FG and Lab with the Banks - a warning

simonj

The lack of alternatives in the forthcoming general election is disheartning to say the least. Let us not forget that the Past is Prologue

Fianna Fail and their Green lackeys are the current bad boys.
I have often said that FF and FG are two cheeks of the one arse, happy with the perpetuation of a two party system.

The lack of banking regulation and oversight should have been repaired by successive Governments involving all three major parties who have all had ample opportunity to do this since 1985.

FG and Labour went into coalition in 1982.
In 1985 AIB purchased ICI - the insurance company of Ireland - who gave out policies on things like bloodstock, satelites and buildings in earthquake prone zones, very high risk sectors.

ICI, however, did not cover its reserves (sound familiar?)

ICI then had liabilities that the AIB group could not cover, and AIB in a most astute manner went to the government - holding an economic gun to their head with threats of systemic failure through the entire banking system.

We are still paying for this bail out, as some policies will not expire until 2050.
It was only when Des O Malley threatened not to issue an insurance licence that AIB paid back some of the bail out money.

From this, the banks learnt that the threat of being too big to fail would panic Governments into writing open and unending cheques - just like the bank garuantee.

In more recent times the FF/Green government received shares of €3.5bn in AIB in 2009 to recapitalise the bank.

The Irish State had been due to receive dividends on those shares, but in typical FF/Green incompetence they overlooked the fact that EU regulations state that banks that get State aid cannot make cash payments.
This forced AIB to give the government shares instead.

It is due to this, in making the situation worse, that any bank failure will present major costs to the Irish taxpayer.

What we need is a sea change, to elect people with policies that will evolve and enforce proper banking controls, to curtail reckless speculation and corruption.

deanh

Typical FF spin in an election dragging up obscure pieces of information to smear the opposition. You could also mention Ernest Blyth cutting a schilling of the old-age pension in the 1920s. It does not detract from the truth that FF screwed up badly and are going down in the new year.