Friday, February 18, 2011

Does Minister Ó Cuív understand the bank guarantee?

Éamon Ó Cuív has a really interesting letter to the editor of the Galway Advertiser. Ó Cuív's letter is in response to one published two weeks ago in which the letter writer describes Ó Cuív as "a high ranking member of the FF/Green government which has made the ordinary taxpayer suffer as a result of a banking crisis caused by individuals with greedy gambling habits."

Ó Cuív 's response to that was to defend the bank guarantee.
I would agree with Mr. Walsh's characterisation of some bankers. However, I cannot agree with his idea that we should have allowed, depositors (including depositors in Credit Unions, etc.), people with pension contributions and insurance policies of all types lose their money. To allow this to happen would have caused untold hardship to people over and above the present difficulties.
Or is Ó Cuív just spoofing or does just he have no idea what he's talking about? Bank deposits (including credit union deposits, I believe) were already guaranteed to €100,000 before the bank guarantee. If that was too low, why didn't the government just up the level to €500K or even €1m?

Ó Cuív's reference to pensions and insurance is even more baffling. Did we need to guarantee all those bank liabilities because some of the pension and insurance funds were invested in bank bonds? Surely pension funds and insurance companies are just as likely to be invested in Ryanair or CRH. Or even Diageo. Are we now going to guarantee every possible investment opportunity?

This is a cabinet minister. This is why we're in such trouble now and why Fianna Fáil needs to spend a long time in opposition weeding out all this dead weight.