Is Newbridge the Anglo Irish of credit unions after dramatic overnight bailout?
Large loans to developers cited as major cause of failure
THE overnight bailout of Newbridge Credit Union to the tune of €54m in taxpayers’ money brings back memories of other fateful decisions taken by successive governments since the collapse of the banking system.
Top of the list, after the bank guarantee, is the liquidation of the former Anglo Irish Bank in February of this year.
As far back as 2012, the Central Bank secured a High Court Order for the appointment of a special manager to Newbridge Credit Union.
In fact, regulators have claimed there has been what they call “poor governance” at the lender.
They cited large loans given to developers as a major cause of failure.
There have also been issues around the valuation put on an elaborate office block, where the credit union is headquartered in the books of the lender.
In addition, Central Bank executives have spoken about “persistent breaches of regulatory standards” at the Kildare credit union.
In the context of Newbridge, the question of liquidation as an option also should be examined as an alternative to a bailout.
Let’s face it – this Government has been keen at every turn to highlight that following on from the collapse of the banking sector there wouldn’t be any more taxpayers money used to bail out institutions.
And savings of up to €100,000 are already guaranteed under existing legislation.
However, at the special sitting of the High Court last night, counsel Paul Gallagher, who appeared for the Central Bank, said the transfer of Newbridge’s loans and savings to Permanent TSB was being made as a matter of urgency.
“A problem in credit unions could cause confidence issues and contagion across the sector,” he said adding that it could give “rise to instability in respect of the general banking sector.”
There are about 400 credit unions around the country
So it would seem that the fear of contagion by the powers that be, yet again, has forced the taxpayer into a bailout.
Have we learnt nothing since the €60bn bailout of the banks?
There’s a distinct sniff of ‘been there, seen that’ from this story which is one that will no doubt run and run with members of the credit union likely to keep fighting the move on their institution.