Trichet warned me ‘a bomb’ would go off, says Noonan
Finance Minister Michael Noonan told the Banking Inquiry he had been put under pressure by ECB president Jean Claude Trichet not to burn the bondholders.
In a phone call from Mr Trichet, which he said had “rattled” him, Mr Trichet told him if bondholders were burned “a bomb would go off”.
Mr Noonan was about to announce the burning of the bondholders in a Dáil speech – but changed his mind after the phone calls, which he described as last-minute.
He said that with all the figures available to him “it is now apparent that the ultimate direct cost of the bank recapitalisation will be the funds invested by the previous government into Anglo Irish Bank”.
The final cost of the financial crash to the taxpayer will be between €30bn and €35bn, Mr Noonan estimated – instead of the original figure of €64bn.
Over time, he added, “we will, at a minimum, fully recover the funds” that his own Government had invested in the banks.
Looking to the future, he would expect changes in the law and institutions in financial regulation, and adequate communication and assessment in relation to liquidity and solvency issues.
He said he wanted to see “robust, honest and informed debate and scrutiny of the budgetary choices facing Ireland.”