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Exit strategy from debt crisis must be established

29 September, 2010

Speaking in the Dáil today on the Credit Institutions (Eligible Liabilities Guarantee) (Amendment) Scheme 2010, Sinn Fein Spokesperson on Finance Arthur Morgan said an exit strategy from the current debt crisis must be established along with a new system of public banking.

He said Sinn Féin is vehemently opposed to the extension of the bank guarantee.

Deputy Morgan said:

“The bill to be footed by the taxpayer for the Government’s banking strategy looks like it could now run beyond €30 billion. The Government’s strategy of creating stability through the bailout of our banking institutions has failed.

“The taxpayer is once again being asked to provide yet another lifeboat for the banks. The critical issue that must be addressed is whether the banking system, with the aid of this guarantee can turn itself around, transform into a system that services the domestic economy by providing the credit much-needed by businesses and households and whether placing this burden on the taxpayer is warranted. The answer is no.

“The Government should not be allowed to extend this guarantee scheme for another three days never mind another three months. Sinn Féin will not support any measures designed to throw the economy into further disarray. Sinn Féin is vehemently opposed to extending the guarantee.

“An exit strategy from the current debt crisis is imperative and a new system of public banking must be established. Sinn Féin’s believes that a State bank should be created by nationalising AIB & BOI. We should nationalise the positive assets, including the deposits and performing loans, of AIB and BOI, and to transfer these into a new State Bank.

“We must allow the banking guarantee to lapse and allow the remaining assets of AIB, BOI and Irish Nationwide to be divided up between the bondholders of those institutions

“And we should guarantee all deposits in the State bank.

“In September 2008, we would have wound down Anglo. We would have burned the bondholders. We would have moved Anglo’s deposits to other, stable banks and that would help them with their new capital requirements. We would follow through with that very same policy now by abolishing the bank guarantee extension.

“On the second anniversary of the original bank guarantee; two years in which the people of this State have been crippled under the strain of a broken banking system, the Government once more signed the taxpayer up to a further blank cheque for the banks. The banking crisis is quickly becoming a sovereign-debt crisis because this prolonged guarantee puts us all on the hook.” ENDS

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