Today’s newspapers contain stories that the government are denying any U-turn in relation to previous commitments on bondholders.
“We have not broken our word,” Mr Noonan said, arguing that all election promises were predicated on agreement being reached at European level.
He said that since the banking crises had emerged Fine Gael had been in favour of burden-sharing and said that it has already happened with subordinated debt.
“We want burden-sharing but we would not do it unilaterally. We would only do it with the agreement of Frankfurt and we did not get it,” he told RTÉ.
“The ECB in Frankfurt has held out solidly that senior bondholders will not be touched. It’s a majority view in Frankfurt. There are governors in Frankfurt who do not hold that view.”
He said the ECB had been “very good to Ireland”, providing almost €200 billion in liquidity. He also added that the Government was reserving its position in relation to Anglo Irish Bank.
He said if Anglo told the Government there was a need for more capital the Government would enter discussions with the ECB on burden-sharing in respect to senior bonds in that institution. But he agreed the Government would not be pushing for renegotiation on senior debt in either AIB or Bank of Ireland.
“The debate is over. Frankfurt would not agree,” he said.
Well let’s take a look at Fine Gael’s banking policy document “Credit Where Credit’s Due”. Pages 5 and 6 list a set of options that Fine Gael wished to pursue for “a more credible, fairer package that is better for Ireland and Europe.”
These options included extending the EFSF “to take equity and long-term debt investments in systemically important European banks, such as AIB and Bank of Ireland”, EU-funded insurance schemes, procedures for restructuring debts of troubled banks, and “a more sustainable funding solution for the Irish banks.”
Page 6 then tells us that
Should some credible, combination of these options prove not be available from Europe, the next Irish Government would – in order to restore its own credit worthiness – be left with little choice but to unilaterally restructure of the private debts of those Irish banks in greatest need of recapitalisation.
Well, none of these options have been made available. And yet rather than unilateral restructuring, we’re told “The debate is over. Frankfurt would not agree.”
Looks like a U-turn to me.