The Seanad sat late last night to pass the legislation to nationalise Anglo Irish Bank. Due to the speed with which it was brought through the Oireachtas I did not get an opportunity to speak. I agree with the principle of the legislation. The choice was simple. Either re-capitalise or nationalise. Nationalisation was the least worst option.
My main concern is however around where the Government will get the money to deal with any bad debt liabilities. Estimates are that the Anglo Irish loan book is worth c€75 billion. If only 5%of this debt is ‘bad’ the potential cost to the tax payer is nearly €4 billion.
The government recently published their plan to restore order to the national finances. This states that they aim to find nearly €20 billon of savings in either reduced spending or higher taxation. This is, in my
estimate, a low estimate of the savings that are neccessary to avoid continuous breaching of the Maastricht criteria.
Where will the Government find the additional for any further banking capitilsation or bad debts? Will they have to tell the country that higher taxes are needed to pay for banking cronyism?
The Government need to honestly answer these hard questions. I will be putting these points to them when the Seanad resumes next week.