Speaking in the Dáil today on the extension of the bank guarantee, Deputy Joan Burton said that it was “not good enough that the Minister for Finance, Brian Lenihan, sends Minister of State Martin Mansergh in here with a document extending the bank guarantee for a further five years with significant financial implications for every taxpayer in Ireland at a time when the country is reeling under economic difficulties.”

She went on to raise a number of questions on the guarantee extension itself, notably in relation to 1) subordinated debt, 2) the guarantee fee and 3) the absence of a ‘sunset clause’.

“Over the past 14 months, the Minister for Finance has not given any valid justification for including dated subordinated debt among the guaranteed liabilities of the banks. Subordinated debt is risky, a form of quasi-equity debt, which carries a high yield to compensate for the risks involved. Guaranteeing subordinated debt is a bailout for speculators. A consistent Fianna Fáil theme is bailing out the developers, the banks and speculators.

“That is a disgrace and an outrage. Those subordinated debt holders should be negotiated with and take part of the hit.

“In this guarantee extension, the Minister appears to have seen the error of his ways by excluding newly issued subordinated debt from the extended bank guarantee under European Central Bank rules. There is, however, no justification for continuing to guarantee existing subordinated debt on which the European Commission has directed the stopping of coupon payments.

“At Anglo Irish Bank it was widely known in the aftermath of the original bank guarantee that Mr. Sean FitzPatrick, then chairman of the bank's board, was a significant holder of subordinated debt in that institution.

“Fianna Fáil is a historic disgrace to the country. For the second time in a generation Fianna Fáil has destroyed the prosperity that people have built up, whether in the public or private sectors, on the back of their hard work.

“It is widely held that the 2008 bank guarantee was issued at a deep discount to benchmark market rates. As a consequence, the cost of Ireland servicing the interest on its national borrowings went up over German basic rates, putting it next to Greece.

“The Minister has never come clean on the mechanism for calculating the guarantee fee. Originally we were told it was to be calculated on the basis of the long-term ten-year increase in the cost of funding the national debt as a result of putting the guarantee in place.

“It was to be paid over the two-year lifetime of the original guarantee scheme at the rate of approximately €500 million per year.

“Will the Minister of State outline how the fee under the new scheme is to be calculated?

“Are we, instead, being asked by Fianna Fáil to buy another pig in a poke?

“Will it be a case where we will have a phoney earning rate which will not cover the cost in the annual budget of the increase in our national debt costs as a result of Fianna Fáil mismanagement?

“Is the guarantee fee under the new scheme to be lodged into a holding account at the Central Bank or go into the Central Fund?

“Why cannot the Minister of State give us details of the fees and tell us what we are to be paid for this additional burden? As a consequence of this order every man, woman and child in this country is taking on, for a further five, ten or 15 years from end September 2010, liabilities of up to €400 billion. That is the extent of what is proposed.

“Naturally, there are no figures attached to this proposal. The Minister for Finance has shown contempt and arrogance in terms of not providing figures in this regard to the Dáil as to do so might inform Members or taxpayers.

“True to his imitation of the Bourbons, we are but the national Parliament and we do not deserve any information. In France, the aristocrats may have held sway for some time but, eventually, they had to give way to the people and the people's assembly.”