Bank policy not bailout for bondholders - Alan Ahearne
The government's chief economic adviser Alan Ahearne has rejected accusations the government's bank policy is a bail-out for developers and international bondholders.
Speaking at a meeting in Dublin last night, Mr Ahearne said senior bonds in Irish banks were owned by pension funds, insurance companies, credit unions and multinationals. "These are the same investors that buy government debt,'' said Mr Ahearne, speaking to the NUI Galway alumni society.
Mr Ahearne said he wanted to take on a lot of the myths that surround the government's bank policy and NAMA in particular. "Borrowers continue to owe every cent,'' he said and there will be no more rolled-up interest for developers, he added.
As for bondholders he said senior bank bonds were part of funding capital, not risk capital. He said the bonds were covered by the government's guarantee scheme and anyone holding a senior bond was entitled to the same legal treatment as a deposit-holder.
He said people needed to be clear when they talked about the banks. Were the "banks'' the shareholders, the senior management, the bondholders, or the depositors, he asked.
"The Government is fixing the banking system,'' he said.
Mr Ahearne, whose works as special adviser to Finance Minister Brian Lenihan, said the government had been fire-fighting for a period.
"It's a large fire, but not one that exceeds suppression capabilities,'' he said.
- Emmet Oliver
Irish Independent
