FG: We were misled into backing bank guarantee

FINE Gael claimed it was “misled” by the Government when it supported the bank guarantee two years ago.

The main opposition party last night voted against an extension of the guarantee, despite accepting it was necessary for Bank of Ireland and AIB.

Finance Minister Brian Lenihan said it was a “source of bewilderment” that the guarantee which was supported by Fine Gael in the Dáil two years ago “is now being characterised the root of all our problems”.

But the main opposition finance spokesman, Michael Noonan, said Fine Gael had been “misled” on the guarantee back in September 2008 and it was “hard to believe” that the minister did not know at that time Anglo Irish Bank was insolvent.

Mr Noonan said an extension of the guarantee was “necessary” to ensure the refinancing of AIB and Bank of Ireland.

But he said his party could not support it unless Anglo immediately started negotiations with subordinated bond holders to “alleviate the cost of an orderly wind down”.

The guarantee will now be extended until December after the Government won last night’s vote to amend the Credit Institutions Scheme by 83 votes to 74.

During last night’s debate, Mr Lenihan said there would be no economy in this country if the Labour Party were in the driving seat on the night it was decided.

He hit out at Eamon Gilmore’s party saying it is trying to be “all things to all people” but would have left the country with even greater problems if it was in a position of power to prevent the guarantee going ahead.

Mr Lenihan said that, had the Government not decided to introduce the guarantee on the night of September 29, 2008: “We would not now have an economy, never mind a banking system.”

He said the Labour Party had “opposed it tooth and nail” and not just its extension to subordinate debt holders.

“As the Labour Party moves to the centre ground of Irish politics in its bid to be all things to all voters, it is as well for us to stop and think where this economy would be if the Labour Party were in the driving seat this time two years ago.”

He said: “We are in stormy waters. But we weathered the tsunami of international financial collapse two years ago and we will come through this storm too.”

Labour’s finance spokeswoman, Joan Burton, said the Government “allowed the banks to deceive them this day two years ago that they were merely enduring short term liquidity problems”.

She said there was a “true culture of denial” by the Government who “spent months pretending there was no solvency problem”.

Fianna Fáil TD, Ned O’Keeffe said the Government had been sold “a pig in a poke” with the NAMA legislation and it had been foolish to vote for it.

“It’s about time the Finance Minister put all this to bed,” he said.


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