Letters show amount of pressure put on Brian Lenihan by ECB over bank bailout
Three letters sent by European Central Bank ahead of bailout revealed
Letters sent from the president from the European Central Bank to the late Brian Lenihan reveal the intense pressure put on Ireland to apply for a bailout in November 2010, reports the Irish Times.
Three letters, sent from ECB president Jean-Claude Trichet to Lenihan in the run-up to the bailout, show that the bank insisted that Ireland apply for the bailout or risk being cut off from access to support.
The letters were sent on October 15th, November 4th, and November 19th, 2010. It is also likely that either an email or fax was also sent to Lenihan on November 12th, which may have prompted a phone call between the two men that day, more than a week before the formal application for a bailout was made.
During this time, the ECB was underwriting funding of more than €150 billion to the Irish banks. Trichet told Lenihan that ECB's governing council was worried that the drain from the Irish banks was putting the whole European banking system at risk.
In the November 4th letter, Trichet said that ECB was monitoring the government's commitment to its four-year plan, which was still in development, and added that ECB's continuing support was contingent on the plan being implemented.
According to the Irish Times, that same day, Lenihan announced a targeted adjustment of €15 billion over four years, with €6 billion of that coming in 2011. The full detail of the four-year plan was to follow at the end of the month.
The final letter sent on November 19th urged Lenihan to accept the bailout, but at that stage Patrick Honohan, the governor of the Irish Central Bank, had already publicly said a bailout was necessary.
Lenihan and his colleagues formally applied for an EU-International Monetary Fund programme on Sunday, November 20th.
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