If Irish banks fail, must taxpayers rescue them?

[feargach]

When the economies in Scandinavia popped in the 90s, those nations spent massive scads of their wealth bailing them out.

If the Irish banks do the same, is it really necessary for the taxpayer to bail them out?

Assuming our Gov't was to say 'no', and refuse to bail them out, what would the result be? As soon as the collapsed banks hit bottom, won't they be bought up by foreign investors?

Anyway, I don't fully understand what would take place in the absence of a State rescue.

Please only post here if you're willing to engage with the hypothetical failure of at least one of Ireland's top 3 banks. I know there are bulls who are certain that no major bank failure can happen here, I hope they'll steer clear of this thread.

[wombat]

I wonder what the EU's reaction would be to the govt' putting money into a bank? I doubt any of them will fail, I'd expect that if the share price drops far enough, they'll be taken over by a foreign bank. I don't see the advantage in having an Irish owned bank, can anyone explain?

[Sidewinder]

We're still forking out millions of taxpayers money every year for the ICI collapse in the 80s, and will be paying millions every year until 2050

The FF/PD axis has spent 10 years banging on about "competition" and "free markets". Therefore, if banks collapse because they have been irresponsible with their lending, this is simply the efficient outworking of the market and they should be allowed to collapse and the ****************************************** management should lose their shirts for running the business badly. End of story.

[Akrasia]

i don't see the advantage of any kind of bank

[hiding behind a poster]

i don't see the advantage of any kind of bank

Neither did Bertie Ahern for a long time.

[kerrynorth]

I would imagine that competition policy prevents the government from 'bailing out' any bank per se. Deposits are guaranteed but there will be no bailing out of shareholders. It would be the ECB that will determine if a bank is salvageable or not through lending facilities, although at penal rates (a la the Bank of England and Northern Rock) of the base rate +1pc. The government will have no role in whether a bank survives or not. Just bye the bye the Northern Rock situation seems to be deteriorating.

[johnfás]

Bailing out banks, in most circumstances, would only lead to a greater moral hazard within the sector.

[Apparatchik]

Bailing out banks, in most circumstances, would only lead to a greater moral hazard within the sector.

It's happened a few times before, notably with AIB, at the time of the ICI debacle.

[jpc]

i don't see the advantage of any kind of bank

Neither did Bertie Ahern for a long time.

[Pauli]

We're still forking out millions of taxpayers money every year for the ICI collapse in the 80s, and will be paying millions every year until 2050

The FF/PD axis has spent 10 years banging on about "competition" and "free markets". Therefore, if banks collapse because they have been irresponsible with their lending, this is simply the efficient outworking of the market and they should be allowed to collapse and the ****************************************** management should lose their shirts for running the business badly. End of story.

Brilliantly and succinctly put, sidewinder! Let them rot.....