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Credit Institutions (Eligible Liabilities Guarantee)(Amendment) Scheme 2012: Motion (Continued)

Thursday, 29 November 2012

Dáil Éireann Debate
Vol. 784 No. 4

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  12 o’clock

(Speaker Continuing)

[Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett] Fianna Fáil initiated it and Fine Gael at the time also backed this guarantee. Whatever qualifications they may have put on it, when it came to it, just like the European political establishment, they prioritised the interests of the very institutions, speculators and financiers who had caused the crisis. They rushed in to provide an emergency guarantee to these gangsters, frankly, who had caused the crisis.

The Government is claiming success in that we are moving towards the winding down of this guarantee. It claims this is being enabled because the banks are now able to access money on the international markets. Whatever small bit of stability might be returning to the famous markets, the Government should not count its chickens on that stability being retained over the medium to long term, particularly considering the net effect of the policy of bailing out the banks and paying for it with an austerity that is crippling economic growth across Europe. At some point the markets will recognise the significant contradiction. I would confidently, but regretfully, predict that the panic will return at some point when the extremely damaging downward spiral caused as a result of the austerity measures imposed on the European economy, begins to kick in and to make its way into the core of the European economy. This is beginning to happen. Even in so far as the Government is claiming success in its efforts to move towards the winding down of this guarantee, we should remember that this so-called success has only been made possible because these banks have been stuffed with the cash of ordinary people. The previous Government and this Government, under the diktat of the ECB, said that they would do whatever is necessary to protect the banks; it is their top priority. Everything will revolve around restoring the banks to so-called normality, bringing them back to profitability, bringing them back to where they were before the crisis began. I find this to be a bizarre aspiration, that we are going to nurse them back to the situation they were in before all this mess started and that we think that is the recipe for sustainable economic and financial development over the long term. This shows a complete failure to understand what caused the crisis in the first place. It is not just a case of studying past history because we will be counting the cost when the crisis hits again, as it surely will.

The cost being paid by Irish citizens for returning the banks to so-called normality is the €64 billion we have had to borrow - for which we will be paying interest for many years to come - in order to stuff these banks with cash and restore the confidence of the all powerful markets. The cost is an unsustainable debt burden taken off the backs of the private banks, the for-profit banks, and unloaded onto the backs of the Irish people. If people are made suffer to the extent that we are making them suffer, the banks will be nursed back to health but at what cost for ordinary people? It is a cost we will be counting for decades, possibly. We are counting this cost now because of an unsustainable debt burden. The cost next year will be €9.1 billion in debt interest. The spectre of the deficit is constantly raised by the Government. We are warned that the deficit is €15 billion which we must cover. We are told that anyone who criticises the Government's policies is living in Cloud Cuckoo land. I ask the Government please to state the qualification that €9 billion of that deficit is in debt interest-----

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes Deputy Boyd Barrett wants us to default.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett Yes. We should not pay their debts and cripple our economy.

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes The Deputy is talking about a situation like Argentina.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett This is a terrible price which is even more galling when one considers that these banks which we have nursed back to health refuse to give relief to distressed mortgage-holders. They refuse to lend to small and medium enterprises and they refuse to put the mountains of cash we have given them back into the economy to create jobs. I draw the attention of the Minister of State, Deputy Hayes, to the sharp contrast between the behaviour of the banks we bailed out to this extent and the offer of the credit unions to use their assets to finance job creation programmes, social schemes and so on. They are pleading with the Government to use their assets to help the economy but the banks, which have been stuffed with our cash and which we own, refuse to do so. That is the contrast between the two.

We will not support the extension of this guarantee. Over the next three or so years, we will be paying off the bondholders at a rate of €17.4 billion in 2013, €6 billion in 2014 and €11 billion in 2015. If we were to assert control over these banks, which we own, and if we were to default on these bondholders, that money could be used for the stimulus programme needed to create jobs, economic growth, the protection of the vulnerable and the development of the economic and industrial infrastructure of the country. Why not do this instead of continuing with this insane protection of the financiers and banking system that caused the crisis? The Government is allowing them to walk off into the sunset after we have bailed them out and paid this terrible price. They will walk off into the sunset, be again privatised and return to making profits, while we are left holding the can.

Deputy Shane Ross: Information on Shane P.N. Ross Zoom on Shane P.N. Ross There might be some sort of a case for an extension of this guarantee if the Government were prepared to take responsibility for the banks and were prepared to direct their operations. There might be some sort of a case for saying the banks need to attract further funds, that they are too fragile at the moment to be allowed depend upon the bond markets and that the Government should decide what the banks should do with the money on deposit. However, the banks are in an extraordinary situation. They are being guaranteed by the Government, subsidised by the taxpayer and allowed to run themselves as some sort of quasi-independent organisations. I cannot understand why the Taoiseach - and I am sure the Minister for Finance also - told the House it was nothing to do with the Government when AIB increased the variable rates for mortgages some weeks ago. The Taoiseach said it was nothing to do with the Government, that AIB is an independent commercial organisation and that the Government has to leave it alone. Yet at the same time, the Government guarantees the money, some of which is used to lend out as mortgages. This cannot happen unless one is prepared to defer to the banks, as every Government had done in the history of this State. I thought that perhaps the crisis would prompt this Government to take a hold of the banks and to direct their operations in the interest of the people of Ireland who, after all, own the banks. This has not happened. The banks are still allowed to do exactly what they like commercially, under the guise of being detached, even though they are fully owned by the taxpayer.

I would like to know what the Government thinks would happen if this guarantee were not extended. As other speakers have said, all the past deposits are guaranteed and only the future or present deposits would come into this category.

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