“Deputy Peter Mathews: As Dr. Somers said, the pension fund that was built up for the people of Ireland has decreased. They stupidly raided it. They gave Wilbur Ross 35% of the other bank for €1 billion, when our State paid €5 billion for 15% of the bank. A junior certificate student would know that is stupid.
Dr. Michael Somers: Obviously, I do not know exactly who it was. I would have had to swallow very hard to do a deal like that, but anyway the deal was done.
Deputy Peter Mathews: I can read between the lines. It is an idiotic deal.” Oireachtas Finance and Public Expenditure and Reform committee hearing with AIB directors on 20th December 2012.
Despite criticizing the Fine Gael TD for Dublin South on here on a couple of occasions – here and here, which provoked a response from the deputy himself – it is indisputable that he is one of the 166 TDs in the Dail who does have a lifetime career in banking, and despite having to put up with the verbosity and lengthily-parsed speeches with which he responds to the simplest of questions, the fact is that (a) he is an expert in his field and (b) he is supposedly in a place where he can influence government policy for the greater good of the nation.
He was one of the few TDs and senators who really had any prospect of making a mark or developing an argument at the recent Oireachtas hearing with public interest directors on 19th and 20th December 2012, the partial transcript of which was made available online yesterday.
Unfortunately, Deputy Mathews was only give 300 seconds to question the directors, about which he complained.
“Deputy Peter Mathews: For the record, I am very disappointed that I get five minutes compared to 12 minutes for other speakers.
Chairman: That is a matter for the Fine Gael Party. If Deputy Mathews wishes to speak first or second he must raise the issue with his party. I will not deal with the matter. I do not accept the criticism. It is for the Deputy’s party to decide who gets prioritised within the party.”
Deputy Mathews didn’t have the opportunity to ask the Bank of Ireland directors about the deal in July 2011 where 20% of Bank of Ireland was sold by Minister for Finance Michael Noonan, as the controller of the State’s state in the banks, to a group of North American investors including Wilbur Ross. At the time, Minister Noonan hailed the deal as “truly another very positive development for the Irish economy”. In the Oireachtas just before Christmas, Deputy Mathews described it as “idiocatic” saying a “junior certificate student would know that is stupid”
This was the deal where a large part of the State’s stake built up at a cost of €5bn was sold to the US and Canadian investors for just over €1bn, though the deal has a lot of strings attached. Bank of Ireland remains the only one of the banks which the State has guaranteed to remain outside our control as we now have a stake of 15% of the ordinary shares.
Deputy Mathews gained a reputation as an Irish Cassandra in 2009 and 2010 where he trumpeted the risks of massive additional losses in the guaranteed banks, and warned against the State covering the losses, lest it beggar the society. Turning up with annual reports on current affairs programmes, he acquired a reputation for being a plain-speaking if somewhat contrarian and verbose commentator on the unfolding crisis, and it was no surprise when he was elected on his first attempt to the Dublin South constituency, nudging justice minister Alan Shatter into fifth place.
Deputy Mathews duly took his place on the back benches and observed as political insiders took the key jobs in finance and economics. Although he tells us with a nod and a wink that he talks with Minister Noonan and gives the impression that his views are listened to, it has become obvious that he is a maverick in a conservative political party. He is frequently described as an Independent and in March 2012 was placed in the farcical position of voting against his own proposal at an Oireachtas committee. Describing Minister Noonan’s deal with Bank of Ireland as “idiotic” can only deepen the rift between the mainstream of Fine Gael.
Whilst not the focus of this blogpost, Deputy Mathews did assert that there was potentially another €60bn that would be required in the Irish banking system – that’s on top of the €64bn direct bail-out of the banks and the €5.6bn of state-aid paid by NAMA to the banks for the acquisition of loans.
“Deputy Peter Mathews: I think the survivor bank system needs further capitalisation. In the case of Bank of Ireland it could be €10 billion minimally to get its provisions right so that it can start the sort of work that would follow from the insolvency stuff. I think that AIB will need more, too, as will Permanent TSB. The IBRC issue is being lumped onto the main national debt. In all, we are talking about a minimum of about €60 billion. However, we need people who really understand it and who can, without having to shuffle through opening statements with simultaneous translation, get it across, eye to eye with the other person.”