Anglo will bankrupt country, says poll
Nearly 75 per cent of public predict Coalition will fall over toxic bank
Published 05/09/2010 | 05:00
Almost three-quarters of the public believe Anglo Irish Bank will bankrupt the country and bring down the Government, according to a Sunday Independent/Quantum Research poll.
A government decision to save the bank from collapse has so far cost €22bn -- but the final cost has been estimated at €35bn, and it could turn out to be even higher.
These mind-boggling sums have escalated to such an extent that The New York Times last week asked a simple question: Can one bank bring down a country?
Now the taxpayer, who will ultimately pay the bill, has given a resounding answer to that question. Asked if they believed the cost of rescuing Anglo Irish would bankrupt the country, a massive 73 per cent of respondents said 'Yes' and 23 per cent said 'No'.
A related question elicited a remarkably similar finding: asked if the Anglo controversy would eventually bring down the Government, 72 per cent said 'Yes' and 28 per cent said 'No'.
The finding will be of little or no comfort to the Government, which is awaiting a response from the EU as to how best to handle the all-consuming problem that is Anglo Irish. The bank has
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become such a destructive force that it is now the single greatest threat to the wider economy, now mired in recession for almost three years.
Finance Minister Brian Lenihan will meet EU competition commissioner Joaquin Almunia in Brussels early this week as the Government presses for a swift decision on the bank's rescue.
The talks will be held as the commission completes its review of the controversial plan to divide Anglo into 'good' and 'bad' banks. There is reported to be concern at EU executive level, as there is everywhere else, at the rapid escalation in the cost of propping up the bank.
The government parties last week showed signs that they were split over what to do with Anglo. The good bank/ bad bank scenario is the one recommended by Anglo management. But the Greens seemed to move from that position last week when senator Dan Boyle suggested that the bank be wound down over a shorter timescale, believed to be four to five years.
The Government subsequently put on a united front, with various cabinet ministers claiming they were at one in their approach. However, initial indications of a split did nothing to reassure the public or the markets.
The Sunday Independent understands that the European Commission is opposed to the good bank/bad bank proposal, and is likely to come down in favour of a wind-down over a medium time-scale of around 10 years.
The crisis surrounding Anglo heightened in recent weeks.
The ratings agency Standard & Poor's (S&P) lowered its grading on Ireland's debt by one level to AA-, stressing the heavy costs of rescuing the banking system.
S&P estimates the cost of recapitalising all of the banks will be about €50bn, which is almost a third the size of the entire economy. Anglo accounts for the vast bulk of this cost, about €35bn, according to the ratings agency.
Ireland now has its lowest rating since 1996.
Irish bonds plunged on the news and the spread over German bonds widened to a record level.
All of this means that the cost of government borrowing has become hugely expensive.
Attempts to deal with the crisis have seen a mountain of debt build up. Meanwhile, Exchequer returns published last week show that the economy has still not hit the bottom, although Mr Lenihan believes it is close to doing so.
Against a growing consensus opposed to the Government's Anglo strategy, Mr Lenihan has defended the decision to attempt to rescue the bank.
Last week he said: "It's not a question of keeping it afloat. It's a question of keeping the financial reputation of the country afloat."