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Labour sets out principles for bank recapitalisation

Issued : Tuesday 10 February, 2009

"The Labour Party is today setting out eight key principles that it says must apply to the bank recapitalisation programme that the government is expected to announce this week.

"The Labour Party document, 'A Clean Break from Business as Usual', outlines a series of proposals that would not only provide for recapitalisation of the banks but also deliver a programme of major reform of the banking system.

"This will be the government's fifth attempt to deal with the banking crisis since the original bank guarantee scheme was announced at the end of September. It is essential that they get this one right.

"The key objective of bank recapitalisation must be to get credit flowing again to businesses to sustain jobs and allow companies to take on new employees.

"I am deeply concerned that the government is side-stepping the huge problem of bad debts in the banks. If the government has accurate information on the scale of bad debts in the banks, it certainly has not been prepared to share it with the opposition parties.

"It is also alarming on the eve of recapitalisation to learn that the banks are still resisting a proper moratorium on home repossessions. Such a moratorium would make an important contribution to restoring confidence among Irish consumers. The government must stand firm on this issue and insist on a moratorium of at least two years.

"Finally, it is essential that the package of measures to be announced by the government provides for genuine regime change in the banks and brings an end to the payment of outrageous salaries to senior bank executives. Labour believes that an upper limit should be set so that senior executives and board members would be paid not more than the total remuneration package of the Minister for Finance ((currently around €250k).

"It is in everyone's interest that the banking crisis is sorted out. Huge amounts of taxpayers' money have already been committed and the government is now preparing pour a reported €7bn into the recapitalisation programme. Badly handled the €7bn could disappear as rapidly as melting snow. Part of the return for this must be real reform of the banking system to ensure that we never again have to face a crisis of this nature."