Fianna Fáil Finance spokesperson on Finance Michael McGrath has welcomed indications that the ECB is about to release a letter issued to Brian Lenihan in November 2010 on the eve of Ireland signing up to a Programme of Assistance with the troika.
Deputy McGrath has said that details also need to be released of pressure exerted by the ECB in the period 2010 to 2012 on successive governments not to impose losses on senior bondholders.
He stated, “It is essential that all of the circumstances surrounding Ireland’s entry into a formal Programme of Assistance in late 2010 are put into the public domain. The ECB is well aware that this correspondence is likely to be requested by the Banking Inquiry and I am glad that it is now moving towards publishing the letter. The view among the European authorities in late 2010 was that the euro crisis could be contained if Ireland entered into a formal programme. This of course proved to be not the case as more fundamental problems in the euro zone were exposed.
“However, the ECB’s role in Ireland’s banking crisis is not limited to a single letter. In late 2010, billions of euros of senior bank bonds came out of guarantee. Finance Minister, Brian Lenihan raised with the troika the issue of imposing losses on these bondholders but the suggestion was flatly rejected by the ECB. This policy, imposed on Ireland by the ECB, resulted in a higher bank bailout bill than was necessary.
“Similarly, when the new government was elected in 2011, Finance Minister Michael Noonan was minded to impose losses on senior bondholders but was again rebuffed by the ECB President Jean Claude Trichet. In January 2012, Leo Varadkar said the government was warned that a financial ‘bomb would go off in Dublin’ if senior Anglo bondholders did not get all their money back. Therefore, letters and details of meetings and phone calls with the ECB on these critical issues need to be brought into the public domain.
“Nothing less than full transparency on any pressure brought to bear by the ECB on Ireland’s application for a Programme of Assistance and its efforts to impose losses on senior bondholders is acceptable.”