The million dollar question on the lips of the tax-payer is, ‘is the proposed €400 billion pay-out to banks going to hurt anyone other than the tax-payer at the end of the day, when the economy recovers’.
Who is going to foot the bill?
This lifeline is not a handout, we must remember - it is a temporary measure to rescue banks whose fall could bring the entire Irish economy to its knees if left to its own devices.
We have seen a similar rescue effort in the US with the Fanny Mai and Freddy Mac scenario and one has to put two and two together and gather that the Irish government is taking its lead from here.
However, is this financial package of which there are few details, just another cost to the tax-payer in the future. It is not a free loan - there is no such thing as a free loan - so the banks will be asked to repay the kind gesture when times improve, and if the banks are paying back big bucks, we can only assume the customer will certainly have to foot some of that bill.
We also have to ask, who is really benefiting from this gamble? Of course the banks will stay buoyant as the larger investors will not withdraw their deposits if there are government guarantees. However, the only other people to benefit are the fat cats of our society! The people with the big bucks - because the rest of us don't need these kinds of guarantees, because we simply don't have that kind of money!
The only people that need these guarantees are developers and other very successful business people. We then have to look at the reasons behind the Government's decision to throw them a lifeline and guarantee their savings.... We have seen much controversy in the past over relationships between Government Oireachtas members and developers. Is there more of this going on right under our noses?
The opposition leaders have been slow to lend their support to the new finance bill and Eamonn Gilmore told the Dáil yesterday that he wanted more details of the bill before a blank cheque was offered to banks. Surely he is correct in his request?
How can the Government rush something as expensive as this through the Dáil, without giving it the attention the issue merits. TDs allegedly got 15 minutes to read the emergency bill - this is not good enough.
In the past, we have seen some extremely shoddy legislation passed in the Dáil under very speedy circumstances while not so important legislation is given months of debate. This indiscrepancy needs to be addressed. Bills of this importance, that affect a nation, should be debated and discussed and amended over and over until members are sure that they are going to achieve what members expect.
There was also a call for a cap to be put on bank executive’s pay which would prevent banks from paying any of their officials more than the minister for finance. Who would have thought that a bank official could be paid more than the finance minister!
The bottom line is the need for financial stability, and it certainly looks like something needs to be done to secure this, however are we giving the banks a very easy way out? They hold no prisoners when the heat is on them and we all see our mortgage rates climb accordingly. We need to know that we as good paying customers will not be left carrying the can. And there don’t seem to be any guarantees in this area unfortunately.
The ordinary Joe Soap will find this debate complicated because we all know that something needs to be done, but we also need to ensure that we do not end up paying for a mistake that we had nothing to do with.
Meanwhile, the Irish stock market has reacted positively to the decision by the Government to guarantee all deposits and borrowings for the next two years which has got to be good news for the economy.
