Tuesday 27 September 2016

Bondholder talks with ECB went to wire

Clodagh Sheehy

Published 19/06/2015 | 02:30

John Moran gave evidence at Banking Inquiry yesterday
John Moran gave evidence at Banking Inquiry yesterday

Burning the bondholders in 2011 was effectively stopped by ECB boss Jean Claude Trichet, a former Finance Department Secretary General told the Banking Inquiry.

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John Moran told how in March 2011 Finance Minister Michael Noonan was preparing to go into the Dáil and make an announcement about restructuring of the system.

There were ongoing negotiations with the ECB right up to the minute "or even the minute after" the speech was due.

Asked by Deputy Michael McGrath if Mr Trichet had threatened to withdraw funding from the Irish banks if the bondholders were burned, Mr Moran said he was not in on the phone call and wasn't going to ascribe words to anyone.

He could only say the Minister and the Government were anxious to take the decision and "the only person stopping them essentially that I could see at that stage was the person on the end of the phone".

Mr Moran told the inquiry that the "sad reality" was that "an acute lack of fiscal capacity at Government level removed flexibility in easing the impact" of the property price collapse.

Even now "the reality of the situation in 2015 is that we are spending more money than we are paying into the system. We are still putting debt on future generations for us to live".

Mr Moran, Secretary General from 2012-14, insisted the "fiscal rectitude we are experiencing" was a result of the "terrible and perilous structure" of Ireland's taxes and spending.

Mr Moran also questioned why there had not been a more sustainable structuring of the tax system and a rainy day fund for unemployment put aside.

Irish Independent

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