Independent MEP Marian Harkin today (22 March) wrote a formal letter to EU Internal Market Commissioner Michel Barnier requesting that he investigate the legality of the Irish Government decision to "burn" credit union bondholders in IBRC.
Harkin, who is a long-time advocate of the vital role played by Credit Unions in the Irish financial ecosystem, explained that "I contacted the Commissioner on foot of the shocking news that a number of Irish Credit Unions - member-owned not-for-profit financial organisations - are together carrying a loss of approximately €15m following Irish Government’s decision to liquidate Irish Banking Resolution Corporation (IBRC), formerly Anglo-Irish Bank".
Harkin noted that "these Credit Unions invested in a custom-made Anglo-Irish bond in good faith - Anglo had the highest possible international credit rating at the time - but they have now been informed by Minister Noonan that their investment will not be repaid".
"The Minister argues that since these deposits are not covered by the State’s Eligible Liabilities Guarantee Scheme, any further claim by Credit Unions for the outstanding balances will only arise where funds remain available at the end of the liquidation process - in other words, forget about it," she added.
"It seems outrageous to me that these bond repayments will not be honoured when senior foreign bondholders were repaid every single cent they invested," said the Ireland North & West MEP.
"I share the view expressed by the Irish League of Credit Unions that this amounts to as flagrant an interference in the sanctity of Eurozone deposits as the proposed conditions for the EU bailout in Cyprus," she added.
"I have therefore asked Commissioner Barnier to assess whether the Minister's actions constitute a breach of the EU Deposit Guarantee Scheme," Harkin concluded, adding that "it would seem to me a most unjust action by the Irish government if these Credit Unions - who represent normal Irish savers, nothing more, nothing less- were so cruelly forced to bear the brunt of the mistakes of crooked banks".