Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

Yes, there was a feeling around among politicians in Europe and among people in banks and various treasuries that Ireland was hard done by. And you know, kind of ... it was never said openly but the, kind of, messaging I was getting that, "We couldn’t let you do what you wanted to do when you were restructuring the banks, but we’ll try and accommodate you somewhere else", you know. You see, there was a long history to this if you go back on it. You had the Deauville declaration where the two presidents, the president and the chancellor, indicated that there’d be a private sector involvement in future bailouts and then that put the shivers through the European system. Then there was the meeting in Seoul that, I understand, you talked about this morning, but, again, if you go back to Tim Geithner’s biography, he references a phone call he had with the participants in the G20 and he places it ... he says it was after Thanksgiving and about four days before the Irish programme was announced. And he says that there was political view in Europe that bondholders should be burned and that he advised very strongly against this because as far as he was concerned that ... the European banking system was being drained of liquidity and if your burned the very people that fund banks, the senior bondholders, that the liquidity crisis would have got worse and it would have brought down the European banking system. So, it isn’t the kind of conventional argument we hear here that we weren't allowed do it because there'd be a contagion effect. It was that there was a liquidity problem in Europe and that the liquidity problem, you know ... if you read Geithner's book, you'll see it. And, I mean, there was a lot of people making accusations about Geithner saying that he, you know, he was the key factor in pressuring the Germans, for example, where there was a political disposition to burn bondholders. And it's true, but he doesn't deny it, like. He writes it in his autobiography and he gives the detail of the phone call. And he said Mr. Trichet was, equally, I forget the word he uses but, equally strident about ... about burning bondholders in that phone call.

And it went on from there, then, and there was a pullback by France and Germany from the discounting of bondholders. And, you know, Germany wanted it and France didn’t seems to be the thing. And the kind of balancing arrangement was when the German proposals for fiscal union were accepted by France. Then it went on and you had banking union. And as part of banking union, bail-ins replaced bailouts. So now it's part of the European legal system to bail-in senior bondholders and all other assets right down along the line in a cascade, giving a priority order. So, like, that's the context from where I sit. But it wasn’t that, like, you had a whole group of people in Europe saying, “No bondholders”. There was differences of view. And the differences of view played out. And, you know, if we were in a programme three years later or if we were going into a programme now, we'd be burning bondholders because it's now part of the European law. But not at the time.

But there's no doubt that Mr. Geithner had a very strong view on it and it's worth reading what he says in the American context because, as Secretary of the Treasury, he had a big influence on Europe and on international opinion on how they'd deal with the crisis because he dealt very successfully with the crisis in the United States himself. As well as that, there’d be a view that, you know, while the IMF have made various statements about ... they were in favour of this and in favour of that, when it went to their executive boards, they weren’t. And I think that the Treasury in Washington has a pretty big influence over the IMF in Washington. So, that's just by a way of a bit of context Michael ... or Senator, sorry.