Minister's secret deal bodes ill
Published 26/12/2010 | 05:00
What is going on inside Allied Irish Bank, once the biggest and most successful financial institution in the State? We all know and have known for a long time that it is a basket case because of the highly irresponsible attitude to lending, and the hapless attempts to deal with the ensuing crisis which amounted to gross incompetence and denial of reality.
The Minister for Finance went to the High Court on Thursday, essentially to get the go ahead to pump another €3.7bn of taxpayers' money into AIB -- thus bringing the amount we have put into the bank to date to €14.1bn. It was an emergency measure, but only in the sense that it was a measure left until the last minute. The use of the High Court was necessary only to allow the minister to sidestep the shareholders of the bank.
Belatedly, we have a regulator and a Central Bank governor who are serious about making our banks live up to their obligations to operate within boundaries that make sense in business. This means that although AIB has no money and owes tens of billions, it must still match up to the standards of a solvent bank if it wants to stay in business. Up until the moment the minister intervened on Thursday, AIB had no hope on hitting that target.