PUBLIC BANKING ALLIANCE – ELECTION 2016 PUBLIC STATEMENT 23/2/2016
It’s time for Banking in the Public Interest.
Michael Noonan TD, outgoing Minister for Finance, has ‘gotten off light’ in General Election 2016. Aside from a protracted debate about the actually miniscule ‘fiscal space’ left inside Ireland’s EU-imposed budget straitjacket and the odd spat with opposition spokespersons on taxation issues or budget arithmetic the critical issues of Ireland’s financial and banking policies have not yet been publicly debated.
The Public Banking Alliance argues that the only real recovery the Minister and his FG/Labour colleagues can legitimately claim credit for is the recovery of two reckless private banks to rude good health and profitability. Having buried the nation under a mountain of debt these too-big-to-fail dinosaur banks that failed have, thanks to Minister Noonan, retained their duopoly status dominating Ireland’s highly concentrated banking market.
If the Credit Unions, An Post Savings Bank or NTMA/Pension Reserve Fund had failed the commercial banks would have been quick to grab their market share, and would have the neo-liberal minister’s approval for it. But when the private banks fail comprehensively, the Government policy has been to save them at all costs! Just when Ireland needed public financial institutions most,
Minister Noonan has presided over a Department for Privatised Finance.
Ireland’s banking landscape remains severely blighted; a monoculture of two private profit-maximising banks dominate the smaller institutions. Ireland’s 350 credit unions remain restricted to the personal loan market where demand fell 50%, and has yet to recover, thanks largely to the recklessness of the duopoly. The credit unions did not contribute to causing the crisis. They weathered it without bail-outs or taxpayer supports. They pose no threat to financial stability and have proven the real backbone of the financial system.
Yet tragically Ireland will lose 100 viable independent local credit unions thanks to over-burdensome regulation and the impacts of a small group of well connected private bankers, developers and their cronies in politics.
Minister Noonan and his colleagues promised to burn the bondholders and to impose burden sharing but then they kowtowed to Jean Claude Trichet and imposed the gambling debts of private German and French banks on Irish taxpayers. As the IMF’s senior official stated ‘they blew the opportunity to get a debt write down from the troika when they took office.’ Last year Ireland’s national debt servicing cost was over €7 billion. That’s equates to €7 billion in over-taxation, or €7 bn. in under-spending on public services, infrastructure and social housing. That’s €7bn, each and every year!
Minister Noonan’s other debacles include the disorderly wind-up of IBRC, the Siteserv debacle, the privatisation of Ireland’s water infrastructure, the introduction of a regressive property tax, the NAMA carousel and the infamous ‘Project Eagle’ swindle.
Nor should we forget the sterling service Minister Noonan has provided to the mainly US vulture capitalists who have picked up the cream of Irish property assets for a song while Irish taxpayers bear the brunt of the huge losses on them, and receive nothing in return.
Under Minister Noonan, Ireland has introduced the Irish Collective Asset Management Vehicle Act enabling the speculators to operate with increased flexibility, less regulation and reduced tax liabilities. His reduction in capital gains taxes on property was yet another concession in favour of the real estate-banking nexus and the 1%.
Minister Noonan’s verbal abuse of Greece and the Greek Government reflected his own loyalty to Herr Schauble, to the ECB and the private banks that helped impoverish so many tens of millions of European citizens. Minister Noonan, it would seem, enjoys blaming the victim. And if further evidence of his neo-liberal leaning were needed we need only remember his firm opposition to the rent controls proposed by Alan Kelly to relieve the burden on low paid tenants as rents escalate. Every day entire families are made homeless by banks and landlords and our housing supply crisis worsens. Thank-you very, very much Mr Noonan!
Minister Noonan’s Legacy: Too-Big-To-Fail Banks and a Financial System Serving the 1%.
The principle legacy of Michael Noonan TD as Minister for Finance is the perpetuated burden of two private, profit-maximising banks that are now once again too big to let fail. As such, they require a permanent public backstop and subsidy. They may even be too big to prosecute because any prosecution of a bank with a 40% market share could unsettle the market with nasty knock-on effects on the economy. The private bank duopoly of AIB and Bank of Ireland will direct credit and capital to wherever it appears most profitable, not to where it is most needed. Capital will be directed towards financing asset transactions like real estate instead of to producers and SMEs.
Finance for social housing construction has been needed for several years and the credit unions sensibly offered to purchase housing for rental, and to help finance construction by Housing Associations to address the housing and homelessness crises in Dublin. Alas the Minister and the Central Bank seem determined to ensure credit unions keep their members savings surplus of around €8billion in ‘term deposits’ in their derelict private bank competitors and in bank bonds!
Public banking institutions, savings banks, community banks and credit union federated banks are the proven counterbalance to the boom and bust created by private banks and the speculators they finance. A less concentrated banking market with more banks, more diverse banks and more public/community type banks dedicated to their communities (like the credit unions) is the key to a more prudent, stable, resilient, competitive and socially inclusive banking sector.
Minister Noonan could have grasped the opportunity but failed.
The 400 German Sparkassen banks are exemplary banks, superbly efficient, robust and ethical. Thanks to Public Banking Forum of Ireland initiatives, the German Sparkassen Foundation submitted detailed proposals for Local Public Banks to the Department of Finance in early 2015. These local public banks would have a public/social mandate, ethical guiding principles and prudent lending policies like the credit unions. They would work with credit unions and the An Post countrywide network to finance local businesses, households and other necessary investment in their region.
For a very modest investment the Minister and the Department could have fostered the emergence of robust local banks dedicated not to profit or bonuses but to serving, and prudently funding, their communities and regions. Such a network would complement the credit unions and local post offices by providing services and products both for them, and their local customers.
Instead Minister for Finance Michael Noonan has squandered every available opportunity presented by the crisis. He has failed to innovate, think laterally or show any initiative or vision. He neglected the potential of the credit unions and An Post Savings Bank and local savings banks to play a far greater role, and a vital stabilising role in Ireland’s financial system.
Vote for Public Banks and Banking in the public interest
The Public Banking Forum of Ireland and the Public Banking Alliance call on all voters to vote for the 34 independent PBA candidates, Direct Democracy – A Citizens Movement and others who are committed to establishing a network of Public Banks in Ireland to serve the real economy.
Public Banks that will,
– Strengthen communities
– Provide safety for deposits
– And become the new spine of the SME sector.
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