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Andrew Lynch: When this Government dies, its tombstone will carry the name Anglo

WE all knew that Anglo Irish was a disaster zone, but even so jaws must have dropped all around the Department of Finance when it emerged that the bank had lost a record-breaking €8.2bn in just six months.

The question of how to get this monkey off our backs topped the agenda at today's first post-summer cabinet meeting -- and with clear signs of an emerging split between the two government parties, the opposition are already scenting blood in the water.

Up until now, Brian Lenihan has taken a hardline position.

While the Finance Minister concedes that propping up Anglo will cost the taxpayer a fortune, he has also warned that shutting it down could end up being even more expensive.



Resist

Unfortunately, the absence of precise figures for the 'pull the plug' option has made this a hard political sell -- and with the bail-out bill rising all the time, the public demand for clarity may soon become impossible to resist.

The political temperature has been significantly raised by the Green Party's announcement that it now favours an orderly wind-down of the toxic bank over the next five years or so.

Not only is this a U-turn from their previous position, it's also a direct snub to their coalition partners.

Even more worryingly for Brian Cowen, the call has been echoed by several Fianna Fail backbenchers -- who clearly want to cover their own backs in the event of an early general election.

When Anglo first ran into trouble two years, the rescue package was estimated at €4.4bn.

Today, the international credit agency Standard and Poor's suggests that it could be closer to €35bn.

The Government insists that this is just scaremongering and that the real figure is likely to be €25bn -- but since their forecasting record is so dismal, who knows what to believe any more?

It's certainly hard to have any faith in Alan Dukes, the new Anglo chairman who was installed by the Government as a consumer champion but instead has adopted the attitude that little people shouldn't even try to question his decisions.

While the former FG leader continues to peddle the "good bank/bad bank" proposal, his patronising media interviews have had the opposite effect to the one he intended.



Uncertainty

Of course, Dukes bears no responsibility for the terrible mess that Anglo created -- but it should also be obvious by now that he is not the right man to clear it up.

The one thing everybody can agree is that all this uncertainty is doing Ireland huge damage on the international markets.

That's why the Government urgently needs to make a clear decision before the European Commission makes it for us.

Since neither Cowen nor Lenihan has been able to explain why Anglo is of systemic importance to the economy, the case for getting rid of it looks overwhelming -- and as a symbol of everything that's gone wrong over the last couple of years, there would at least be a psychological satisfaction in closing it down and moving on as quickly as possible.

The Anglo debate is coming to a head just as the Government begins preparing in earnest for December's Budget, which is certain to be even more gruesome than last year's Nightmare on Merrion St.

The Government has already signalled that it needs to reduce the current deficit by €3bn -- and thanks to the Croke Park deal, the relatively soft option of cutting public sector pay is no longer on the table.

That means social welfare payments, health and education will all be in the firing line, highlighting once again the terrible human cost of this recession and the banking scandals that brought it about.

When this Government finally falls, the words 'Anglo Irish Bank' should be inscribed on its tombstone. That day may be arriving sooner than they think.


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