Fianna Fáil Finance Spokesperson Michael McGrath has welcomed the acknowledgement from Minister for Finance Michael Noonan of the existence of a letter from the European Central Bank (ECB) in November 2010 which effectively forced the then government to accept a bailout from the troika and has called on the Minister to immediately publish the letter.
Deputy McGrath stated, “Having admitted to the existence of this letter for the first time, Minister Noonan should now press ahead and publish it. I understand the letter was interpreted as a threat to the late Finance Minister Brian Lenihan that the emergency liquidity assistance being extended by the ECB to the Irish banks would be withdrawn if a bailout was not accepted. The terms of this bailout included an ECB insistence that senior bondholders would not lose one cent on the tens of billions of euro they were owed by bust Irish banks. Essentially, we had a situation where the Central Bank of the 17 member state eurozone was pointing a loaded gun at the Irish government in order to get its way.
“I and my party have welcomed the suggestion that a further bankin inquiry be undertaken to deal with any remaining unanswered questions concerning Ireland’s banking collapse. As part of this inquiry, the role of the ECB must be examined. In particular, the insistence of the ECB that senior bondholders bear no losses whatsoever was a critical policy intervention which cost this state dearly.
“There is no reason whatsoever why Irish people should have to wait decades to understand the full background to Ireland’s entry into a formal bailout programme with the EU, ECB and IMF in November 2010. I have always held the view that the ECB policy on bank rescues – basically forcing ordinary citizens to pay a limitless bill for the utter recklessness of banks – played a central role in the extraordinary cost of Ireland’s bank bailout.
“For the public record and to allow everyone gain a greater understanding of the circumstances surrounding Ireland’s entry into a bailout programme, Minister Noonan should immediately publish the ECB letter of 19 November 2010 and all other correspondence from the ECB from around that time. In addition, the role of the ECB should be an important part of any planned banking inquiry.”