Lenihan Says Ireland Couldn't `Judge' Bank Losses Before Rescue
Ireland’s Finance Minister Brian Lenihan said the government wasn’t “in a position” to forecast property loan losses faced by the country’s banks on the night it introduced a guarantee of their liabilities two years ago.
“We were very suspicious about the property based lending which had taken place in the banks, but we weren’t in a position to form a judgment on that, that evening,” Lenihan is quoted as saying in an e-mailed transcript of a documentary, ‘Freefall,’ to be broadcast on Dublin-based RTE television tomorrow.
The state injected almost 33 billion euros ($42.5 billion) into banks and building societies, with two-thirds going to nationalized Anglo Irish Bank Corp., since the guarantee was introduced in September 2008. It paid a further 13 billion euros for real-estate loans that were once worth 27.2 billion euros, the agency responsible for the debt said on Aug. 23.
Lenihan said a financial “nuclear winter” could have followed the collapse of U.S. bank Lehman Brothers Holdings Inc. two years ago. “Our banks were very dependent on obtaining funding from other countries and once that began to dry up, we knew that would create very serious problems for the Irish banking system,” Lenihan said, according to the transcripts.
Editors: Frank Connelly
To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net;
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