Trichet: I will not submit to bank probe
Exclusive interview with former ECB chief who 'bounced' Ireland into €85bn bailout
FORMER European Central Bank (ECB) president Jean Claude Trichet has indicated that he will not appear before any Oireachtas banking inquiry, the Sunday Independent can reveal.
In an exclusive interview, Mr Trichet said he had not yet been asked to appear, but was firm in his view that the current governor of the Irish Central Bank should represent the ECB at such an inquiry – and not him.
He told this newspaper: "Until now, I received no such request from Ireland. The rules in the ECB are that, all our decisions being collegial, the president goes to the European parliament and the governors of central banks go to the national parliaments."
Mr Trichet said Ireland was not a "special case" and denied that this country had been targeted unfairly by Europe.
He also defended the ECB's ban on Ireland's desire to burn senior bondholders in Anglo Irish Bank in March 2011.
Five years on this week from the night of the bank guarantee and in the week that the Government announced its intention to hold a banking inquiry, Mr Trichet's comments pour cold water on calls from Tanaiste Eamon Gilmore that the former ECB president should appear before the inquiry.
Just days after it was announced, the holding of the inquiry now appears to be deeply problematic, given the pending trials of several senior Anglo Irish Bank executives, including Sean FitzPatrick, the former chairman.
Throughout the interview, Mr Trichet repeatedly refused to deny that he had threatened to withdraw emergency funding to Ireland.
It has repeatedly been suggested that he told Finance Minister Michael Noonan and Taoiseach Enda Kenny in March 2011 that if the Irish Government tried to "act unilaterally" and impose losses on senior bondholders in Anglo Irish Bank, then he would withdraw the €150bn plus of emergency liquidity funding to Ireland.
Mr Trichet said: "That I will not say. What I will say is that (it was) the same message for all (countries). And a fact is that Ireland was supported more than any other country by far. This question misses an important point.
"The Governing Council of the ECB had been, was and continued to be much more forthcoming, in terms of supply of liquidity, with Ireland than with any other country in the euro system. My understanding is that the Government of Ireland at the time assessed rightly the systemic consequences of the decision it had to take."
Mr Trichet also strongly rejected the widespread perception that the ECB "bounced" Ireland into the bailout, saying the country received "fantastic support" from Frankfurt.
He said the level of support to Ireland was "many multiples" of that given to other countries and denied that Ireland was picked on or made a special example of.
Mr Trichet said: "Lending to Ireland was in many multiples to what was being given to other countries. So enormous support, and that is one of the reasons I am very surprised, I have to say, at this kind of discussion.
"The only thing that is absolutely clear, there was a fantastic support by the euro system as a whole for Ireland. The message was the same for all countries – all countries, without exception. And all countries reacted like Ireland.
"There was not a special case there in terms of their (Ireland's) action with the Central Bank. Also, I wouldn't say there was any sort of quid pro quo. Lending to Ireland was in many multiples to what was being given to other countries."
Mr Trichet said that the refusal to allow bondholders to be burnt was done in consultation with all national governors, including Irish Central Bank governor Patrick Honohan.
"First of all, there is nothing in what I said that was not discussed with the Governing Council as a whole, including, of course, the governor of the Central Bank of Ireland. All the other – and I see in your question a mention of a phone call with one individual president of the Bundesbank and so on – this is absolutely not true. It was with all in the Governing Council (that) these issues were discussed."
When asked did he mean Governor Honohan, Mr Trichet responded: "Of course. The governor of the time, you know better. But all colleagues, all members of the Governing Council, including, of course, the governor of Ireland. The discussions took place with all governors, without exception, and not with one of them."
But when asked why the bondholders were not burnt, Mr Trichet said that governments were told to ensure that any actions didn't jeopardise the wider European system.
"The message was for all (countries). When you take any decision, take into account all dimensions of these decisions, including the systemic aspects of these decisions."
The former ECB president added that all governments and central banks decided that no commercial bank would be allowed to fail.
"The decision finally taken by all at that time in the post-Lehman years was not to let any particular commercial bank go bankrupt as Lehman had done," he said.
Mr Trichet added that Ireland's "extremely difficult" fiscal correction, in which more than €25bn in tax increases and spending cuts have been implemented since 2008, was "appropriate".
The Government was given a firm warning yesterday from a current ECB board member to stick to its plans to make €3.1bn of savings in the forthcoming Budget.
ECB executive board member Jorg Asmussen said revising this figure down would be risky.
He told RTE's The Business: "Delaying fiscal adjustment is a risky strategy and the achievements so far should not be put at risk."
Ratings agency Moody's also warned the Government that relaxing austerity would undermine international confidence in the Irish economy.
"Downward pressure would develop on Ireland's government rating. . . if the country's fiscal consolidation process were to falter," Moody's said.