Noonan accuses Donnelly of populism over AIB debts

MINISTER FOR Finance Michael Noonan accused Independent TD Stephen Donnelly of being populist during sharp exchanges on Ireland’s debt to bondholders.

Mr Donnelly said that on bondholder repayment, “the logic the Minister has just given is Fianna Fáil economics, which is that we need to borrow and, therefore, we will pay off all of these debts because if we do not people will not lend to us”.

He said the opposite was true.

“By paying off everybody’s debts, which the new AIB does not owe because it was taken over by somebody else when it was bankrupt, one removes the ability of AIB to borrow further,” he added.

“That is exactly the incorrect logic that ended us up in a troika programme.”

Mr Noonan asked if Mr Donnelly was seriously suggesting that AIB, which was in recovery and one of the pillar banks financing the economy, should have defaulted on money raised, called its creditors together and gone bust.

Mr Noonan said Mr Donnelly was engaging in “a populist publicity stunt on the pretence he is knowledgeable on these matters”.

He told Mr Donnelly that “while recent media reports may suggest the identity of particular bondholders, the bank or Government has no substantive means of establishing the underlying ownership of these securities, which are freely tradeable once issued”.

Replying to Fianna Fáil finance spokesman Michael McGrath, the Minister said the Government had been working extremely hard to secure a deal on the Irish bank debt.

Detailed work would continue to ensure the positive moves in Europe were harnessed to maximise the benefit to the Irish taxpayer.

Mr McGrath said that when one read the June summit statement, it seemed that the possible investment by the ESM in the pillar banks was some distance away.

“Not only does the supervisory system need to be up and running, its effectiveness needs to have been tested,” he added.

“That is reaffirmed in the statement by the finance ministers. I am not sure how much progress the Minister will make on that issue in the short term.”