# David McWilliams views on the Bank Guarantee 5 years on



## Brendan Burgess (1 Oct 2013)

[broken link removed]

Some quotes...

It is important to understand that the guarantee and the bailouts  were the consequences of reckless lending, too much borrowing and total  lack of banking regulation. They were the consequence of the Irish  banking/housing/credit collapse, not the cause.


 If there had been no reckless lending, there wouldn’t have been a  crash and no need for any remedial action to protect depositors.


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The banking crisis started in 2000, not 2008 as is often stated. It is  still crippling us, as evidenced by the mortgage arrears debacle.

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Today, there are many who argue that we should have let them all go  under, or that we could have isolated the bad banks and let others go.  But they were all bad; every single Irish bank needed money to keep the  doors open in 2008.

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The state could have let toxic banks go, but AIB, the biggest bank in  the country, was on the verge of bankruptcy. Would letting AIB go have  been a good idea? The government could have grabbed deposits, as they  did in Cyprus.

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It ought to have been temporary, used to stop the panic, and then,  following careful assessment of the situation, led to the introduction  of a bank resolution law. This would have allowed for a negotiation with  the bondholders in a calm way, which is the way the Americans dealt  with their banks’ creditors in the savings and loans crisis of the  1980s-1990s.
 But, for some reason, the guarantee was extended and extended.


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