THE LABOUR Party has claimed that the Government has changed the terms of the bank guarantee scheme from what was agreed in the Dáil and Seanad, in order to facilitate the banks.
Labour leader Eamon Gilmore said: “The Government is telling the public that the banks will be liable if a bank goes under and telling the banks that the public is liable.” He claimed a “sweetheart deal” had been done with the financial institutions.
However Minister for Finance Brian Lenihan insisted that the deal was “no free lunch” for the banks and “in accordance with the principles of the legislation, the scheme is designed to safeguard the interest of taxpayers”.
Mr Gilmore said the Taoiseach had told everyone that “if a bank goes to the wall, the other banks will club together and pay for it”. He added that “the ink was hardly dry on that scheme, however, when the Government did a sweetheart deal with the same banks”.
Mr Gilmore raised the issue twice yesterday, on the Order of Business and later during the debate on the education cuts. The issue was raised again on the adjournment by Labour finance spokeswoman Joan Burton.
Mr Gilmore said during the education debate that the arrangement originally meant that “if a bank gets into trouble, the other banks will be required to pay, but what the Department of Finance has advertised to the banking market is that this does not apply and any bank covered by the scheme will not have to pay”.
“While this Government is bringing in one of the most savage budgets in the history of the State, it is giving the nod and wink to the banks that it has asked the Irish taxpayer to bail out. It is a nod and wink for the banks, but the lámh láidir for the poor school pupils.”
Mr Gilmore asked: “Who is trying to change measures which were approved by this House?”
Later, Ms Burton claimed that the terms of the scheme had changed from what was agreed in the Dáil.
Mr Lenihan told her: “The scheme agreed by the Oireachtas has not been changed. The market notice published by my department stated that no legal guarantee was required under the scheme from one recovered institution in respect of any other outside its group.”
“That’s not what the Minister said,” Ms Burton insisted.
However, the Minister said he and the Taoiseach had made it clear that “if it was a case that a call was made under the guarantee for an institution and not recouped from that institution, the Government would ensure that any loss experienced by the taxpayer was recouped in a manner consistent with the covered institutions’ long-term viability and sustainability. That general principle is reflected in the scheme.”
“It’s a big change,” Ms Burton said.
“No,” Mr Lenihan retorted, “that general principle is reflected in the scheme.”
It stated that “in regard to the specific indemnification it is restricted to the particular institution. That is the provision of the scheme. That was always the provision of the scheme and the market notice does not change that in any way.”
