Ireland's Financial Practices Face Total Overhaul

Government decisions in the last few days are to profoundly reshape the way Ireland will operate financially.

Emergency legislation, announced on Tuesday by the Government, will mean the State can take a stake in any financial institution that receives financial support from the Exchequer.

The move is in essence an ideological shift, a rejection of Ireland's journey towards a free market economy, and is potentially a nationalisation of the major financial institutions in the state.

The Bill gives the Minister for Finance unprecedented powers to stop financial institutions from collapsing, and allows for competition law to be set aside to allow previously outlawed bank mergers to take place.

In another historic move, mirroring a recently failed deal in the United States, the Irish government have provided a state guarantee for the six main Irish banks, in scheme that will use €400 billion of public money as guarantor to help stimulate the market.

The move is widely being seen as very risky, as the €400 billion guarantee is more than double Ireland's GDP of €190 billion, and has the potential to bankrupt the entire country.

Announcing the 'Credit Institutions (Financial Support) Bill', the Minister for Finance, Brian Lenihan, told the Dáil last night that it was not about protecting the interests of the banks but about safeguarding the economy and everyone who lived and worked in the country.

He added that the guarantee to the banks was not "free" and taxpayers would be remunerated for the value of the support provided.

The Labour however wanted the Government to go one step further, and are seeking an amendment to the bill to seek a cap on the salaries of bank bosses.

The proposal is amongst 12 amendments sought by the party, which a spokesman said are designed to protect the taxpayers money, provide for increased supervision by the Oireachtas of the rescue package, and allow for the establishment of an independent oversight board.

(DW)