Hanging out dirty linen is costing us -- Lenihan
FINANCE Minister Brian Lenihan said yesterday he believed Ireland was being "punished" by the international markets for coming clean about the problems in the banking system.
His comments came as markets began to react to the decision to split Anglo Irish Bank in two.
The minister claims the Government's approach to Anglo, along with the setting up of the National Asset Management Agency (NAMA) and being open about the level of losses in the banks and the writedowns on property values, will ensure confidence is returned.
But he conceded there was a flip side to this openness, compared with what other countries in similar difficulties had had to endure.
"We are being punished because we have exposed our dirty linen on the banking front. We have made no secret of that because I believe the quicker we bring that out, the quicker confidence will be restored and be returned to the country," he said.
Through NAMA, the Government feels it has put a real price on the problems in the banks. While the writedown on property loans in Ireland is 55pc, in Spain it has only been 10pc -- this is not regarded as realistic.
Fine Gael leader Enda Kenny repeated his claim that the Government had previous plans for Anglo turned down by the EU Commission and said the one announced earlier this week was "half-baked".
But Transport Minister Noel Dempsey said the Anglo decision was effectively having the liabilities worked out of the system over a period of time.
"The concept of immediate closure was one that we couldn't contemplate, but this is one that will work over a period of time," he said.
The Government still can't say what the cost will be.
"There's been a lot of speculation and a lot of talk over the last two weeks that hasn't been helpful nationally. The Government is anxious to bring it to finality as quickly as possible, anxious that people will know, particularly the markets, but Irish taxpayers as well, know exactly what it is going to cost and over what period of time. So the sooner it is done, the better," Mr Dempsey said.
Labour Party leader Eamon Gilmore described the Anglo solution as a "rushed decision" which added more confusion.
"The only thing I hope is that there aren't going to be more people out of work while Brian Lenihan and the Government are going through this 'work-out'," he said.
"It is very confusing. We came into where there were two approaches to dealing with Anglo.
"The Government appears to have some kind of a compromise between those two approaches.
"We don't know yet what the cost of it will be and meanwhile, there are continuing confused signals to both the Irish public and to the international money markets," he said.
Asked what Labour would do to tackle Anglo, Mr Gilmore replied that they had argued for an orderly wind-down."It would be less expensive for the taxpayer," he said.
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