The background to what has been described as the biggest blank cheque in the history of the Irish state appears to have been the fear that one of Ireland’s biggest banks would declare itself bankrupt at the opening of business on Tuesday morning.Well, clearly that's a problem if true. I'm a little skeptical because I half suspect that this rumor serves the Irish government's purposes better than that they feared that one of the banks was going to be taken over.
Very senior Irish business figures said that the bank’s insolvency, in the face of a €1.5 billion (£1.2 billion) debt to a German bank that it was unable to pay, would pull down several large companies and possibly a second bank. It was this and the fear that a domino effect would begin – fuelled by the fact that a number of banks are owed billions of euros by property developers – that forced the Government to take action.
Regardless, it's amazing how opaque the financial standing of our financial institutions really is (this seems to be a global phenomenon, not just Ireland or America). We don't know what state the banks are in.
I'm assuming that the Irish government now has all the figures - actually I don't assume that, but I really want to believe it - and that they will publish full and truthful (I'm chuckling as I type this) numbers on the well-being of any institution asking to get under the state's big umbrella. Each and everyone of us is backing the banks now so we should all get to see the truth with regards to their commitments and capital.
Why not?
Make it the law that no bank can operate here without complete transparency. I'm sure there's a downside to such a law that I haven't considered yet, but I'm a conservative person and if I'm going to be underwriting the banks I want to know that the banks are being run prudently.
