Opposition and Government in Ireland Cash Over Anglo's Role

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Irish Times:

THE GOVERNMENT and Opposition parties have clashed over the systemic importance of Anglo Irish Bank to the economy at the time of the State guarantee.
The row comes after the bank yesterday announced it had incurred losses of €8.2 billion for the first half of 2010, the highest ever loss recorded by any Irish commercial entity.
Last night, Minister for Finance, Brian Lenihan issued a statement taking issue with the assertion made by the Opposition that the bank was not systemically important at the time the Government guaranteed deposits in late September 2008.
Earlier Labour’s finance spokeswoman Joan Burton contended that the figures confirmed that Anglo was never of systemic importance to the economy.
“They show instead that it has become systemically destructive of Ireland’s capacity to recover and to restore its banking system.
“Anglo Irish is not just the biggest bank failure in Irish economic history, either before or since independence, it has also turned out to be one of the biggest corporate failures anywhere in the world,” she said.
Responding to the comments, Mr Lenihan claimed the bank was systemically important and said it had over 250,000 depositors at the time of the guarantee, and its importance had been confirmed by the governor of the Central Bank Patrick Honohan in his recent report on the causes underlying the banking crisis.
“I fail to see how Ms Burton can now claim to say that the bank was never of systemic importance,” said Mr Lenihan.
“Is Deputy Burton saying that the Labour Party would have allowed the bank to collapse thereby destroying the savings of those depositors?” Mr Lenihan did accept that the losses were unacceptably high.
However, in a clear contradiction of Coalition partners, the Green Party, he said the only wind-down option was one that took place over a long period of time, and not a quicker wind-down, as advocated by the Greens, which he said would cost the taxpayer more money.
Michael Noonan, the Fine Gael finance spokesman said yesterday that the overall burden to the taxpayer was now €22 billion and rising. He said that it suggested that the Standard Poor’s estimation of non-recoverable losses of €35 billion might be accurate.
He said the very wide range of the guarantee that was introduced in 2008 meant it was not possible to negotiate discounts on loans that were guaranteed.
There was no solution that would not prove very costly for the taxpayer, he added.
“What I am calling on the Minister to do is to publish a very simple balance sheet setting out the costs of the good bank/bad bank suggestion, as proposed by Anglo’s management, as against the costs of an orderly wind-down.

“We need to be told the solution that will cost the taxpayer the least as the bank has no economic importance. It is one that we could well do without,” he said.
Mr Noonan said his own preferred option was an orderly wind-down over a period of seven to 10 years.
Mr Lenihan confirmed yesterday that the Government had sent its final submission on the future of the bank to Brussels.
Sinn Fein’s spokesman on finance Arthur Morgan said the Greens should now insist on Fianna Fáil pulling the plug on Anglo.
“If they do not then they should pull down the Government and let the people finally have their say.
“Fianna Fáil have nationalised the losses of their banking and developer cronies and the revelation that Anglo incurred an €8.2billion loss for the first half of this year is the nail in the coffin for the Government’s banking strategy,” said Mr Morgan.

Read the original story at Israel’s Financial Expert