FG accuses Government of making up banking strategy 'on the hoof'

FINE GAEL has accused the Government of making up banking strategy “on the hoof” and has expressed concern that Fianna Fáil could use the nationalisation of Anglo Irish Bank to advance the interests of property developers closely linked to politicians.

Finance spokesman Richard Bruton hit out at Government ineptitude, bank leaders’ recklessness and auditors who “were not watching”.

During the Dáil debate on the Bill to nationalise Anglo Irish Bank, Mr Bruton said it had to be made crystal clear that they were not bailing out “bankers and developers who behaved wrongly”.

There “can be no hiding behind the cloud of confidence, as we have seen before, when the Government stated it could not possibly reveal what was going on because there was too much at stake”.

Minister for Finance Brian Lenihan had not displayed a “grand strategy”, that he had a sense of how he could achieve nationalising Anglo Irish Bank and “managing it in a way that protects the taxpayer” or successfully recapitalising AIB and Bank of Ireland to keep them in private ownership.

Mr Bruton added that the Minister “may say it is frivolous and wrong-headed but there is a concern that Fianna Fáil politicians could use the nationalisation of the bank to advance the interests of debtors to the bank – big property developers with close relationships to politicians.

“It must be absolutely copper-fastened that that cannot happen.”

There can be “no unwarranted interference; that the bank will be managed entirely without fear or favouritism”. The taxpayer had to be protected “so our money will not be abused. I do not see that sort of protection in the Bill.”

The Fine Gael deputy leader criticised the Minister for not articulating his strategy on Anglo Irish Bank. “He has kicked it off into the middle distance so that someone will come back and tell him what the strategy will be.”

Mr Bruton said there was outrage at the behaviour of senior bank executives.

“There is a sense that there are many at the top of the banking system who have behaved in a wholly reckless way, who have betrayed their shareholders, the employees who work in the banks and, worse still, who have done great damage to our credibility as a country in which to manage financial institutions.”

There was also outrage at incompetent oversight. The role of auditors and regulators is in sharp focus “despite the honeyed assurances” of Government and the regulator.

Fine Gael spokeswoman on the arts Olivia Mitchell said “the markets do not believe what the Minister for Finance is telling them”. “He says the banks are sound, but the markets do not believe him no matter how many times he says it.”

She also warned that “the elephant in the corner, which no one wants to discuss, is Ireland’s ability to stay within the euro”.

Fine Gael deputy finance spokesman Kieran O’Donnell said a completely new board of directors should be appointed to the bank and the current auditors should be removed. “It is absolutely critical that the existing auditors be replaced to restore trust.”