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No tax-payers’ money for bank resolution fund – Doherty

28 June, 2011 - by Pearse Doherty TD

Speaking tonight during the second stage debate on the Central Bank and Credit Institutions Resolution Bill, Sinn Fein Finance spokesperson Pearse Doherty said “no tax payers’ money should be used for the bank resolution fund”.

The Central Bank and Credit Institutions Find is a major piece of legislation providing for new powers for both the Minister for Finance and the Governor of the Central Bank to wind down failing banks. The Bill includes a bank resolution fund into which both banks and the tax payer would pay funds to be used for future bank bailouts.

Deputy Doherty said:

“The Central Bank and Credit Institutions Resolution Bill is an enormously important piece of legislation.

“Sinn Féin supports the introduction of Special Resolution Regime legislation. The financial and banking crises of recent years have exposed the inadequacies of commercial law in providing the necessary tools for dealing with insolvent banks.

“There is clearly a need for strong powers to be vested in the Minister for Finance and the Governor of the Central Bank, with adequate oversight by the Oireachtas, to enable the State to wind down failing financial institutions in a way that protects ordinary depositors and the taxpayer.

“However I am very concerned with the provision in the Bill for state funding of the credit institutions resolution fund. The creation of such a fund is clearly required, and I support the Bill’s intention to make it a legal requirement for banks to contribute to such a fund.

“However there is simply no reason why the taxpayer, having already put €46 billion of taxpayer’s money into the banks, and having committed a further €24 billion, should even contemplate contributions to a resolution fund, the purpose of which would be to pay creditors in the event of a banking collapse.

“This Bill effectively gives the Minister for Finance a blank cheque for the use of tax-payer’s money in a fund whose cost is as yet unknown. We know only too well what happens when such blank cheques are left in the hands of Ministers whose banking policy is directed by the ECB rather than the taxpayer. Sinn Féin will not be party to the issuing of any such blank cheques.

“All such costs in the future must be born by the banks themselves and their creditors in a manor consistent with protecting the public interest. Sinn Fein will be tabling amendments at Committee Stage to prevent the use of tax-payers’ monies for any such fund.”

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