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Recapitalisation falls far short of what is required – Morgan

12 February, 2009

Speaking on the Planned Recapitalisation of Allied Irish Bank and Bank of Ireland in the Dáil today Sinn Féin Finance Spokesperson Arthur Morgan TD said the people have lost confidence in the Government, in the banks and in the financial regulator. He said the key issues of mortgages, credit streams for SMEs and executive pay have not been adequately dealt with while regulation has been put on the backburner. Deputy Morgan called for the establishment of a public bank through the nationalisation of an amalgamated AIB and BOI.

He said, "We are in a serious mess as a result of the practices of the Government, banks and speculators. It looks as though the culture of Lawlor, Haughey and Burke has not gone away.

"Sinn Féin has for a long time called for the establishment of a state bank. We now believe that this should be done through the nationalisation of an amalgamated AIB and BOI. If the banks are dictating then we are going to have to go in their and take them over.

"The objective of the recapitalisation plan is sound but the terms and conditions fall far short of what is required on the three major issues of mortgages, executive pay and credit streams for SMEs.

"On homes the Government has secured a one year moratorium on repossessions. What does that say? Do they expect full employment in one year? That is nonsense. The moratorium should last at least for the two years of the guarantee scheme.

"The Government has failed also to secure a proper credit stream for SMEs. These companies are crying out for credit for machinery, shop refits, cash flow problems and, crucially, to improve competitiveness, preserve jobs and keep the economy moving. But the Government appears afraid to stand up to the banks and demand a proper credit stream. The clearing groups to be established have no power to ensure credit and as such are toothless.

"The Government has no sense of perspective on the issue of executive pay. To reduce someone's pay from €3million to €2million is nonsense. Bonuses are only being suspended for one year. The Government needs to get realistic on this. Executives should be made hand back all bonuses and 50% of their salary for the last three years.

"The recapitalisation plan falls on all three of the key issues which it needed to address. It is tokenistic in the extreme. The Government is out of touch with the people and needs to start listening to the man in the street.

"Will this recapitalisation programme work? Many economists doubt it. This is a major error from a Department of Finance with a very poor record of forecasting." ENDS

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