We need a state banking system . . .

» Eoin Ó Murchú

The Government’s policy towards the banks is to ‘return them to profitability’ so that they can be given back to the same people who created the banking and financial crisis in the first place

THE CENTRAL BANK has produced yet another a report showing that the Irish banks are unable or unwilling to perform their proper role in the Irish economy — to provide credit to keep viable business functioning. 

Not only does this failure place existing jobs at risk but it also prevents the possible creation of new jobs.

But how can this be when the Government and their defenders are at pains to point out that ‘We own the banks’?

Only the most cynical could argue that if the state owns the banks and the banks behave this way then that is the policy of the state, but it does call into question the willingness of the Government to assert its own supposed policies of job creation.

The reality is that job creation comes very low down on the Government’s wish list, and its policy towards the banks is designed to “return them to profitability” so that they can be given back to the same people who created the banking and financial crisis in the first place.

We must suffer so that they can become rich.

The Labour Party makes much of the fact in debates on banking that they opposed the bank guarantee at the beginning.  Indeed, they did (secure in the knowledge that it was going through anyway) but since they got into office they have underlined and reasserted that guarantee.

Sinn Féin, by contrast, listed out the conditions that were essential for the acceptance of a guarantee and when those conditions were not met voted against it – a position from which the party has never deviated.

For the point is not that the state should have a majority holding in any bank but that the state should have taken the lead in developing a different banking system and that instead of pumping billions into paying the private debts of private banks that money should instead have been used to meet the social needs of the Irish economy.

A social banking system doesn’t mean it shouldn’t make profits (the state must get a return on money that is collectively put forward by the citizens of the state) but it means that the judgement calls that are made should be consistent with a policy of easing the burden on the mass of the people and at the same time providing business with the investment funds necessary to state recovery through job creation and economic stimulus.

In such a system there will be mistakes.  Not every business will turn out to be viable but the emphasis would be on getting the economy moving in line with Government policy.

Instead, the real agenda at the moment is to recapitalise the banks: to give them sufficient capital reserves that they become an attractive proposition for outside investors. And which outside investors are poised at the gate? None other than the very German banks whose reckless lending to private banking institutions in Ireland brought about the crisis.

And instead of the pain being felt by these institutions it is mortgage holders, especially those with serious negative equity who have lost their jobs, who face losing their homes. All that the Fine Gael/Labour Government can offer them is a system that gives the last word on mortgage forgiveness to the banks whose policy of recapitalisation is squeezing business and holding the economy back.

High-profile pursuits of bankers and developers are all very well but they mask the actual policy of protecting the bankers that is the reality of the Government position.

And making a scapegoat of Seán Quinn, who created jobs in a neglected area of the country, also lets the real offenders off. Quinn must pay his debts and if that means real bankruptcy then that is the way it must be. But let no one be fooled: the real agenda is to defend the banks because the powers that be — both politicians and civil servants — cannot conceive of any system other than unbridled market capitalism.

And so, in the midst of the continuing chaos, the Government proudly boasts that it is being favourably regarded by the markets. Markets, controlled by outside financiers, should not be allowed to be the judges of what decisions should be taken in our economy. We need democratic decision-making by the Irish people over these matters.

And to get that we need a different, a social, banking system owned and run by a state responsive to popular needs.