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Strategy needed to wind up institutions, says McCreevy

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Commissioner Charlie
McCreevy taking
questions with Tom
Fitzpatrick, president
ICAI, at the Institute of
Chartered Accountants
Financial Services
Seminar yesterday on the
future of financial
regulationin the National
Concert Hall, Dublin.

Commissioner Charlie McCreevy taking questions with Tom Fitzpatrick, president ICAI, at the Institute of Chartered Accountants Financial Services Seminar yesterday on the future of financial regulationin the National Concert Hall, Dublin.

Commissioner Charlie McCreevy taking questions with Tom Fitzpatrick, president ICAI, at the Institute of Chartered Accountants Financial Services Seminar yesterday on the future of financial regulationin the National Concert Hall, Dublin.

IRELAND's EU Commissioner, Charlie McCreevy, said a process for winding up financial institutions will have to be put in place to deal with the fallout from the banking crisis.

The former Minister for Finance said "it was not easy to wind up a financial institution" adding that the "process would now have to be addressed and dealt with".

"We do not have a satisfactory way of dealing with how institutions should be wound up. These issues have never been thought of and they have to be addressed now," he said.

His comments come following calls to wind up Anglo Irish Bank as the State prepares to pump €4bn into the embattled institution after it reported a record €4.1bn half-year loss last month. However, government sources stressed that any wind-down would have a devastating impact on the €64bn held in the bank's deposits.

Speaking to the Institute of Chartered Accountants in Dublin yesterday, Mr McCreevy said financial regulators had encouraged the accumulation of unsustainable debt by households, individuals and companies.

He said the concept of banks being "too big to fail" would also have to be looked at.

"We can't have a situation where the players can bet away knowing they can never loose," he said.

Lisbon Treaty

However, the EU Commissioner said he was confident the Irish economy would rebound from the current crisis.

"There have been fundamental failures in the assessment of risk, both by financial firms as well as supervisors. But we will emerge from this crisis with a stronger, more reliable financial and economic system," he said.

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Mr McCreevy has been blamed for the crisis by some commentators due to his implementation of light-touch regulation in the financial sector.

Commenting on the soon-to-be established National Asset Management Agency (NAMA), he advised the government not to take a too rigid approach to its operation and said "flexibility was key to NAMA working".

"There is no single magic bullet solution but they mustn't get caught in ideological and rigid decisions," he said.

The EU Commissioner also said that when the Irish people rejected the Lisbon Treaty last year, a lot of people in Europe reacted with shock and horror.

"But all of the politicians and heads of state in the European Union would have known that if a similar referendum had been put in their countries, the answer in 95pc of those is that it would have been defeated as well," he added.

He said many EU leaders were glad they had no legal obligation to hold referenda on the treaty.

"Most would agree that membership of the eurozone has been of great benefit to us in this economic crisis," Mr McCreevy pointed out.

But he added that Irish people should not be ashamed about how they voted.

"We learn a little bit extra incrementally all the time. I've never been ashamed to stand up for the way we do our business here. We do it by referendum. That's democracy."


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