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False truths have exposed taxpayer to litany of debt - Morgan

16 July, 2010

Reacting to the reports of the Public Accounts Committee in relation to the bank guarantee scheme that revealed that the Government based its €400 billion bank guarantee scheme on the belief that €500 billion in assets was held by the banks, Sinn Féin Spokesperson on Finance Arthur Morgan has said that the false truths that were provided by the banks in relation to their assets have exposed the taxpayer to a litany of debt. Deputy Morgan also said that given that this was a home-grown crisis it was not feasible that the banks would absorb these losses.

Deputy Morgan said:

“The information supplied by the banking system in the run-up to the guarantee was falsified and the banks dramatically over-estimated the value of their assets. The mis-information and inaccuracy of forecasts surrounding these assets tainted the considerations of officials in the run-up to the guarantee. The result of these false truths is that the taxpayer has been exposed to a litany of debt of generations to come.

“A document produced by the Department of Finance revealed that there was ‘significant capacity within the institutions to absorb any losses’ from the property market. Lest we forget that this was a home-grown crisis, spurred on by the Government over-dependence on the property market and the willingness of banks to lend to developers without substantive guarantees, the artificial nature of the interconnected property and banking sectors was never going to be able to absorb the losses once the bubble burst.

“Indeed, the analysis provided by Merrill Lynch on options available to Government was admittedly ‘based only on information from and conversations with the three main institutions’.

“The harsh reality was that the Department of Finance, because of false truths supplied by the corrupt banks, produced a document based on wishful thinking, which has now left the people of this State liable for billions of euro worth of losses incurred by the banks and developers of this State.

“The privileged position of the banking sector in Ireland was upheld by this Government and their officials, to the detriment of the ordinary people of this State. The Government took on a bank guarantee scheme, making citizens liable, on the pretence of banking reports on the assets, which were grossly over-exaggerated.” ENDS

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