Cutting toxic link between banks and State must be permanent
Ending the notorious blanket bank guarantee is the clearest sign yet that the battered financial system is returning to some semblance of normalcy. Temporary measures to protect the banks have been in place since September 2008, and were starting to look semi-permanent, so ending them for once and for all must be a welcome development.
That is particularly true as this latest move comes hot on the heels of this month's sale of Irish Life out of state hands and the belated closure of the former Anglo Irish Bank, as part of the new deal on the so-called Promissory Notes.
Taken altogether, and against a background of banks that are starting to borrow on the markets, it shows a determination on the part of the current Government to undo the legacy of the banking crisis, and with real speed.
The true test of banking success will be the flow of credit into homes and businesses, and meaningful action on tackling the legacy of – in some cases unpayable debts built up during the boom. The big winners in the short term are the banks themselves which will no longer have their coffers drained by paying €1.1bn a year to the State in protection money. That will raise hackles in some quarters and as a State, we could do with the money.
The loss is well worth bearing however, because it helps cut the disastrous ties between banks and the State. It is why we must be clear with all sides that the guarantee is indeed being scrapped.
The Government, banks and those who lend to them must be clear that the toxic links between State and banks are being sundered, forever.