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Banks recapitalisation must include radical reform - Mitchel McLaughlin MLA

15 December, 2008

Sinn Féin Economy Spokesperson, Mitchel McLaughlin MLA (South Antrim) commenting of Brian Lenihan's proposed Bank recapitilisation package said:

"The rescue package for banks proposed by the Irish government needs to be accompanied by radical reform of banking practices and greater regulation of lending practices.

Mitchel McLaughlin said:

"The Irish Government's proposed €10bn fund to recapitalise all its listed banks has implications right across the island as three of the four main banks in the North are Irish listed.

"Sinn Féin met with the banking unions last week and there are very real concerns that the banks may use the current economic difficulties as an excuse to reduce staffing levels and services.

"However, we are saying very clearly that any public investment in banking institutions needs to be accompanied by a number of very strict conditions. That includes the state taking a significant shareholding control in the banks. Any money invested by the state in the banks must be given in return for preference shares, ie, semi or
full nationalisation.We are now living with the fruits of an unregulated economic system and we must ensure that this experience is not allowed to recur through handing over a 'no-strings' injection of taxpayers money to the very people who got us into this mess.

"A commitment needs to be secured from the Banks that lending practices will be radically reformed to provide greater protection for consumers and more customer friendly approach for struggling businesses and individuals wishing to access affordable credit.

"Given the extent of the crisis, it is inevitable that some rationalisation may be necessary but redundancies should be voluntary and in the first instance costs should be cut by eradicating the 'fat cat' culture where directors continue to pay themselves huge bonuses despite leading the country into an economic disaster."

Mr. McLaughlin expressed serious concerns about suggestions that private equity finance could be used to bolster the rescue package.

He commented: "Allowing control of our banking system to be put into the hands of international private equity funds could have disastrous consequences for the future of the island's economy.

"These companies are interested only in making the largest dividends possible for their shareholders and will inevitably lead to large scale staff and service cuts.

"If the banks are to be recapitalised, then the terms and conditions need to represent the interests of the taxpayers who are footing the bill - not the shareholders of private equity funds." CRÍOCH

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