November 15, 2011
There have been a number of recent comments about the Bank Guarantee. I would like to take the opportunity to get something straight about the Bank Guarantee, not in my words but in the words of Brian Lenihan.
It is true that when he called out to my house – at his instigation not mine – I told him that in my opinion (opinion, not advice — advice is given by paid advisors, civil servants, paid consultants, paid central bankers etc) he should copy the Swedish banking policy of 1992. This would stop the bank run that was happening in Ireland at the time.
That was it. I assumed that they would do their homework — that is after all what these guys are paid to do. Remember the politicians had teams of civil servants, central bankers and personal economic advisors.
In contrast, I have never been inside the Department of Finance in my life to advise on anything. I was never asked to clarify the parametres of anything — re timing, scope etc.
Very soon it became shockingly apparent to me that the Swedish approach was not being followed. In fact, the opposite was occuring with devastating consequences. By early 2009, I thought it best — even at that stage — to rescind the guarantee and call the creditors into a room and tell them the game was up. I wrote articles to this effect.
In response to this stance, Brian Lenihan in April 2009, personally wrote a op-ed page for the Irish Independent. I am sure this is one of the first times such a thing has happened where a Minsiter of Finance writes a personal attack on an individual commentator.
I would like you to read it as it clarifies what my position was by early 2009 and the fact that the Guarantee as implemented since Oct 2008 was nothing like what I had suggested. Within three months, I had realised it was a diasater because it had been hijacked by the very bankers who had brought the country to ruin in the first place.
It might also reveal the level of establishment smearing and undermining that goes on in this country when the entire appartus of the State is used to blacken someone’s reputation.