EXPOSURE THREAT IN BAIL-OUT.
As the Finance Minister revealed he may set up a "bad bank" to deal with toxic assets in Irish finance houses, Fine Gael said they had "huge concerns" about the package.
Taxpayers were being asked to put cash into banks without knowing the full extent of the hole in their balance sheets.
Finance spokesman Richard Bruton said: "There is a real risk the only result will be to allow existing banks to nurse along their dodgy property lending while continuing to starve viable businesses of access to the credit."
Fine Gael urged the Government to set up "good banks" with clean balance sheets within each bank. Bad debts would be isolated within the "bad" arm of the bank.
Taxpayers' money would only be pumped into the good arm of the bank.
The Labour Party last night warned the bail-out didn't deal with huge problem of bad debt in the banks.
Finance spokeswoman Joan Burton said: "Irish banking is at an impasse and there is a real risk of a Japanese-style scenario taking hold, whereby 'zombie' banks hide bad debts on their balance sheets." Last night as Brian Lenihan put the finishing touches to the bail-out, he revealed the "outstanding" issues with AIB and Bank of Ireland were security for homeowners threatened with repossession, executive salaries and loans to small businesses.
He said: "There has to be real reform and change in the banking sector as well."
Mr Lenihan also revealed he may set up a "bad bank" where toxic assets could be sent.
But he stressed the Government could not be rushed in to removing bad debt from balance sheets.
He said: "We can't be jump - led by markets and market expectations into solutions that suit banks rather than the people. "We want to clean up the banks balance sheets and get them back to resuming lending.
"We will do everything in our power to do that but governments have to protect the interests of the taxpayers."
AIB and Bank of Ireland yesterday agreed to delay repossessing homes for 12 months as part of the deal. The banks currently start repossessing just six months after a customer defaults.
But the Labour Party slammed the move claiming it was only "putting off the evil day for six months".
TOTAL VALUE OF THE BAIL-OUT PACKAGE ON TABLE TO BANKS
PACKAGE Brian Lenihan; CONCERNS Richard Bruton; ZOMBIE BANKS Joan Burton
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|Publication:||The Mirror (London, England)|
|Date:||Feb 11, 2009|
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