Bailout was 'not a bad deal' but had 'missed opportunities' -- bank chief
Published 03/09/2011 | 05:00
THERE were a "lot of missed opportunities" in the €85bn bailout package agreed for Ireland last December, Central Bank Governor Patrick Honohan admitted yesterday.
But he insisted that it was "not a bad deal" for Ireland and said the European Central Bank (ECB) had "indulged" the country by allowing us to keep an "emergency" funding programme open for the banks since late 2008.
The comments came in a wide-ranging appearance before the Finance Committee yesterday morning, where Mr Honohan also suggested that the Government might want to move "faster" to restore Ireland's public finances.
Asked whether his decision to confirm Ireland's bailout talks on national radio had been "unhelpful", Mr Honohan said he had "no doubt" that he had done the right thing given the level of concern that talks had stalled. "It wasn't a bad deal," he added, later describing a bailout as "the best course of action in a worsening position".
But he admitted that there were a "lot of missed opportunities" like a "more realistic" interest rate and a system that would have allowed Europe's bailout fund to directly inject money into the banks.
Mr Honohan also pointed out the ECB, one of the parties involved in drawing up the bailout, had "indulged" Ireland by allowing so-called emergency liquidity assistance (ELA) to be advanced for so long.
The money is now chiefly being used to support Anglo, with the ECB loaning money to the Central Bank of Ireland it can be loaned to Anglo on the strength of the bank's assets and a Government guarantee.
Mr Honohan yesterday described the Government's "letter of comfort" as the third line of defence to ensure the Central Bank got paid -- the first line is that the bank is able to repay the money itself, the second is the collateral used.
Asked whether the letter of comfort was legally binding, Mr Honohan said he "wouldn't envisage taking the Government to court ... We would expect them to honour these [agreements]."