Tuesday 21 January 2020

ECB 'strong-armed' us into taking bailout deal, claims Rabbitte

Fiach Kelly Political Correspondent

IRELAND was "strong-armed" into the bailout by the European Central Bank (ECB) because it feared the crisis could spread across the EU, according to a cabinet minister.

Communications Minister Pat Rabbitte says "ECB insistence" led to private banking debt being burdened on the taxpayer.

"Because we were in first, because the crash was deepest and first in Ireland, we have found ourselves burdened with private debt that the citizens didn't incur as a result of ECB insistence at the time," Mr Rabbitte said.

"I have no doubt but that we were strong-armed at the time or the then Government was strong-armed into the appalling decisions that were made."

Mr Rabbitte's comments come amid ongoing efforts to strike a deal on Irish bank debt and on the Anglo Irish Bank promissory notes with another €3bn due to be paid in March.

A deal on the promissory notes will be dealt with by the ECB, while a deal on a possible retrospective refund to the taxpayer for recapitalising Irish banks is being dealt with by eurozone finance ministers.

Mr Rabbitte's comments also came a day after Taoiseach Enda Kenny's meeting with German Chancellor Angela Merkel in Berlin, where there was no major progress on a deal for Ireland's banking debt.

Suffering

However, both Mr Kenny and Ms Merkel insisted the precise details of any deal were to be worked out by eurozone finance ministers.

Mr Kenny yesterday criticised the decisions made by Irish banks during the boom.

"The consequences of the environment and the atmosphere and the decision-making process that passed for banking in this country over a long period of years has led to millions of people, every family, suffering the consequences of that kind of environment," Mr Kenny said.

He also said "every citizen" should help out with a banking inquiry when it is established, although the Government has yet to decide how to set up the inquiry.

Meanwhile, Mr Rabbitte also blamed the previous government for not preparing adequately for a banking collapse, especially since the run on the UK's Northern Rock in 2007.

"We didn't seem to do any preparation for what befell us," Mr Rabbitte said. He called the Fianna Fail-led government "dysfunctional" and added: "The ECB didn't believe Irish politicians then, and didn't believe the bankers then."

It is now known that former ECB president Jean-Claude Trichet wrote to then finance minister Brian Lenihan a number of letters in the run-up to the bailout, urging Mr Lenihan to apply for the Troika package.

Irish Independent

Editor's Choice

Also in Irish News