Calls for protests as bondholders avoid taking a hit

THE Government’s radical overhaul of the banks was criticised for failing to include any plans for strengthened European Central Bank support and burden sharing among senior bondholders.

The plan prompted calls for protestors to take to the streets over the extra €24 billion needed for bank losses as well as concern over job losses in banks.

Former Finance Minister Brian Lenihan said the Government’s “stuffing” of banks with more funds was to give international markets more confidence in Ireland.

But the stress test demand for billions of euro more in capital injection would not help attract investment from overseas, warned the Fianna Fáil deputy leader.

Mr Lenihan also queried why a recently leaked scheme involving €60bn in funds from the ECB for Irish banks was nowhere to be found in the plans.

“Despite the clear flagging of this… it has not happened,” he told the Dáil.

The further losses were a sign of changing pattern in the debt in Ireland, he said.

“What we’re looking at here is a crystallisation of losses not in the land and development category but in the home ownership category and in the category of business lending.”

Party colleague Michael McGrath raised concerns that the bank restructuring plan had made no mention of making bondholders share the burden of the projected losses. That pre-election commitment by Fine Gael seemed to have “evaporated”, the TD said.

With talk of a smaller banking system and the merger of institutions, there was also concern over job losses in the sector, he said.

“It can only mean less branches in Irish towns and cities across the country and less jobs in the banking system.”

Sinn Féin finance spokesman Pearse Doherty queried why the Government’s promised strategic investment bank was also not in the plan. This was the fifth attempt in recent years at bailing out the banks over their losses, he told Finance Minister Michael Noonan, and still senior bondholders were escaping the pain.

“The gift that you announced today is that senior bondholders will be paid, that the gamblers in our banks who gambled recklessly in our banks will be paid by our government.”

Mr Noonan said last night that the ECB had been against the idea of “burning the bondholders” and that such a move could scare off future investors in the two remaining large banks, Bank of Ireland and AIB.

Independent TD Richard Boyd Barrett called on people to take to the streets.

“We should do what the people of Iceland did when their Government refused to listen to them and attempted to implement the measures the minister has just announced. We need to take to the streets to stop the madness of this bank bailout.”

Fellow Independent TD Joe Higgins also claimed more payments for bank losses would continue to damage Ireland’s economy.

“In fact, it will be unsustainable and by savaging the living standards of working people with draconian cuts, it will ensure an economy bouncing along the bottom, thus, making the debt unsustainable but the Government has capitulated utterly to the financial markets.”

Mr Higgins queried why Government coalition partner Labour had not objected to the further commitment to cover bank losses.

“It is only six weeks ago that it [Labour] was firing salvo after salvo in the direction of Frankfurt and the European Central Bank.”