Let's be absolutely clear. The bail out of the banks benefitted the depositors more than anyone else. People talk about bailing out "the banks" and bailing out the"property developers" and various "golden circles".
To the creditors in question, Brian Lenihan must be a god like figure.
The ordinary depositors in the banks should be genuflecting in front of Brian Lenihan.
If the guarantee had not been given, then the ordinary folk would have lost their deposits.
while there was a fund in place to guarantee €20,000 per individual, that would not have been sufficient for all the claims.
So we should really change the wording to "Why did the taxpayer bail out the depositors".
Others have benefitted as well.
Senior bondholders who have the same rights as depositors.
(Anglo)Staff who are on an average salary of €105,000 ( I think?) and who have got very generous redundancy payments compliments of the taxpayer.
The subordinated bonds(in Anglo) have lost a good part of their value because they were not guaranteed. Nor have they been receiving their dividend payments.
While the taxpayers have lost, it could be argued that we have benefitted from avoiding the collapse of the banking system and the economic ruin which would have ensued.