The following article by Conor McCabe, is taken from the first issue of the relaunched The Bottom Dog, published by the Limerick Council of Trade Unions. Copies of the full print issue are now available in Connolly Books. You can also follow The Bottom Dog on Facebook.
At the start of 2013 the independent TD for Wicklow, Stephen Donnelly, stood up in the Dáil and talked about the bank guarantee. He said it was passed because ‘of a diktat from Europe that said no European bank could fail, no Eurozone bank could fail and no senior bondholders could incur any debt.’ It is a curious opinion to hold, as the only foreign accents heard on the recently-released Anglo tapes are imitations done by Irish bankers of considerable wealth and influence.
The tapes shone a light on the short-term focus, the scramble for capital that was to the front of the bank’s management team. John Bowe, the head of Capital Markets at Anglo Irish Bank, told his colleague Peter Fitzgerald that the strategy was to get the Irish central bank to commit itself to funding Anglo, to ‘get them to write a big cheque.’ By doing so, the Central Bank would find itself locked in to Anglo as it would have to shore up the bank to ensure it got repaid.
The Irish financial regulator, Pat Neary, in a conversation with Bowe, said that Anglo was asking his office ‘to play ducks and drakes with the regulations.’ Once the guarantee was passed the bank’s CEO, David Drumm, told his executives to take full advantage but advised them to be careful and not to get caught.
This was reinforced by an article in the Sunday Independent on 17 November 2013 which looked to the British Treasury’s archives for information on Anglo and the bank guarantee. ‘The documents reveal’ said the newspaper, ‘that the Financial Regulator tipped off Britain that Anglo might be “unable to roll €3bn [in funding] overnight,” but not to worry as if that happened the Central Bank or Government would step in to bail it out.’
The idea for a blanket guarantee, however, did not originate entirely with the Anglo management team, regardless of how much they embraced it. In the weeks leading up to the decision, the idea of a guarantee was flagged in the national media by people such as David McWilliams and the property developer Noel Smyth.