Government has no exit strategy from failed banking guarantee – Doherty
Sinn Fein Finance Spokesperson Pearse Doherty TD has accused the government of implementing “the failed banking policy of the previous government” following this week’s approval by the European Commission of the Eligible Liabilities Guarantee (ELG). The ELG makes the taxpayer liable for any losses of the €110.6 billion in liabilities held by the six banks covered by the scheme.
Deputy Doherty said:
“This week the European Commission approved the extension of the Eligible Liabilities Guarantee for the next six months. This is the blanket guarantee that makes the taxpayer liable for any losses to the €110.6 billion of liabilities held by the 6 covered banks, including Anglo Irish Bank and Irish Nationwide.
“Minister for Finance Michael Noonan described the extension as necessary to facilitate the restructuring of the banking system.
“What the Minister failed to say is that this guarantee was the primary reason why interest rates on Irish government bonds spiralled out of control last year, as the markets were increasingly concerned about the States ability to honour the guarantee. It is also the principle reason why the Government remains dependant on the diktats of the EU, ECB and IMF.
“The only way the government can return to the international bond markets is by ending the blanket guarantee and return the toxic debts of the developers back to the banks.
“When the European Commission approved the extension of the Guarantee in June 2010 the then Labour Finance spokesperson Joan Burton attacked the decision and criticised the Government for having ‘no exit strategy’.
“In a week of Labour party U-Turns this is clearly the most damming. Not only have the Government no exit-strategy from this disastrous guarantee, but they are clearly committed to implementing the failed banking policy of the previous government.”