THE US government last night rubbished a claim that one of its most senior officials "torpedoed" a plan to allow Ireland to write-off some of its bank debts.
The rejection came after UCD professor Morgan Kelly said US Treasury Secretary Timothy Geithner -- the equivalent of the Irish Finance Minister -- had played a key role in the negotiations on how to deal with Ireland's massive bank debts.
Mr Kelly said that during last year's bailout negotiations, the IMF had presented a plan to impose a 'haircut' on €30bn of unguaranteed bank bonds.
These were bonds not covered by the state banking guarantee and the 'haircut' would have reduced the State's liability by two-thirds -- or €20bn.
Mr Kelly said the deal was "torpedoed" unexpectedly by an intervention by Mr Geithner, and maintained the US treasury secretary believes bankers take priority over taxpayers.
Last night, a senior US official said this report was "inaccurate".
The official pointed out the ECB and the European Commission (EC) did not want to impose haircuts on bondholders who loaned money to Irish banks.
"The ECB and EC were both dead opposed and they are decisive. The US is not a decision maker on European issues," the official said.