The ECB still protects the banks at the expense of the EU taxpayers

Emily O'Reilly European Ombudsman and European Commission President Manuel Barroso. (European Ombudsman, photographic library).

Emily O’Reilly European Ombudsman and European Commission President Manuel Barroso. (European Ombudsman, photographic library).

In a courageous decision, Emily O’Reilly, the European Ombudsman, condemned the decision of the European Central Bank not to disclose a letter the central bank’s then President, Jean-Claude Trichet, wrote to the Irish Finance Minister in November 2010. O’Reilly stated: “I regret that the Governing Council of the ECB has wasted an opportunity to apply the principle that, in a democracy, transparency should be the rule and secrecy the exception. At a time when so many people have been, and are, suffering as a result of austerity arising from the economic crisis, the very least a citizen can expect is openness and transparency from those who make decisions that directly impact on their lives and on the lives of their families. Following an inspection of the letter, I am unconvinced by the Governing Council’s explanation for continuing to keep it secret.” Let’s follow the facts.

In December 2011 an Irish journalist had asked for the disclosure of the letter. He had good reasons to suspect that it included pressure on the Irish government, to enter the EU’s bailout program the previous year. It’s clear by now that the ECB had forced then the Irish taxpayers to repay at face value the imprudent loans some major German and the French banks had accorded to the Irish lenders. All those banks kept investing in the Irish real estate bubble, despite knowing that it will burst.

The criminal part of the whole affair is that the Irish taxpayers were forced to undertake and repay the loans of the failed Irish banks at face value by the EU and ECB. The Irish banks had borrowed money from major German and the French lenders. In a similar occasion, though, Iceland refused to recognize the fraudulent loans of its own three banks which collapsed at the same time as their Irish counterparts in the aftermath of the 2008-2009 credit crisis.

Iceland resisted

European Sting writer Maria Milouv on 13 December 2013 noted “Kaupthing along with Landsbanki and Glitnir, the three major Icelandic banks, went bankrupt in 2008… Unlike the rest of the western countries, Iceland’s taxpayers didn’t cover the losses of those careless banks neither did they compensate their equally careless creditors. On the contrary Ireland, confronted with exactly the same problem – when the Irish banking system collapsed – was forced by the European Central Bank to borrow around €90 billion and instructed to bail out all fraudulent bankers”.

To be noted that Ireland spent another €70bn from the country’s reserves to repay the loans of its failed banks. Today still nobody knows for sure who got all that money. Clearly Ireland went bankrupt because the EU and the ECB forced the country’s government to undertake and repay the loans of the Irish private banks in full. Before this arrangement which was engineered mainly by the ECB, Ireland’s sovereign debt was around 25% and today it has reached 125% of GDP.

Ireland forced to repay

Coming back to O’Reilly’s Press release issued last Friday, it states “The ECB justified its refusal to disclose the letter in 2011 by the need to protect Ireland’s financial stability. According to the ECB, the letter was sent in the context of significant market pressure and extreme uncertainty as to the prospects for the Irish economy”. Obviously the ECB doesn’t reveal the whole truth now. The Irish exchequer didn’t run any danger neither did the Irish economy as a whole. Only the three major Irish banks were in danger of collapse as they finally did (Anglo-Irish Bank, Bank of Ireland Allied Irish Banks), threatening to take with them in the abyss their lenders in Germany and France. The country went bankrupt and was forced to borrow from Eurozone €90bn, only after it undersigned the debts of its banks.

The problem is that the ECB and the EU didn’t allow any negotiations between the Irish Republic and its taxpayers on the one side who were about to undertake and repay the debts of the country’s banks, and the Irish lenders’ lenders on the other. The ECB and the EU demanded that the German and the French lenders of the Irish banks should be reimbursed at full face value for their imprudent loans. In all previous banking crises of the last fifty years no banks were repaid at par value for their bad loans.

Who covers whom?

This is probably the reason why the ECB still rejects the disclosure of this letter. It might contain proofs that the people involved in the case, may have personal responsibilities, because their behavior enforced disproportionate financial responsibilities on the Irish side, in direct contrast with the practice followed in similar cases, like the Latin American debt crisis of 1980s.

It’s obvious then that the ECB still has to protect not Ireland’s financial stability, but its own people who were directly involved in this affair. A well- documented lawsuit in the European Court of Human Rights though, on the grounds of the violation of the rights of the Irish taxpayers and the disproportional compensation of the French and the German lenders, may produce very interesting results. Probably such a lawsuit may be based on the statement of the following statement of the Ombudsman “At a time when so many people have been, and are, suffering as a result of austerity arising from the economic crisis, the very least a citizen can expect is openness and transparency from those who make decisions…”














the European Sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Security Council should ‘nurture’ Colombian consensus against return to violence, top UN official urges

Annexing Jordan Valley would end ‘illusion’ of a meaningful two-State solution: UN rights expert

Why transparency in drug pricing is more complicated than it seems

EU tells Britain stay in as long as you wish

What does a good digital ID look like?

UN report sheds light on ‘unimaginable horrors’ faced by migrants and refugees in Libya, and beyond

Food choices today, impact health of both ‘people and planet’ tomorrow

Food safety: Enhancing consumer trust in EU risk assessment and authorisation

A hot autumn after a cool summer for Europe

More taxpayers’ money for the banks

Altruism can be good for business, as these companies show

E-Governance: A powerful tool to combat, mitigate and sustainably manage disaster risks

Greenhouse gas levels in atmosphere break another record, UN report shows

The hidden downsides of autonomous vehicles – and how to avoid them

Big world banks to pay $ 4.95bn for cheating customers; Is it a punishment or a gentle caress?

Transparency and tech together can safeguard taxpayers’ money

Pervasive corruption costs $2.6 trillion; disproportionately affects ‘poor and vulnerable’ says UN chief

In Tanzania visit, UNHCR official stresses freedom of choice is crucial for refugee returns

New forms of work: deal on measures boosting workers’ rights

Chart of the day: Why marine protected sites matter more than ever

D-Day for Grexit is today and not Friday; Super Mario is likely to kill the Greek banks still today

Discussion at Europe House: Brexit & Food

Real EU unemployment rate at 10.2%+4.1%+4.7%: Eurostat Update

Ten years on, crisis in Nigeria ‘far from over’; UN and humanitarian partners urge support for millions still affected

Main results of European Council of 18/10/2018

Armenia should take vigorous measures against entrenched corruption

UN Children’s Fund chief condemns ‘horrific’ Kabul bomb attack

Parliament supports plans to improve quality of tap water and cut plastic litter

Electronic cigarette: a still controversial qualitative imbalance

Food safety: more transparency, better risk prevention

Will AI make the gender gap in the workplace harder to close?

Is ECB helping Germany to buy cheaply the rest of Europe?

Medical students: The need for emigration

Yemen: Security Council backs new mission in support of key port city truce

MWC 2016 LIVE: T-Mobile US reveals 5G trial plans

EU imposes provisional anti-dumping tariffs on Chinese solar panels

US-China trade war at point of no return: Washington’s demands go beyond tariffs

Recognize, celebrate and ‘stand in solidarity’ with persons with albinism

Mergers: Commission clears E.ON’s acquisition of Innogy, subject to conditions

These Indian fishermen take plastic out of the sea and use it to build roads

MEPs and European Youth Forum call on EU to Invest in Youth

European Youth Forum warns of a Peter Pan generation as a result of financial crisis and response to it

UN chief condemns attack targeting international forces in northern Mali

The link between migration and technology is not what you think

No barriers to free flow of non-personal data in the EU

Eurozone: Statistics don’t tell the whole story

‘€1 million’ fines for rescue boats prompts UN concern for future sea operations

Emergency meeting called as Ebola spreads to Congolese city – UN health agency

How tech companies compare at protecting your digital rights

ILO discusses world of work response to global refugee crisis

“BRI cooperation is entering a new stage: we need a new and more constructive approach rather than waste time on suspicion”, China’s Ambassador to EU Zhang Ming underlines live from European Business Summit 2019 in Brussels

This city is planting a tree for every man, woman and child

Report on EU trade defence – effective protection against unfair trade

Towards a tobacco free India

What data dominance really means, and how countries can compete

EU elections: Can EU citizens’ awareness eradicate fake news more efficiently than Facebook, Twitter and Google?

The von der Leyen Commission: for a Union that strives for more

‘Moral obligation and political imperative’ to support Syria on path to peace: Guterres

World Retail Congress Dubai 2016: Retail’s night of nights

Syria war: executions condemned as violence continues ‘on both sides’ of border with Turkey

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s