Business Irish

Saturday 23 August 2014

Government ‘squandering’ money in bank bailout plan

Louisa Fahy and Simone Meier

Published 07/10/2009 | 13:58

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Nobel Prize-winning economist Joseph Stiglitz said the Government is "squandering" public money with its plan to bail out the banks.

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Finance Minister Brian Lenihan said last month that the government will buy €77bn of souring property loans from banks to purge them of toxic assets.

The Government is paying €54bn for loans that have a value of €47bn. The €7bn difference takes into account the properties’ “long-term economic value”, Lenihan said.

“The Irish government is squandering large amounts of money to bail out banks,” Stiglitz said at conference in Dublin today. “There’s a sort of a view that there’s no alternative.”

That view is “nonsense,” Stiglitz said, adding that “the rule of capitalism says that when firms can’t pay what they owe, they go bankrupt.”

Stiglitz, a professor at Columbia University in New York, told RTE yesterday that overpaying for the loans was “criminal”.

“It’s a massive transfer of money from the public to bankers,” he said today.

Bloomberg

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