Credit Gurantee Scheme - bank bailout 2.0?

letitroll

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Hi in looking at the governments credit guarantee scheme I can’t help thinking that in practice it’s bailing out not just businesses (which I agree with supporting) but the banks again. All the capital poured in by taxpayers post-GFC + capital buffer increases were meant to ensure banks had sufficient capital buffers To ride out a crisis like this.....but here we are a decade later underwriting large swathes of bank balance sheets.

Now with the guarantee in place....... aib/BOI/ ulster will undoubtedly focus first on extending credit to existing borrowers such that the old (non-credit guarantee) loans won’t go delinquent (new loans to pay old loans) and effectively the credit/default risk moved on to the governments balance sheet. I know skiin in the game has been written in (20%) but in practise the Irish taxpayer has stepped in and underwritten big chunks of the existing SME loans book?

interested in anyone’s thoughts on the above?
 
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