Is Anglo ‘systemic’ to the Irish economy?
There is no doubt that Anglo Irish Bank has poisoned the well of this country’s banking sector and also its economy. What happened at that bank led to the making of the decisions that were announced yesterday in the Dáil. I do not accept, however, that this issue can be reduced to alleging wrongdoing on the part of certain named individuals. I agree with people who state that in so far as wrongdoing is found to have occurred, those involved should be brought to book. I would be as strong as anyone in advocating that this should happen.
It is part of an emerging narrative, particularly on the part of the Government, to seek to reduce this problem to the proverbial small number of bad apples. I do not accept that when considering what occurred in the past ten to 12 years, it is possible to reduce the wrong that has been done to the people as something which resulted from the actions of three, four or even half a dozen wealthy, or formerly wealthy, individuals. We would be doing a real disservice to the people and this country’s history if we insisted, even for one minute, that this was the case.
There is a great word which continues to be bandied about in respect of the banks, particularly Anglo Irish Bank, namely “systemic”. I am extremely interested in the use and abuse of this word. Like everyone else, I have a reasonable understanding of what it means in the English language. However, it has been employed by the Government, particularly in the context of Anglo Irish Bank, in the same way that Americans use the phrase “Too important to fail”. As I understand it, if a bank is of systemic importance this means its tentacles and those of its business reach so far into the heart of the economy that if it got into difficulty it would, by necessity, have to be saved.
I am intrigued by the statements made in the past 24 hours to the effect that the contents of the balance sheet of Anglo Irish Bank constitute half of the value of the Irish economy. I had not previously come across such statements. In fairness to the Government, if what is being stated is true then this would point to the importance of Anglo Irish Bank being somewhat systemic in character. Is it truly the case that the contents of one relatively young bank could constitute half the value of the country’s economy? If the answer is yes, how was this allowed to occur? In a country where people were previously informed that competition and the plurality of banking services were extremely important, how was such a position allowed to develop? There is a need for someone to clarify the position, particularly in the context of the absence of regulation for such a long period. How did the contents of Anglo Irish Bank’s balance sheet come to constitute such an enormous part of the economy?
I stated earlier that Anglo Irish Bank poisoned the well. I simply do not accept that said poison could not be detected until the entire well had been contaminated. Senators Dan Boyle and Fiona O’Malley stated the right thing had been done yesterday. I want more evidence and detail, particularly on the Anglo Irish Bank question. Perhaps colleagues on the government side are prepared, for whatever reason, to accept what they are told to be the case on the basis of a mere assertion and being told something is true. However, I will not accept it, unless it is demonstrated to me to be true. Perhaps it will be demonstrated to me to be true that it is necessary to save Anglo Irish Bank, a bank which looks to me to have very little life in it. When I discuss it in private with colleagues opposite, they agree with me, roll their eyes and state it does look like it is a dead duck but that it is what we have to do. This morning I heard Mr. Dukes, chairman designate of Anglo Irish Bank, state he would be prepared to produce the relevant figures in order that Members of the Houses and others could assess the statement that it was necessary to save it. Where are these figures and why can we not have them in this debate? Why is it merely an assertion and a claim all the time?
Senator Boyle made the extraordinary statement that what had occurred vindicated the position of the Government on the guarantee. How is it conceivable that attracting to the people a bill of multiple billions vindicate the position of the Government? Even the honest Members opposite – most of them are honest – accept this is extraordinarily painful to have to do but how does it constitute vindication? Statements such as this are made all the time that are not borne out by the evidence or the facts.
It is all very well for Senator O’Malley and others to criticise the Opposition for making outlandish statements in circumstances where she states, again without a scintilla of evidence or support for her statement, that she genuinely believes that if the bank guarantee had not been given on 29 September, it would have led to the collapse of the economy. That is purported to be a statement of fact but what backs it up? Where is the evidence for it? The Labour Party does not engage in self-congratulation on not supporting the bank guarantee. We stated it was excessive and guaranteed things that did not need to be guaranteed. Certainly, there was an argument for guaranteeing deposits but a considerable amount of the debt guaranteed should not have been guaranteed and drew us into the vortex in which we find ourselves and from which it will be so difficult for generations of Irish people to get out. It will be many years and budgets before there is light at the end of the tunnel. How can Senator O’Malley state that if the guarantee had not been given, it would have led to the collapse of the economy? What a statement to make. I am drawing attention to it because it is one of many statements that are made opposite in support of what the Government is doing. I do not think colleagues opposite have more information than we do.
I suggest – I am open to being corrected if I am wrong – that the only difference between them and us is that they have a responsibility, as they would see it, to back up what the Government is doing because they make speeches and contributions but they do not have evidence to back up what they state. They state it is cheaper to keep Anglo Irish Bank and have this bailout. There is no question that it is a bailout; if it is not, what is? They state it is cheaper than the cost of letting the bank go to the wall. Perhaps I could be persuaded that is the case but yesterday I heard someone state the cost of retaining it and the cost of letting it go were starting to converge. It might arise that it might be cheaper in the long run to let it go. Can we not have the facts, information and the evidence rather than a mere assertion along the way?
Others have called for this debate to be continued. I heard Senator MacSharry make such a call. When we do so, will we have information and evidence circulated in advance in order that Members of the Houses and the public will be able to see the basis upon which their money is being committed?