Government ‘squandering’ money in bank bailout plan
Wednesday October 07 2009
Nobel Prize-winning economist Joseph Stiglitz said the Government is "squandering" public money with its plan to bail out the banks.
Finance Minister Brian Lenihan said last month that the government will buy €77bn of souring property loans from banks to purge them of toxic assets.
The Government is paying €54bn for loans that have a value of €47bn. The €7bn difference takes into account the properties’ “long-term economic value”, Lenihan said.
“The Irish government is squandering large amounts of money to bail out banks,” Stiglitz said at conference in Dublin today. “There’s a sort of a view that there’s no alternative.”
That view is “nonsense,” Stiglitz said, adding that “the rule of capitalism says that when firms can’t pay what they owe, they go bankrupt.”
Stiglitz, a professor at Columbia University in New York, told RTE yesterday that overpaying for the loans was “criminal”.
“It’s a massive transfer of money from the public to bankers,” he said today.
- Louisa Fahy and Simone Meier
© Bloomberg
