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Sinn Féin unlikely to oppose bank bail out Bill – Morgan

1 October, 2008

Speaking last night, after having a cursory look over the Credit Institutions (Financial Support) Bill, Sinn Féin Economy Spokesperson Arthur Morgan TD said it is unlikely that Sinn Féin Deputies will oppose the Bill.

He said the legislation is about more than the banks - it's about offering security to ordinary citizens, to investors and to Irish businesses which in turn means jobs.

Deputy Morgan said the Bill is very vague in the detail concerning the terms and conditions of the deal with the banks. It does not mention anything about levies on the banks or bankers foregoing their annual bonuses and nothing about more transparent and better regulated banking. Deputy Morgan will propose amendments to the Bill seeking guarantees from the banks on these issues.

He said rushed legislation is always bad legislation even when taking into account the sensitivities of the financial markets and criticised the Government for its handling of the Bill today.

Full text of Deputy Morgan's Dáil speech follows:

Sinn Féin understands that the Government wants to intervene to stabilise the financial system. I know that the logic behind this move is to undermine the Bear market and lead to investment in our banking system. This legislation is about more than the banks - it's about offering security to ordinary citizens, to investors, to Irish businesses, which in turn means jobs. It may even be a move that other states are looking at enviously.

But the concern all day has been what will be the quid pro quo? What will this Government extract from the banks in return for bailing them out? This Bill does not offer the details needed to inform us of the terms and conditions that the taxpayer will be looking for and we have not even been afforded adequate time to examine the provisions of this Bill.

We need to be particularly cautious about this issue, because, since the Central Bank has proved itself spectacularly incapable of doing its job, we don't know what our major banks' budget sheets look like. What liabilities are the Irish taxpayers undertaking?

We need this Guarantee to be underpinned by more conditions and we need the detail of those conditions. When the Government bailed out AIB in the eighties after the ICI collapse, a levy was introduced on the banks. A similar initiative must be included upon passage of this Bill to build a fund that will serve to meet the insurance that this state is giving them. If this guarantee does what it should, the banks should make a profit from 'borrowing' the Irish state's name, and should pay compensation to the state for that security.

There must also be a commitment from bank management to forego bonuses for the length of the time covered by this guarantee, or indeed to look at cuts to their exorbitant wages. Separately, we need to see a new transparency in the banking system and we need more regulation.

We must also today, while welcoming a decisive move, point out that action could have been taken many years ago to prevent this move being necessary. As far back as 2005, the Oireachtas Committee on Finance and the Public Service, of which my colleague Caoimhghín Ó Caoláin was a member, made recommendations on Bank Charges and Interest Rates. As well as exposing the lack of transparency on the part of banks regarding their charges for customers, it urged the need for regulation of banks.

We mustn't forget that the current global finance crisis is of the sector's own making. We need to know now what assurance will be given to ordinary people - people who have lost their jobs in the construction sector, people who are mortgaged to the hilt and are now facing negative equity in their homes, people who risk losing their homes, people who did not earn bonuses during the boom years that ran into millions. This guarantee will mean nothing to people currently embroiled in court hearings about mortgage defaults.

When was the last time the Government sat through the night to come up with a solution to solve these people's problems? It is imperative that the Government offers the same level of security offered to the banks to ordinary people in debt to the banks.

So far, no bank has moved on a major Irish developer to recoup loans. But homes continue to be repossessed. Along with this Guarantee, there must be an immediate moratorium on home repossessions. Everything must be done to ensure people can reschedule loans, delay payments or subsume interest payment into the capital amount owed.

Finally, Sinn Féin has always argued for a state bank and this morning's announcement is evidence alone of the value in such a proposition. With a state bank, Government can adequately protect the investments and deposits of ordinary citizens and small businesses whilst wisely investing profits back into the public purse to the advantage of all.


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