When Dreams Turn To Nightmares

There are times when you have to wonder: is this all a dream?

I was under the impression that the Irish banking system crashed in the most spectacular way back in 2008. There was a meeting, in September of that year, if I recall correctly, at which the heads of the main Irish banks told the Government of the day that the institutions they represented were literally bust. And that there was only one possible remedy: that the Government would have to guarantee the debts of the banks no matter what the cost might turn out to be. Which the Government duly did...
The cost of this undertaking to the Irish exchequer, depending on how you read the figures, is anywhere between €60 billion and €90 billion. And if I recall accurately, approximately €22 billion went on shoring up Anglo Irish Bank alone. In addition I thought that the Irish government, and by extension the Irish people had become de facto owners of all of the major banking institutions here, apart from Bank of Ireland. Even in the latter instance, there was an impression that we pumped multiple billions into the bank, took ownership of a large minority shareholding and then agreed to the off-loading of a chunk of those shares at a knock-down price to a bunch of US investors. But the people of Ireland still own 15% of the bank.
Now in my dream, I imagine that this should give the Irish people a strong say in what happens within the very banks that we bailed out. After all, we – and indeed our children and, in turn, their children – will still be paying for this act of sheer madness in thirty or forty years time. So surely in the interim, we have a right to run the bloody banks in whatever way we believe is right?
That seems like ordinary common sense. And so the question arises: what would the Irish people accept is an appropriate pay level for a senior banker, at a time when the county as a whole is effectively bankrupt? And what would the Irish people see as the correct pension level for the executives who were on the upper tier of the banks when they collapsed, at such a catastrophic cost to the country?
It emerged last week that a cool €1.1 billion had been transferred by Allied Irish Banks into its pension fund. This is at a time when the Government is threatening that, in the December budget, it will have to seek even more than the already promised cuts of €3.2 billion in public expenditure.
Meanwhile, the Sunday Independent has revealed the extraordinary salaries that are still being paid to the top bank officials – despite the colossal damage wreaked by the banks on the Irish economy.
In Anglo Irish Bank alone, there are six executives on salaries with a value, including pension payments, in excess of €500,000. That is 2.5 times what the Taoiseach is paid. Some estimates put the value of the remuneration package of the CEO of Anglo Irish Bank, Mike Aynsley, at €886,000. There are another 200 employees in the bank on salaries of between €100k and €200k.
Meanwhile Richie Boucher, the CEO at Bank of Ireland, is paid €620,000 per annum. At the wholly State-owned Allied Irish Banks, David Duffy is on €500,000. And the pensions being paid to former banking top dogs are in the same ball-park. The head of the Bank of Ireland when the shit hit the fan, Brian Goggin is on a pension worth €650,000. Over at AIB, both Eugene Sheehy and Colm O’Doherty are on €300,000 each.
To ordinary people these are astonishing sums. These guys were never worth anything like this kind of money, but with a banking system in collapse, it is a monumental absurdity that they are having money thrown at them. But the Government seems to entirely lack the political will to do anything
about it.
The Minister for Finance Michael Noonan is convinced, apparently, that his hands are tied. He offered the excuse that pensions are protected under the constitution in the same way that property is. And besides, the banks are run by independent boards.
And so we are faced with the following proposition: the State wholly owns Allied Irish Banks but it can do nothing about the excessive salaries paid to the executives working for the bank. Similarly, the State wholly owns Anglo Irish Bank – now the Irish Bank Resolution Corporation – but it can do nothing about the excessive salaries paid to the executives working for it either.
In my dream, this is appalling bullshit. It is madness writ large. It is ludicrous beyond words. If we own these banks, then we can run them as we see fit. And if it is necessary to take additional measures to enforce this, then that is what the Government has to do.
Why have they accepted this absurd status quo for so long? That much is impossible to fathom. But there is no excuse whatsoever for continuing to do so.
If there are constitutional impediments to reforming the banking system then the Government should move immediately and call a referendum to enable the necessary reforms to happen. Similarly, they must move to bring the salaries paid to officials working in State-owned financial institutions into line with the money being paid to other senior civil servants and do this by legislation or constitutional amendment if necessary.
Not to do whatever is required in this regard represents a complete abnegation of responsibility and goes against all of the commitments entered into prior to their election by the present Government.
It is true that the Fine Gael/Labour coalition were met with a fait accomplis in relation to the bank guarantee and the bailout by the EU and the IMF – and that their room for manoeuvre in negotiations with the EU in relation to these issues was hugely constrained as a result. So how well have they performed? There is little or no evidence that they have impressed sufficiently on the EU and the ECB the extent to which the social contract has been broken in this country; or that they have fought effectively on behalf of the Irish people to reduce the burden of the debts incurred by the Irish sovereign, in order to protect European banks who were exposed to Irish banking losses; or that they have communicated the extent to which the socialization of private debt is a totally unjust and unsustainable imposition on the citizens of Ireland.
But all of those statements are essentially matters of opinion and interpretation. What is not a matter of opinion is that the grossly excessive money being paid in salaries and in pensions to the top bankers in Ireland represents an ongoing scandal that the Government has within its power to end.
They need to do it fast. Or my dream will end with a rout at the next General Election, with Sinn Féin and Fianna Fáil coming to power.