Kenny criticises move to invest €7.5bn in Anglo

FINE GAEL leader Enda Kenny has said the Government’s commitment to invest up to €7.5 billion in Anglo Irish Bank was a move to protect a “golden circle” at the expense of hundreds of thousands of taxpayers.

Mr Kenny yesterday reiterated his party’s policy that it would wind down Anglo Irish Bank “in orderly fashion” if it did not have its affairs in order by September 2010, the end of the period for the Government’s guarantee scheme for deposits held in Irish banks.

He said that all the main Irish banks were effectively “zombie banks” because of their incapacity to restore the flow of credit to small and medium business.

On RTÉ radio’s This Week programme, Mr Kenny criticised the Government for its handling of the Anglo Irish Bank crisis and its establishment of the National Asset Management Agency.

“It [the Government] is taking millions off the masses to protect a few [developers]. We don’t know who the golden circle is. We don’t know who the people in the black hole of Anglo Irish are. It’s Robin Hood in reverse,” he said.

On Nama, Mr Kenny said the Government should take up Fine Gael’s proposal to establish a wholesale national recovery bank funded by the European Central Bank, which could allow a credit flow to be restored to small business. He said that the evidence from other EU countries was that such banks worked.

He said that international bond holders, not taxpayers, should take the hit on bad loans. On the Government investment in Anglo Irish Bank, he said: “The taxpayer will not be made to bail out bondholders and others who got involved in risky investments.”

On Saturday, Taoiseach Brian Cowen defended the Government’s latest decision on Anglo Irish Bank saying that it was essential to maintain the stability of the Irish financial system and protect jobs.

“This economy could not withstand the failure of a bank of that magnitude and the consequent impact it would have on other banks and other parts of the financial system,” he said.

The Taoiseach’s defence received strong support from its coalition partner, the Green Party, yesterday.

Party leader John Gormley said that the decision was a difficult one but the correct one. “If you let a bank fail similar to Lehman Brothers in the US, then the consequences for the country could be quite catastrophic.”

His party colleague criticised Labour’s calls for the nationalisation of all banks.

“We have seen with Anglo Irish Bank that it does not necessarily get you out of difficult calls.

“We have made sure that it’s the taxpayer that comes first. If there is a loss in Anglo, it’s the bond-holder who will take the hit first.”