Cowen's tough message for bankers: it's payback time
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TAOISEACH Brian Cowen last night threw down the gauntlet to the banking sector and warned it must now reopen its lines of credit to hard-pressed customers.
The multi-billion guarantee is not free and will carry with it a "substantial fee" for use of the country's financial standing, Mr Cowen said in a wide-ranging, hard-hitting and landmark speech at a CBI-Ibec dinner in Trinity College last night.
"Any of you who have been trying to get lines of credit in recent months and who have found the banks, in effect, closed for business should now see a change. Your legitimate, well-planned and costed business ideas can now, and must now, be banked," he said.
"We chose this course because we have an economy to protect and to grow. That is what we are responsible for. But make no mistake. The Government and the Oireachtas have done our bit -- with the notable support of the main opposition party -- and now it is up to the banks to respond."
The decision to protect the country's banks was not taken lightly, and was not taken in order to "prop up" an ailing system, Mr Cowen said.
Protection
Equally, the intervention was not designed to support the banks in order to "protect the reputations of institutions and individuals who needed protection".
"Without a stable banking system, we have no economy and no prospects. That is how serious the situation was. There is no doubt that this is a defining moment in our nation's history," he said.
In recent months, too many good businesses had run into difficulties because the "banks stopped doing what they were there to do", Mr Cowen said.
The "extraordinary economic circumstances" that the country found itself in meant there would be "stark choices".
The result of the rapid deterioration in economic growth had resulted in a €6.5bn shortfall in tax revenue, the Taoiseach said.
As a consequence, nobody should underestimate the challenges and nobody would be immune from the pain that would have to be endured in addressing the challenges of the unprecedented times, he added. "Nobody should harbour any illusion that living within our means will be easy. It will force considerable sacrifice on all of us," he warned.
Mr Cowen laid the blame firmly at the door of the subprime problems in the United States. Greed, he said, was inherent to the US system, but it was also not absent in Ireland.
He concluded by appealing to unions and employers to stand shoulder-to-shoulder with him and Irish citizens in taking some of the "toughest decisions that we have had to make in decades".
- ine Kerr Political Correspondent
