Thursday 23 November 2017

Bankers alone can't be trusted to resolve crisis

The Government can't pass the buck on debt as the public has no faith in our financial institutions, writes Brendan O'Connor

By now you are confused. The Government either is or isn't in favour of some kind of "debt forgiveness". It categorically won't be blanket, even though nobody actually suggested it should be blanket. Fine Gael is either totally against it (Brian Hayes and Michael Noonan) or slightly for it (Michael Noonan) or against it again (Michael Noonan). Labour is against it (Eamon Gilmore -- anyone remember him?) or kind of for it, in a pragmatic way (Joan Burton).

In fact, you'd almost wonder if the confusion was deliberate, except the Government is not really organised enough to create deliberate confusion. Basically, what appears to have happened is that the resurrection of the debt forgiveness thing caught the Government by surprise, and apart from the odd person like Joan Burton, it has been consistently behind the curve on it.

So while Brian Hayes was trotted out like a good little German to tell us initially that the banks couldn't afford debt forgiveness and that it could create moral hazard, his boss Noonan then had to frantically back-pedal on that last week, saying that of course the banks have money put aside to absorb mortgage write-downs. This was of course ages after everyone else had pointed out that we have actually given the banks billions in capital, some of which was precisely to offset planned and anticipated bad mortgage debts.

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