The Minister for Finance has stated that the €5.5 billion package for the banks is a good deal for the taxpayer. In reality, the return to the Exchequer is derisory given the risks involved, the cost of borrowing the funds for the package, and the fact that the proposed preference shares are neither convertible nor cumulative and have no priority over ordinary shares in the event of a liquidation.
In addition, the government has agreed to act as funder of last resort for the two main banks if their private fund-raising is unsuccessful and, most extraordinarily, it has offered Anglo Irish a blank cheque by agreeing "to make further capital available if required so that it remains a sound and viable institution". If this bank is sound and viable why does it need €1.5 billion of State funding and why is its share price sinking like a stone and valuing the entire bank at a mere fraction of this support?
All this largess comes on top of several hundred billion of guarantees which have increased interest costs for the state's own funding needs.
Surely, it is completely unacceptable for the very same people - ministers and bankers - who created the crisis to also negotiate the solution using "our" money. Where are the sanctions to ensure that their reckless behaviour is not repeated and why should the taxpayer shoulder all the risk and none of the rewards?
Letter published in the Irish Times on 29th December 2008.
