Michael Noonan called to quit over ECB threat remarks

Finance Minister Michael Noonan was called on yesterday to resign after he was accused of misleading the Dáil about threats made to him by the former head of the European Central Bank (ECB).
Michael Noonan called to quit over ECB threat remarks

Social Democrats TD Stephen Donnelly made the call of Mr Noonan after a clear contradiction emerged between comments the minister made to the Dáil in 2011 and testimony he gave to the Oireachtas Banking Inquiry.

In November 2011, during Dáil exchanges with Mr Donnelly, Mr Noonan repeatedly and categorically denied he and Ireland had been threatened by Jean Claude Trichet, the then ECB president over the finance minister’s plans to burn senior bondholders.

As shown by the record of the Dáil, Mr Donnelly explicitly asked the finance minister in the chamber if he had come under any pressure over Ireland’s position regarding burning senior bondholders.

In response, Mr Noonan said clearly: “With regard to threats, the ECB does not operate that way. Jean-Claude Trichet is a perfect gentleman.”

He had been pressed by Mr Donnelly as to whether there was even an implicit threat.

Mr Noonan further stated that with regard to “the threat of increased interest rates or a turning off of the tap of liquidity to the banking system... neither of these threats was ever made”.

However, last year in evidence to the Oireachtas Banking Inquiry, Mr Noonan gave a very different version of what happened when he tried to burn bondholders.

Under oath Mr Noonan told the inquiry: “He [Mr Trichet] said if you do that, a bomb will go off, and it won’t be here, it will be in Dublin”.

“I can assure this committee that he said it. He did not use the word economic,” he said. “He said a bomb will go off, a bomb will go off,” he said.

Ultimately, the banking inquiry in its final report has concluded that the ECB had explicitly threatened Ireland at least two separate occasions — in November 2010 and March 2011.

Speaking yesterday, Mr Donnelly said: “These two statements are not consistent. In any other jurisdiction he would have resigned.”

He added: “We now know that they threatened that if senior bondholders had losses imposed, the ECB would withdraw emergency liquidity assistance to Irish banks. This could have had a very negative effect on, and possibly collapsed, the Irish banking system”.

The Social Democrats have called on Finance Minister Michael Noonan to correct the Dáil Record.

Fianna Fáil finance spokesman Michael McGrath also said he felt Mr Noonan was guilty of “misleading the Dáil”.

Fine Gael TD Eoghan Murphy, said that while the Banking Inquiry concluded Mr Noonan was threatened, the finance minister himself may not feel that way and therefore may not feel the need to correct the record of the Dáil.

The Department of Finance, in response, said Mr Noonan is satisfied he did not mislead anyone.

“He has given the position to the Banking Inquiry under oath. That states the position and he is confident he didn’t mislead anyone,” a spokesman said.

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