As the government set about nationalizing under-siege Anglo Irish Bank, there was mounting speculation that the same fate could befall the country's two largest financial institutions, Bank of Ireland and Allied Irish Bank, following continuing downward spiraling share values. On Monday alone the value of both banks was cut in half in what one commentator described as "another calamitous day" for the Irish financial sector. On Tuesday, legislation nationalizing Anglo Irish was rushed through the Dail (Parliament) and the upper house, the Senate, following the government announcement last week that it was taking the troubled institution into public ownership to bring stability back to the financial system. Although the crashing shares on Monday, and a continuation of the dive on Tuesday, prompted speculation that the other two banks would also be nationalized, ministers insisted that would not happen and that they would proceed with a refinancing scheme to pump €2 billion of taxpayers' money into the banks in the belief that they can trade their way out of trouble. Taoiseach Brian Cowen sharply criticized the opposition and others for questioning the government's motives for nationalizing Anglo Irish. He warned that their remarks could lead to a loss of confidence in the Irish banking system. Finance Minister Brian Lenihan said the government was determined to protect the taxpayer's interests by putting "clear blue water" between the new Anglo Irish Bank and the unacceptable behavior that had gone before. "Anglo Irish Bank is a major financial institution, with a balance sheet in excess of €100 billion. There is no doubt that the viability of an institution of this scale is of systemic importance to Ireland," Lenihan said. "Contrary to the impression being put about, the bank lends to a wide range of customers providing funds for investment and employment in areas such as retail, office, leisure, healthcare, tourism and other services." In December, Anglo Irish chairman Sean Fitzpatrick was forced to resign when it was revealed he had been hiding loans to himself of €87 million over eight years. He wasn't present at an extraordinary general meeting last Friday when angry shareholders rained a barrage of criticism on bank chiefs and auditors who failed to spot Fitzpatrick's borrowings. Many at the meeting in Dublin complained that they had lost life savings and that they seemed irrecoverable despite government measures to prop up the bank. There was bewilderment among small investors that an institution which had squandered their pension entitlements was to be kept in business with their taxpayers' money. As ministers proceeded with nationalization legislation, Fine Gael deputy leader and finance spokesman Richard Bruton accused the government of "making up banking strategy on the hoof."
No Irish Need Apply? Not anymore