Euro Crisis: State Support to Anglo-Irish Bank Reaches EU22.9 Billion

The nationalized Anglo-Irish Bank posted record losses of EU8.2 billion, and revealed that the government was forced to inject a further EU8.58 billion into the bank to prop it up. Total state support to Anglo-Irish is now EU22.9 billion. This is a giant volume for Ireland, which has a GDP of EU179 billion. Last week, S&P forecast a total bill of EU35 billion.

An informed Irish journalist source told EIR that the government wished to liquidate Anglo-Irish, but that this would involve costs and, above all, "systemic risks". Thus, the government is now thinking about a good bank/bad bank solution which, they estimate, could limit costs to EU25 billion. Ireland has already a 20% deficit on GDP, and even such a "limited" cost would increase the deficit remarkably. The source shared the view that a real solution would be a Glass-Steagall regulation. Even though Anglo-Irish is a commercial bank, its mortgage loan activity has been financed by the securitized ABS market, which is not a Glass-Steagall standard; therefore, a Glass-Steagall reform would establish what part of its debt fits to a commercial standard and which not.