Irish Plans Go Awry as ECB Wrangle Prompts Government Confusion
Ireland’s government is waking up from a nightmare that’s been dubbed ``#promnight.''
A day that began with hopes of a deal to ease the nation’s bank-debt burden ended in the early morning hours today following an emergency midnight session of parliament in Dublin. Hanging in the balance is an accord with the European Central Bank that could help pave the way for Ireland to exit the international supervision that came with a 2010 rescue.
“If it weren’t so serious, you’d laugh,” said Alan McQuaid, chief economist at Merrion Capital in Dublin. “It did look a bit comical, but at the same time if we do get a deal, I think the markets will say it is a positive for Ireland.”
The drama began when Irish central bank governor Patrick Honohan flew to Frankfurt for the twice-monthly meeting yesterday of the ECB’s Governing Council. He was armed with a proposal to stretch out the 30 billion euros ($41 billion) bill of rescuing the former Anglo Irish Bank Corp., by replacing so- called promissory notes with long-term bonds, Bloomberg News reported. His aim: helping the nation regain the economic sovereignty it lost with the 2010 bailout.
By mid-afternoon in Dublin, political correspondents at parliament began posting messages on Twitter Inc. that the government was planning emergency laws to wind down the bank as part of the deal with the ECB. The hashtag #promnight trended on Twitter in Ireland.
Just before 5 p.m., Finance Minister Michael Noonan was planning to make a speech that night at 9 p.m., as optimism about an accord with the ECB grew. Around then, national broadcaster RTE and Reuters reported the proposal to liquidate Anglo, which has been renamed the Irish Bank Resolution Corp.
At 7:09 p.m., Bloomberg News reported that some of the ECB policy makers wanted more time to weigh the proposal, which was given to them before they sat down for dinner. It was the first indication the Irish plans might go awry.
The officials were concerned that an accord could set a precedent for other countries, such as Spain, dealing with banking crises, said a person familiar with the situation.
Twenty-seven minutes later, Noonan cancelled his scheduled speech to await the deliberations in Frankfurt.
By 9 p.m., the government realized it needed to provide a legal underpinning for Anglo’s liquidation and decided to press ahead with an emergency session of parliament to pass the laws.
“When we as a government and I as a minister were not in a position to deny that the government was planning to liquidate IBRC, we had to act,” Noonan said later. “I would have preferred to be introducing this bill in tandem with a finalized agreement with the European Central Bank.”
Opposition lawmakers pounced.
“We are being asked in isolation to vote for the liquidation of a bank which we might approve of but we don’t know what the other part of the package is,” Shane Ross, an independent lawmaker said.
Parliament was due to sit at 10:30 p.m. After the opposition protested they had just 10 minutes to examine the bill, proceedings were delayed to midnight.
“I want to register a protest and state our objection in the strongest possible terms with the way this matter has been handled,” said Michael McGrath, finance spokesman for Fianna Fail, the largest opposition party. “This is no way to conduct our business.”
At one point during a rowdy debate, Sinn Fein leader Gerry Adams suggested closing the parliament’s bar, as government lawmakers heckled his contribution.
Just before 3 a.m., the bill passed the lower house of parliament, and subsequently the upper house.
The bill was sent by courier to the Irish President Michael D. Higgins’s residence in Dublin city after the Upper House of parliament passed the bill about 5:50 a.m., the Irish Times said today. Higgins jetted in from Italy to sign the bill.
Now, Irish eyes turn back to ECB. At 2:30 p.m. in Frankfurt, ECB President Mario Draghi will hold a press conference following the rate-setting meeting today.
The events of the past 24 hours “don’t do the country any good in terms of reputation,” said McQuaid at Merrion. “But people get over that.”
-With assistance from Joe Brennan in Dublin and Zoe Schneeweiss in Zurich. Editors: James Hertling, Patrick Henry