Dáil debates

Thursday, 1 December 2011

Credit Institutions (Eligible Liabilities Guarantee) (Amendment) Scheme 2011: Motion

 

12:00 pm

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)

The fact that the Government is seeking to extend the disastrous decision to guarantee the banks in this country is proof positive that there is not a scintilla of difference between it and the last one. It demonstrates most graphically that Fianna Fáil and Fine Gael, notwithstanding the Punch and Judy show that sometimes goes on in here, are exactly the same when it comes to the core issues. It is a case of Tweedledum and Tweedledumber.

The bank guarantee was a disastrous decision. This country led the way and was the poster boy for the deranged neoliberal economic dogma that has plunged the entire European and global economies into an unprecedented crisis. It was also the people who led the way in the disastrous response to that by being the first to initiate a blanket guarantee of private profit crazed institutions whose reckless behaviour plunged this economy towards an abyss. Now the rest of Europe seems to be copying us in moving down the same road.

The policy is to protect the banks at all costs, regardless of the consequences for society or the possibility of economic recovery. The guarantee forced us into the clasp of the EU and IMF and the need to borrow money to pay off and recapitalise banks because of their reckless lending. It allowed them to put us in a vice grip where they can ram brutal austerity down the throats of our citizens, crucifying them and ransoming our entire future against the interests of the bankers and bondholders. This was not necessary and was done solely to protect the bondholders and corporate depositors.

We had a guarantee for ordinary deposit holders. What have we got for this? For all the money we have put into the banks and back stop that our citizens have provided for them, we have received nothing. They will not do anything for distressed mortgage holders and will not lend money into the economy. No matter how much we bow down in front of the bondholders, they will still not lend us money at reasonable rates.

The important point for people to grasp is at the beginning of 2009 the ECB demanded, in the guidelines it issued, that we had to rescue the banks but not divert them from their central goal of profit maximisation. The ECB was explicit in its instructions that the funding should not be diverted towards social or other macro-economic goals and that the overriding priority must be profit maximisation. That is the problem. Balance sheets and bondholders come first for the banks and they will not lend money into the economy or invest in it.

We should repudiate this guarantee, tell the bondholders to take a hike and guarantee the moneys of ordinary deposit holders. We must then set up a State bank which would not have all these liabilities to bondholders and others and which the State would instruct to give relief to ordinary mortgage holders and to invest in our economy so that we can put our people back to work. If the Government is worried about money flowing out of the country, we should do as the Icelandic people did and impose capital controls to prevent that.

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