In an odd sort of way, the Taoiseach was making a very reasonable point yesterday, when he stood up and told the country, in the Dáil, that the banks were not bailed out when his party last lead a Government. But rarely in Irish history can a reasonable point have been made in a more disastrous fashion. Take a look:
The statement that the Taoiseach makes – “the banks were not bailed out” is accurate in so far as he is talking about shareholders. If you were an ordinary person with your pension, or your savings, invested in bank shares at the time of the bailout, then you lost almost everything. Bank shareholders, decidedly, were not bailed out. They took huge losses.
But Mr. Martin is being very disingenuous. In challenging him about the bank bailout, Deputy Boyd Barrett was not calling for a bailout for shareholders. He was asking for a similar deal as the one the banks received, which saved the jobs of bank employees. And the banks, as institutions, absolutely were bailed out.
When the state bailed out the banks, it injected equity (which is a fancy way of saying that it bought shares) in the banks, taking over control of them in return for injecting taxpayer cash. In the process, the value of the existing shares was wiped out. But this was done so that the banks could pay their bills – the money they owed to lenders who had lent them money. These lenders, you might recall, were called “bondholders”.
“Burning the bondholders” – something people who opposed the bailouts asked the Government to do, meant defaulting on loans that were made to the banks. Whether this was a good idea, or a bad idea, is something we can still debate, but what happened was that taxpayer funds were used to pay bills that the banks themselves had run up, and could not pay. In anybody’s language, that’s a bailout.
What Boyd Barrett is asking for in the clip above is for the Government to provide an identical bailout to Debenhams Irish Operations. In other words, to take over the stores, and invest the money needed to pay wages that are still owed, and suppliers who are still owed, and all the rest of it.
But that is probably a bad idea, notwithstanding the genuine outrage that’s been inflicted on Debenhams employees. Whether you agree or disagree with the bank bailout, the collapse of the Irish banks at the time would have had genuinely awful consequences for society at large – because the state had guaranteed deposits in those banks. Had they collapsed, the Government would have been faced with the choice between breaking its word, and watching the savings of millions of people be wiped out, or honouring its word, and being on the hook for an untold number of billions – possibly in excess of what was ultimately spent on the bailout. The issue of the banks was a genuine matter of national interest. Debenhams doesn’t fall into that category, and if the state were to set a precedent here, then it could be on the hook for every cent in wages that future employers, for whatever reason, are unable to pay.
The Taoiseach, of course, is an eloquent man, and he could have explained all this yesterday afternoon. But, as we know, he didn’t. Instead he said “the banks were not bailed out”.
This is not just untrue – politicians say untrue things all the time. It’s much worse than that, because it makes him look, and sound, delusional and arrogant.
He is, after all, the first member of his party to hold political office since voters shredded it, in 2011, over the bank bailouts and the economic collapse. He’s spent a decade in the political wilderness, trying to rebuild his party’s reputation for competence, and insisting that it acknowledges and regrets the mistakes that were made when it was last in power.
The average voter is not going to read pieces like this one explaining what he meant, or why he may have had a point, but expressed it badly. To speak plainly, they’ll hear him saying there was no bank bailout and decide that he’s lost his marbles, if he ever had them to begin with.
Fianna Fáil, remember, is not in a position of strength anyway. It will be almost impossible for it to recover any strength when the opposition – if they have any gumption – will throw this soundbite back in his face at every available opportunity.
Mr. Martin’s whole leadership has been predicated on the notion that he is not Bertie Ahern, and not Brian Cowen.
It’s astonishing, then, that he decided, yesterday, to do his very best impersonation of them both, in a way that will lodge in the public mind.