Affair has damaged whole system, admits Dempsey
The Anglo Irish Bank debacle has damaged the entire reputation of the country's banking and regulation system, the Government admitted yesterday.
Transport Minister Noel Dempsey said what happened at Anglo Irish, with undisclosed loans to executives and the former chairman Sean Fitzpatrick, raises questions in people's minds about the banking system of the entire country.
His view was supported by NUI Galway lecturer in economics Dr Alan Ahearne, who said the activities at Anglo Irish weakened the reputation of the banking system and of other banks, such as Allied Irish Bank and Bank of Ireland. While UCD Professor of Management Niamh Brennan believes interest rates for the Government could now get higher.
Mr Dempsey staunchly defended the Government's decision.
"We decided nationalising Anglo-Irish Bank was the best thing to do and to do it immediately," he said.
He said the recapitalisation of Bank of Ireland and Allied Irish Bank will continue.
"The September decision was the right decision at the right time," he said. "But the circumstances changed, necessitating the nationalisation of Anglo Irish," he added.
Green Party leader John Gormley said it was "too early" to determine the cost to the taxpayers of the nationalisation."
"If we had not acted, the costs to the economy would be incalculable and that is why we had to act," he said.
Mr Gormley also said everybody needed to see the bigger picture and he wanted to see the opposition backing for the Government's moves.
"We need to sit down and work in the best interests of the country. Let's put the national interest first. And let's stop the point scoring," he said.
Mr Dempsey also appealed to opposition parties to be supportive. He said financial markets do respond to rumours and people need to be aware of that.
"There is a national interest here as well as party political interests," he said.
Mr Gormley also defended each of the Government's actions on the banking system, including the original State banks guarantee.