Lenihan sticks to defence of guarantee
FORMER Finance Minister Brian Lenihan last night defended introducing the bank guarantee as his successor Michael Noonan pumped another €24bn into the beleaguered banking system.
Mr Lenihan also defended his previous claim that the guarantee was "the cheapest bailout in the world so far" and said he would have delivered the same speech as Mr Noonan if he was still in office yesterday.
But Sinn Fein's Pearse Doherty said Ireland has reached the "point of unsustainability" and is now facing a sovereign default crisis. Mr Lenihan said Mr Noonan's description of the day of the bank guarantee in September 2008 as the blackest since the Civil War was a "rhetorical flourish". He also defended his 2008 "cheapest" description of the guarantee.
"I simply said that 'so far' the guarantee was the cheapest bailout.
"I would never have said it was the cheapest bailout, we all know there were difficulties, real difficulties. The guarantee was necessary to stabilise funding."
Mr Lenihan said the new Fine Gael-Labour coalition was sticking to the path taken by the Fianna Fail-Green Party government, and said he hoped yesterday's stress tests stood up this time next year.
He said Mr Noonan "fully supported the EU-IMF agreement and the whole text of the speech was the same speech I would have delivered in the same circumstances".
He said the underlying assumptions of the stress tests were very pessimistic, and factored in property prices not returning to 2002 levels for another 40 years.
Mr Doherty claimed Ireland could no longer afford its debts or interest rates.
"The big question is: is it right that we pay all the debts of these banks? And the second question is, and we've moved definitely into this territory: can the State stay afloat if we do so?" he asked.
"I believe that at least with today's announcement we have passed that point. And if we have done so, this is a bigger issue than a banking crisis, this is a sovereign debt and sovereign default crisis."
And he criticised Mr Noonan for not addressing burden sharing by senior bondholders.
"Enda Kenny, in his second day as Taoiseach, said there would be no additional capital injection into our banks, bar what is already committed, until burden sharing is achieved. That was repeated by him on a number of occasions."