Wednesday, September 29, 2010

Required reading for opponents of bank bailouts

From today’s FT:

Ireland’s finance minister has vowed to stand behind Anglo Irish Bank, the lender at the centre of the country’s property meltdown, saying that allowing it to fail would “bring down” Ireland.

In an interview with the Financial Times, Brian Lenihan, finance minister, said Ireland had no choice but to act.

“Any Anglo failure would bring down the sovereign. It is systemically important not because of any intrinsic merit in the bank, but because of its size relative to the national balance sheet. No country could contemplate the failure of such an institution,” he said.

[Note: Anglo-Irish has liabilities of EUR 80 billion.]

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