The Excesses In Banking Need To Be Tackled Now

Very shortly we will be asked to vote ‘yes’ in a referendum on the European Stability Treaty. It is a big ask: as a result of the banking collapse, Irish citizens have been eating shit for a long time now and they are getting utterly sick of it. A lot of people feel that the treaty will prolong the agony. They might just have a point. One thing is for sure. It certainly isn’t going to make things any easier.

We all know the script by now: rather than those who lent money to Irish-based banks taking the hit when these hallowed institutions failed, vast mountains of debt have been loaded onto the Irish people, with the connivance of the Fianna Fáil-led government which was in power when the banking crisis hit. There is a monumental injustice in this. More or less everyone knows that. But, at the insistence of the European Commission and the European Central Bank, we are being asked to shut the fuck up about it, take our austerity medicine, and do s little bit of grovelling while we’re at it.
Under the terms of so-called Promissory Notes, a payment of €3.1 billion is due in less than two weeks time, on March 31, to meet obligations entered into by the then-Government to pay off debts to bondholders incurred by Anglo Irish Bank.
€3.1 billion. It is a lot of money, almost 10% of the tax collected in the Republic in 2011. At a time of enormous, and frequently crippling, cutbacks in expenditure on State services, there is something thoroughly obscene, not to mention plain wrong, about being told that this money simply has to be paid, in effect to re-fatten the coffers of a variety of financial institutions and investors – mainly, as it happens, European banks. What’s worse is that this is just the first of many payments which will have to be made, unless an alternative agreement can be reached. A total of €30.6 billion in debt was outstanding as a result of the Anglo-Irish crash, and unless a new deal is struck, this has to be repaid over the next 20 years. Some estimates suggest that the cumulative repayments, including interest, will amount to a gruesome €85 billion.
There is a very broad consensus that this level of debt – in addition to debts incurred as a result of the gap that has emerged in the post-crisis environment between State expenditure and tax revenues – is completely unsustainable and will ravage the Irish economy for decades. Representatives of the International Monetary Fund (IMF), one third of the ‘troika’ that has usurped Irish economic sovereignty, have indicated that they are sympathetic to this point of view. However, last week, the European Economics Commissioner Olli Rehn dismissed the notion that anything could be done to lessen these repayments or to ameliorate their impact – for example by lengthening the period of repayment, decreasing the rate of interest or allowing for a discount of some substantial kind.
On one level, you might say that Rehn is on solid ground. “The principle in the European Union,” Rehn said, “and in the long European legal and historical tradition is, in Latin, pacta sunta servanta. Respect your commitments and obligations.”
The important word here, surely, is ‘your’. The difficulty is that, in general, Irish people do not recognise these debts as theirs. And rightly so.
Which brings us back to the European Stability Treaty and the problems the Government is likely to face in trying to convince people to vote yes.
Where is the €3.1 billion being stumped up by Irish taxpayers destined to go if it is paid? To banks and other money lenders and speculators. And what is the perception of banks right now? Far from being seen as essential to the smooth running of any society, which they may or may not be, banks are seen as leeches, draining the last of the blood from people who are already on life-support. The banks triggered what amounts to a catastrophe for most ordinary people. So why should those same ordinary people be forced to pay through the nose to keep the banks afloat? No-one can provide a satisfactory answer to that question.
But it runs deeper than that. In the UK last week, it was revealed that the package paid last year to the head of Barclay’s Capital, the fantastically named Rich Ricci, amounted to a criminal – and I use the word advisedly – £44 million. And, while Britain is among the worst culprits in encouraging a climate of corporate and personal greed on the part of bankers, a culture prevails where those working in the higher echelons of banking internationally are paid what are ludicrously hyper-inflated salaries. It is utterly reprehensible and indefensible.
It was revealed here in Ireland, last week, that the CEO of Bank of Ireland, Richie Boucher, was paid €831,000 last year. It may be small beer compared to Rich Ricci’s lovely lolly, but it is a phenomenal amount of money nonetheless. The then Minister for Finance, the late Brian Lenihan put a cap of €500,000 on the amount that could be paid to anyone working in the banking sector in the Republic of Ireland, and yet in Boucher’s case was exceeded by over 60%. Nor is that all. Shane Ross in the Sunday Independent has revealed that excessive payments are also being made to the members of the boards of Bank of Ireland, Anglo-Irish Bank and Allied Irish Bank.
Meanwhile, as evidenced by a number of gut-churning videos made recently of evictions, the same banks, with the support of the Gardaí, are turfing Irish people out of their homes for being a couple of thousand euro in arrears. And why are people unable to pay their mortgages? Because they are victims of the economic madness heaped on this country. Because have lost their jobs. Because banks are foreclosing on businesses. Because the money supply has dried up. It is an affront to any sense of decency...
No matter what way you look at it, these revelations about the money paid to the guys running Irish banks hugely diminish any moral authority the Government might hope to have in relation to the referendum. They own the now-renamed Anglo Irish Bank. They own Allied Irish Banks. They have a substantial stake in Bank of Ireland. It is very hard to see how they can hope to be taken seriously in asking people to shoulder the burden of even more ‘austerity’, if they are incapable of reining in effectively the amounts being paid to board members and other staff at these failed institutions.
This is not to take a position on the treaty one way or another. I am positive by nature and believe that it is possible for the Irish people to rise above all of this, if the circumstances are created which encourage employment, innovation and productivity. But what I can say for sure is this: if the Government wants to have any credibility, or any leverage, then it must tackle head-on the issue of the overpayments to the fat cats who work in the banks. 
The time to do that is now. If that mission were accomplished, the people might then be able to decide on the treaty, secure at least in the knowledge that we have an administration which has the courage of its convictions
and the interests of the Irish people
at heart.