04 October 2008

The Cat is out of the Bag

Sean FitzPatrick, chairman of the Anglo Irish Bank and for more than 20 years its chief executive, has openly admitted that his bank - like many other financial institutions in Ireland, Britain, the USA and other parts of the western world - "made serious mistakes". However, he rejected the accusation - made by politicians and media alike - that they had been "reckless".

Speaking with Marian Finucane on RTÉ Radio 1 this morning, FitzPatrick also stated that he is "grateful for the € 400 billion guarantee scheme introduced by the government".
He added that banks would pay the full cost of the guarantee, and the taxpayer would only be called upon "if all the banks fail".

I would not have thought that I ever hear a senior banker make such a statement, and make it in public. It appears that the global financial crisis, which in Ireland's case is first and foremost a massive under-capitalisation of the banks, is more serious than even pessimists expected.

When the chairman of one of the country's major banks mentions the possibility of a failure of all banks on national radio, we all should sit up and listen very carefully.

Until very recently such a sentence would have been seen as economic blasphemy and no-one would have spoken these words, not even behind closed doors, in the cosy clubs and circles where money people meet and socialise.

Now the cat is out of the bag, as we sailors would say, and for everyone to see and hear. Let's hope that there are some sensible people left in government and international finance. Otherwise we might all get a free ride this winter - down to hell in a handcart.

The Emerald Islander

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