Burton continues to peddle myths re the bank guarantee - Fahey

Frank Fahey TD for Galway West has said that the Labour Party’s Joan Burton continues to peddle the same myths about the banking guarantee introduced in September 2008 despite evidence to the contrary.

The truth is the guarantee provides people in this country with a sense of security knowing that their savings and the capital they need to run their businesses is secure on deposit.

Deputy Fahey, “The Labour Party continue to castigate the Government for introducing the Bank Guarantee despite the Governor of the Central Bank’s findings that without the guarantee the banks would have run out of money and our economy would have collapsed within days. Professor Honohan report on the banking crisis stated that “Closure of all, or a large part, of the banking system would have entailed a catastrophic immediate and sustained economy-wide disruption involving very significant, albeit extremely difficult to quantify, social costs, reflecting in particular the fundamental function of the payments system in a modern economy. These costs would have been broad-based in terms of income, employment and destruction of the value of economic assets and would have been on top of the recessionary downturn which has actually occurred”. The reality is that banking guarantees have been extended in several European Member states including Germany, Spain, Denmark, Austria and Hungary.”

“Furthermore, Deputy Burton claims that Irish Government bond spreads increased following the introduction of the guarantee. The truth is that bond spreads increased after the nationalisation of Anglo Irish Bank. If Deputy Burton had her way we would have nationalised the entire banking system. Given all the evidence one wonders Is Deputy Burton persisting with this line of argument merely to save face?”, concluded Deputy Fahey. ENDS