Taxpayer getting bullied into saving Anglo Irish
Chief claims it may cost more to close bank than save it but I don't believe him, writes George Lee
Published 10/06/2009 | 00:00
THE boss of Anglo Irish Bank told an Oireachtas Committee yesterday that it would be more expensive to close down the bank than to prop it up with billions of euro of taxpayers' money.
What else would you expect him to say? A turkey would never vote for Christmas.
Anglo Irish Bank is a complete and total disaster for the State and for the taxpayer. Last September it turned out to be the weakest link in the Irish banking system as international liquidity dried up.
It had a business model which completely failed. Its success was based on the fact that it was able to borrow billions of euro on international markets and lend that on to a number of greedy developers here.
The world has now changed.
There is no surplus of global capital available for any bank, anywhere. That means the business model on which this bank was based is now defunct. Even if the international recession were to end in the morning, it will not be possible to return to the situation where a small bank in Ireland would be able to suck in so much funding from abroad to fuel property developments here.
The financial world in which Anglo-Irish Bank thrived is dead.
The problem, of course, is that the people associated with the bank, including the Government, are refusing to bury it.
Instead, they are telling us we must continue to pump our scarce resources into this lifeless institution and try to convince us that, if we don't continue to do it, we would be worse off.
I don't believe them.
Enda Kenny, Richard Bruton and Fine Gael don't believe them and, from the outset, highlighted the folly of propping up Anglo Irish.
As Mr Bruton pointed out, Anglo is not of systemic importance to the Irish banking system. It has only one branch outlet in Dublin. How can anyone argue that a bank with one branch in the capital city is of systemic importance?
This argument about it being critically important may well have sounded convincing last September when nobody knew the full scale of the corrupt accountancy practices uncovered in recent months.
There is the fact, for instance, that it presented €7bn of inter-bank loans as legitimate deposits to fool investors and shareholders and the Government into continuing to have faith in it.
There is the fact that its directors have been secretly hiding illicit loans from their own bank for years.
And there is the scandal of how this bank rounded up the 'golden circle' of 10 of its closest clients to buy €450bn worth of shares to unwind the massive shareholding of businessman Sean Quinn. Mr Quinn was bailed out, alright, but ordinary taxpayers footed the bill.
There was, and still is, an alternative and Fine Gael pointed to it from the very beginning. Instead of pumping billions into a failed bank that will never, ever again be profitable, it is much better to wind Anglo down. An orderly wind-down, allied with the setting up of a National Recovery Bank, is necessary and the Government better believe there is support out there for it.
Over the last five weeks, as I was campaigning throughout Dublin South, I never came across a single person who thought it was a good idea to bail this bank out. I came across one woman living on a pension of €1300 per month -- that's less than the minimum wage -- who found herself paying tax because of the new income levies and bitterly resented the imposition. Her taxes, and the taxes of people like her, are going to bail out this bank.
I also spoke to the director of Saint Michael's House Special School in Ballinteer where severely handicapped children, some of whom were being spoon-fed at the age of 16, had to be confined indoors on the hottest day of the year because the temporary yard they have wasn't suitable for their wheelchairs.
Right beside their pre-fabs that passed for a school was a site with full planning permission for a new facility that they had been waiting for years to build. But there is no money for them. Instead, they are being told to stay in their sub-standard facilities and join the ever-growing queue for scarce Government resources.
It's a very different story for Anglo Irish Bank.
Not only is the Government tripping over itself to plough billions of euro of newly borrowed money into it, now the 'boss' says, in effect, that if the Government doesn't keep doing it, then the children in this special school will have to wait even longer for their resources.
How can it be that, having been tricked into saving Anglo-Irish Bank, we are now going to allow ourselves to be bullied into ploughing in even more billions on the basis of a threat that, if the bank were to close, we'd all suffer?
This doesn't make sense. There is an awful lot of good the Government could do elsewhere with the billions it is ploughing into this bank.