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Morgan – use of private equity funds to recapitalise banks would be disastrous for the economy

21 November, 2008

Sinn Féin Economic spokesperson Arthur Morgan TD said he is totally opposed to the use of private equity funding for the recapitalising of the banks as it could have serious consequences for the economy in the long term. He described it as yet another example of short term thinking from the government that has put the economy in such difficulties already.

Deputy Morgan said:

"It is deeply worrying that the government are considering allowing international private equity funds to be used as part of the recapitalising of Bank of Ireland and AIB. Allowing control of our banking system to be put into the hands of such investment funds could have disastrous consequences for the economy in the future.

"Small businesses are under serious pressure with up to 54% of companies refused access to finance in recent weeks. And today's figures from the CSO show how serious the unemployment problem is with the first annual decline in employment since the early 1990s. Unemployment is expected to reach 7.5% by the end of the year.

"It is increasingly likely that the state will have to recapitalise. In our view this should happen sooner rather than later. And if it does happen the state has to secure a substantial shareholding in both banks. The outworking of this financial crisis sets out the necessity of a state bank. It is also essential that recapitalisation is accompanied by a radical reform of banking practices and greater regulation of lending practices.

"The biggest problem in all of this is that the government are taking knee-jerk decisions. There is no long term strategy to turn the economy around. There is no three year plan to get people back into the workforce, no planned investment in school building, social housing, no plan to build expertise in new renewable energy technologies, no real plan for high end research and development." ENDS

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