Dáil debates
Tuesday, 22 June 2010
Leaders' Questions.
3:00 am
Enda Kenny (Mayo, Fine Gael)
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I was not the only person absolutely appalled by the revelation at the Oireachtas committee last week by Mr. Aynsley, the chief executive of Anglo Irish Bank, to the effect that the €22 billion put into that bank by the taxpayer will never be seen again and will end up in a black hole. Given that the Taoiseach gave a personal promise to the House on 1 October 2008 that the Irish taxpayer would not be held liable in any way for banking policies being pursued by the Government, does he accept that the majority of this €22 billion will, in the words of Mr. Aynsley, never be seen again?
Brian Cowen (Laois-Offaly, Fianna Fail)
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The chief executive of Anglo Irish Bank has indicated to the Oireachtas committee what the situation is, namely, that were one to go for immediate liquidation of the bank, it would involve a cost to the taxpayer of over €42 billion, which has been the policy put forward by Fine Gael on a number of occasions. This would be in addition to an immediate funding requirement of up to €70 billion. Clearly that is not viable. What we seek to achieve is to obtain for the taxpayer the best possible outcome of what has been an appalling situation. The reduction in the value of the loans provided for by NAMA, and the losses on the non-NAMA loan book and, to a limited extent, restructuring of the balance sheet of the bank in the context of a proposed bank split, has meant that additional capital has been required. The issue, ultimately, for Government has always been to discover in what way it can reduce the exposure of the taxpayer over whatever period required for this part of the Anglo Irish Bank operations to be dealt with.
There is a funding requirement, as things stand, of €22 billion. The options that were available for an immediate liquidation were far in excess of that. In the longer term, in the aftermath of this recapitalisation, we will have to consider the question of obtaining some bank levy support for return of moneys to the taxpayer and the Exchequer.
Enda Kenny (Mayo, Fine Gael)
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That is not the question I asked. I asked whether the Taoiseach accepts that the majority of the €22 billion to be put into Anglo Irish Bank will, in the words of Mr. Aynsley, never be seen again. The Taoiseach said that Mr. Aynsley told us what the situation is and went on to say that in the event of an immediate liquidation, this would cost €142 billion. Nobody is talking about an immediate liquidation of Anglo Irish Bank. Neither the Financial Times on 10 March, Mr. Johnson, former chief executive of the IMF nor the Fine Gael Party has ever put forward that proposition. What we did put forward was that there should be a fair sharing of the loss by professional investors in and lenders to Anglo Irish Bank.
This is now a question of policy and of what one is borrowing for. In the case of the Government, it is borrowing to pay off investors in and lenders to Anglo Irish Bank. The alternative is to borrow for infrastructure requirements as part of the capital programme. If one looks at the capital programme, the reduction this year, next year and the year after amounts to approximately €11 billion. That is a reduction of 40%, the equivalent of approximately 40,000 jobs. The Government's case is that it borrowed this money to put into Anglo Irish Bank, which effectively is dead, which will not make a contribution to the economy-----
Séamus Kirk (Louth, Ceann Comhairle)
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Can the Deputy get to a question please?
Enda Kenny (Mayo, Fine Gael)
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----- and which Mr. Aynsley, the chief executive states "will never be seen again". The alternative is for the Government to change its policy by making some of those lenders and investors share the pain equally. It then would be able to hold onto some of the aforementioned 40,000 jobs that could be created. In addition, it could bring about a situation in which income could be generated to pay back those debts. It makes absolutely no sense for the Government to continue with the policy of borrowing money to put into a black hole in the fear that its investors and lenders will not do so again.
I again ask whether the Taoiseach accepts that Mr. Aynsley's assertion at the Oireachtas committee that the vast majority of this money "will never be seen again" is the reality? Moreover, does he accept that no one is talking about an immediate liquidation of Anglo Irish Bank and that he should now change policy? He should forget about the shorter picture and should consider the longer picture of retaining 40,000 jobs. As Mr. David Begg stated yesterday, "The only sustainable route out of this crisis is through job protection and the creation of new work opportunities". I suggest to the Taoiseach, and will support him in this regard, that new work and job creation opportunities exist and they will be realised through more infrastructural investment.
Séamus Kirk (Louth, Ceann Comhairle)
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Does the Deputy have a question?
Enda Kenny (Mayo, Fine Gael)
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Moreover, the reduction proposed by the Government of €11 billion over the next three years will cost 40,000 jobs.
I again ask the Taoiseach whether he accepts the Aynsley assertion that this is dead money in a dead bank in a black hole? Consequently, is he prepared to change tack and change policy and make those lenders and investors share some of the pain in respect of Anglo Irish Bank?
Brian Cowen (Laois-Offaly, Fianna Fail)
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In respect of subordinated debt, there have been buy-back arrangements that have seen losses for those who held dated subordinated debt in this bank and in other banks. The Deputy appears to be suggesting that senior bondholders, that is, pension funds, credit unions and people like that, also should take some part of the hit. The Deputy's policy at present is to default on senior bondholders and then go off and get money from-----
Enda Kenny (Mayo, Fine Gael)
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No, the Taoiseach stated that our policy was to liquidate Anglo Irish Bank immediately. That is not true.
Séamus Kirk (Louth, Ceann Comhairle)
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Allow the Taoiseach to reply without interruption.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I have been trying to decipher the Deputy's policy for the last five minutes while listening to him and it appears to be as follows-----
Enda Kenny (Mayo, Fine Gael)
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The Taoiseach stated that our policy-----
Brian Cowen (Laois-Offaly, Fianna Fail)
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Sorry, but the Deputy has had four chances to talk about this. His policy appears to be that rather than the scenario in which the Government must provide this funding to Anglo Irish Bank - I note an immediate liquidation would cost twice the amount and would entail funding requirements of a further €70 billion - the Deputy suggests that more of that money should be put into infrastructural investment. The way he claims he could do this is that he would not be obliged to give €22 billion but would insist on some default to the senior bondholders, because the dated subordinated debt bondholders have taken a loss and will continue to so do.
Brian Cowen (Laois-Offaly, Fianna Fail)
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As for that matter, Deputy Kenny then intends to go elsewhere in the international markets and claims he will be able to raise this money from the same people he does not intend to pay.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy must figure this out for himself. If one does not get paid for the first debt, one will not sell the second one. This is the facility of the Deputy's policy.
Enda Kenny (Mayo, Fine Gael)
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The Taoiseach should answer the question. The money will never be seen again.
Brian Cowen (Laois-Offaly, Fianna Fail)
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As recently as last week, in a stout defence of Deputy Kenny, the man now sitting beside him suggested that Anglo Irish Bank needed to be wound down immediately.
James Reilly (Dublin North, Fine Gael)
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I suggested it be wound down in an orderly fashion.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I can supply Deputy Kenny with the quotation from RTE news. The policy last week was to wind it down while the policy this week, according to Deputy Kenny, is not to pay the credit unions and the pension funds-----
James Reilly (Dublin North, Fine Gael)
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There is no business out there-----
Séamus Kirk (Louth, Ceann Comhairle)
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Deputy Reilly, the Taoiseach is in possession.
Brian Cowen (Laois-Offaly, Fianna Fail)
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----- in order to get money from the pension funds and the credit unions to perform the proposed infrastructural work.
James Reilly (Dublin North, Fine Gael)
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The Taoiseach is not convincing anyone.
Brian Cowen (Laois-Offaly, Fianna Fail)
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At present, that is where the Deputy is at. The sooner he selects a finance spokesperson, the better it will be for his own outfit.
Dinny McGinley (Donegal South West, Fine Gael)
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It will be €40 billion next year.
Brian Cowen (Laois-Offaly, Fianna Fail)
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As for the situation here, the Government is committed to an infrastructural investment programme.
James Reilly (Dublin North, Fine Gael)
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The Taoiseach did a great job in Finance, did he not?
Seán Barrett (Dún Laoghaire, Fine Gael)
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The Taoiseach should look behind him.
Brian Cowen (Laois-Offaly, Fianna Fail)
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It has set it out and has stated that €40 billion over the next six years should be provided for infrastructure.
Enda Kenny (Mayo, Fine Gael)
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The Taoiseach should check his own outfit. If he wants any advice, he should give me a shout.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Indeed, much the infrastructural investment that has been seen in recent years continues to be of benefit to the economy, despite the serious downturn in the public finances as well.
Enda Kenny (Mayo, Fine Gael)
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It is dead money that never will be seen again.
James Reilly (Dublin North, Fine Gael)
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It is dead money put in a dead hole by a dead Government.
Pádraic McCormack (Galway West, Fine Gael)
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It is a case of Fianna Fáil looking after the bankers again.
Séamus Kirk (Louth, Ceann Comhairle)
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I call Deputy Gilmore, please.
Eamon Gilmore (Dún Laoghaire, Labour)
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I was interested in the proposals that were put forward jointly by IBEC and the ICTU and the Construction Industry Council yesterday , which are aimed at getting back to work the 140,000 building workers who have lost their jobs over the past two years. The package of proposals that was put forward jointly by the bodies yesterday amounts to €5.5 billion per annum in infrastructure works. The sum of €22 billion would keep that package going, with all of the jobs that would be provided, for four years . The sum of €22 billion would build the metro, the 400 schools on the list of the Department of Education and Skills and the hospitals. Moreover, there would be money left over to do a lot more than that. The sum of €22 billion is the amount of taxpayers' money the Government has put in to Anglo Irish Bank. As Deputy Kenny has pointed out to the Taoiseach, the chief executive of the bank stated last week that the lion's share of the €22 billion will never be seen again. Members could go on all evening arguing about whose banking strategy and policy on banks is right and whose is wrong but they should stick with this single fact. Is the chief executive of Anglo Irish Bank right or wrong? Is it the case that the lion's share of the money will, as he put it, "never be seen again"? Is the money gone?
Brian Cowen (Laois-Offaly, Fianna Fail)
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I will mention two facts. In response to the Deputy's question, the first relates to the fact that of course recapitalisation of banks, including the provision of moneys to that bank, has arisen because there were inadequate shareholders' funds to take the losses in those banks. Second, the banking inquiry review confirms that the aforementioned bank unfortunately was of systemic importance and that were we not to have supported it, as Deputy Gilmore suggested at the time, it would have seen the banking system run out of money within days. These are the two facts.
James Reilly (Dublin North, Fine Gael)
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Will the Taoiseach answer the question? Is it "Yes" or "No"?
Séamus Kirk (Louth, Ceann Comhairle)
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A final supplementary from Deputy Gilmore.
Eamon Gilmore (Dún Laoghaire, Labour)
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That is the Taoiseach's third go at talking his way around what is a very simple question.
Dinny McGinley (Donegal South West, Fine Gael)
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Give him one more chance.
Eamon Gilmore (Dún Laoghaire, Labour)
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The Taoiseach should leave aside for today the question of who is right and wrong. There will be bank inquiries and so on and there probably will be debates about banks in this House for a long time to come. The chief executive of Anglo Irish Bank came before an Oireachtas committee last week and stated in very simple and stark terms that the lion's share of the €22,000 million of taxpayers' money that has gone into Anglo Irish bank will, as he put it, never be seen again. Deputy Cowen is the Taoiseach and in common with people throughout the country, I want to know whether that man is right. Is our money gone? Is the €22,000 million that has gone into Anglo Irish Bank lost and gone forever? The Taoiseach should not give me arguments or points on which he was right and where I was wrong or where Deputy Kenny was wrong and where everyone else, apart from himself, was wrong. He should simply answer the question, is the money gone?
Brian Cowen (Laois-Offaly, Fianna Fail)
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I have given the Deputy the answer to the question.
Eamon Gilmore (Dún Laoghaire, Labour)
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No, the Taoiseach did not.
Brian Cowen (Laois-Offaly, Fianna Fail)
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If I may be allowed, it is clear that when shareholders' funds are not sufficient to meet the losses of a bank and when taxpayers are obliged to intervene to fill those losses, that loss is being taken on by the taxpayer.
Brian Cowen (Laois-Offaly, Fianna Fail)
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It is clear, in respect of that bank, that this is the situation. It also is clear that the choice was not €22 billion or zero, as the Deputy would have people believe. It was a choice between €22 billion or €42 million or €70 billion.
Eamon Gilmore (Dún Laoghaire, Labour)
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Does the Taoiseach suggest that he got a bargain?
Brian Cowen (Laois-Offaly, Fianna Fail)
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No, Deputy. It is not being as smart-alecky as that, because this is too serious an issue.
Séamus Kirk (Louth, Ceann Comhairle)
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Can we have the Taoiseach on this issue, without interruption. Deputy Gilmore, please.
Brian Cowen (Laois-Offaly, Fianna Fail)
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What it is about is making sure that one reduces the exposure of the taxpayer to the greatest extent possible. I also make the point that in respect of the investments we have made in Bank of Ireland and Anglo Irish Bank, the Government expects to make money from those investments. Money will be made from those investments.
Joan Burton (Dublin West, Labour)
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From Anglo Irish Bank? It will not.
Brendan Howlin (Wexford, Labour)
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The Taoiseach is changing the subject.
Brian Cowen (Laois-Offaly, Fianna Fail)
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In respect of the 1.8 million preference shares-----
Joan Burton (Dublin West, Labour)
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The Government is going to make money from Anglo Irish Bank?
Joan Burton (Dublin West, Labour)
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The Taoiseach stated the Government would make money from Anglo Irish Bank.
Brian Cowen (Laois-Offaly, Fianna Fail)
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In relation to those banks, those investments will have a return. Clearly, Anglo Irish Bank is in a completely different category and that money will not be returned because clearly, the shareholders' funds have been inadequate to meet the losses. If one had even a peremptory understanding of the banking situation, one would understand that.