We are now five years on from the blanket bank guarantee. Let us ask, as calmly as we can, two basic questions. What were our aims in putting €100 billion (including the cost of Nama) into the banks? And were those aims achieved?

If we analyse the official statements

of the time, we can break the reasoning behind the guarantee into ten distinct aims.

We can then ask, objectively, whether the €100 billion gamble paid off. All unattributed quotes here are from

the late Brian Lenihan, then minister

for finance.

1 To save the State massive amounts of money. “We’ve had the cheapest bailout in the world so far.” (November 2008)

Result: FAIL. The bailout is proportionally the most expensive bank rescue in history.

2 To ensure no bank be allowed to collapse: “As a country, we cannot afford to have the message going out that we will let a bank fail.” (January 2009). “The fundamental question that arises in connection with the guarantee concerns the fact that the Government decided it could not let a bank fail.”

(June 2009)

Result: FAIL. Two of the six covered institutions, Anglo Irish Bank and Irish Nationwide, have since been liquidated.

A third, EBS, has in effect disappeared as an independent entity.

3 In particular, to rescue Anglo

Irish: “Anglo is a major financial institution, with a current balance sheet in excess of €88 billion and a substantial deposit base, whose viability is of

systemic importance to the economy.” (November 2009) “Winding up the bank

is not and was never a viable option.”

(March 2010)

Result: FAIL

4 To avoid the nationalisation. “I do really want to scotch the idea that there are huge risks to the taxpayer in the valuation process [for Bank of Ireland and AIB] because we are not nationalising these institutions.” (February 2009)

Result: FAIL

5 To invest public money in the banks as a commercial proposition with a good return. “We are going to commit an investment for a definite return to the taxpayer. This is not bailing out the banks. This is a commercial investment for the State.” (February 2009) The State would “hold valuable shares in our two main banks which can realise gains for the citizens of this country”. (March 2010)

Result: FAIL. There is no chance of a commercial return on the taxpayer’s €100 billion investment. If we were to get half of that back, it would be a miracle.

6 To “get credit flowing”: “My overriding concern throughout this financial crisis has been to get credit

to viable businesses, particularly SMEs, which will lead our way out of this

recession.” (February 2009)

Result: FAIL. Almost half of SMEs say banks are not lending to their sector. Ireland has by far the lowest level of investment in the EU.

7 To reassure depositors that their money was absolutely safe: “Deposits in Irish banks are secure and bank customers can rest confident in the knowledge that their money is safe.” (January 2009). The guarantee “ensured that citizens and businesses could go about their daily business and in the knowledge their funds are secure”. (August 2009)

Result: FAIL. Credit union deposits in Anglo Irish have been seized by the State and the EU has made it plain in Cyprus that seizing deposits is a legitimate policy for the euro zone.

8 To sustain the credibility of Irish sovereign debt on the bond markets: “borrowing costs have fallen and

our bond spreads have halved . . . as a sovereign we are now fiscally stable and credible”. (March 2010)

Result: FAIL. Largely because of the bank guarantee, the credibility of the Irish sovereign collapsed.

9 To create a well-functioning banking system: “The goal, at the end of the two-year guarantee period laid down in the legislation, is a banking system that is ‘fit for purpose’ for the transformed financial environment in which it will find itself operating in the coming decades.”(October 2008)

Result: FAIL. After five years, banks are still struggling to deal with mortgage books and credible analysts believe they may demand another public bailout.

10 To save the euro. “We were very concerned at the time that there would not be a bank run, that there would not be those photos, pictures or films around the world showing people queuing outside banks . . . That would have been a complete disaster.” (Christine Lagarde, November 2010). The instruction from European Central Bank president Jean-Claude Trichet was, Lenihan said, “that you must save your banks at all costs”. All costs, that is, to the Irish: an economy with 1.8 million workers has borne 40 per cent of the cost of the euro zone banking crisis. Result: FABULOUS SUCCESS

In all of its stated aims except one, the bank guarantee and the decisions that flowed from it have failed. The benefits promised to the Irish have been entirely illusory. The social and economic costs have been locked in for decades.

The least we can ask is that we be spared all the spinning about this great success story. As Rudyard Kipling put it, in a very different Irish context, “What need of further lies? / We are the sacrifice.”