Fine Gael calls for creation of 'good banks' with clean balance sheets into which the taxpayers' recapitalisation would go.

Acccording to FG the Government's recapitalisation plans may leave taxpayers' dangerously exposed to massive bad debts and the Government should urgently consider other options, including the creation of brand new 'good banks' with clean balance sheets.

Fine Gael Deputy Leader & Finance Spokesman Richard Bruton TD said today (Monday).

"It is time to look at other alternatives to the present proposal for recapitalisation.
"Fine Gael has huge concerns that the taxpayer is being asked to put money into banks without knowing the full extent of the hole in their balance sheet. There is a real risk that the only result will be to allow the existing banks to nurse along their dodgy property lending while continuing to starve viable businesses of access to the credit they so badly need.
"The taxpayers' interest is to kick-start new lending. It is not to protect the existing banks or those who knowingly took on the risk of funding their impaired lending policies.
"It is now time to look at a different model, which would create 'good banks' with clean balance sheets into which the taxpayers' recapitalisation would go.

"This would involve separating from within each bank a new bank which would hold all the state guaranteed deposits and which would buy those parts of the loan book such as residential mortgage loans and business overdrafts which can be easily valued from the existing parent bank. This would constitute a new good bank with a clean balance sheet. Its capital base would be provided by the taxpayers' recapitalisation, hopefully with other private capital, and some small shareholding could be given to the existing shareholders. These new banks would then be well capitalised with a clean balance sheet and fully open to resume lending.

"A legacy bank would be left behind in each case which would no longer engage in any lending. Its role would be to manage the remainder of the loan book and recoup maximum value from it over time. It would be managed entirely in the interest of the existing capital owners and non-guaranteed creditors. Fine Gael believes that this alternative model deserves serious assessment and could offer a much better use of scarce taxpayers' resources."

FG leads FF by 5% in latest Sunday Business Post/Red C poll

The Red C poll in tomorrow's Sunday Business Post shows that FG leads FF by 5%. There is an improvement in FFs fortunes with a rise of 4% since the last Red C poll. However FF is still down 12% on its general election result. FG at 35% gains 2% since the last survey. FGs support is up 8% on its general election showing. Labour is down 1% since the last poll but is still 4% higher than its 2007 general election outcome. A 1% drop is statistically insignificant. The Greens drop 1% for the second successive month. Support for the Greens is likely to evaporate in the coming months as the economic recession, tax rises and public expenditure cuts bite. This is the first poll since the PDs were wound up.

FG will be buoyed up by its showing in various polls and by a very successful conference in Wexford this weekend. Nevertheless it is likely that FF will come in at around 40% in any general election situation unless FG can break FFs stranglehold on the loyalties of a significant proportion of the electorate. The economic crisis has damaged FFs claims to competence in the economic management of the country. The FG party must improve organization and communication and continue to demonstrate economic competence. Finance Spokesman Richard Bruton is by far the most impressive performer on the economy in the Dail. His talents are wasted in opposition.

The reality is that the core support for all Irish political parties will continue to drop. This opens up prospects for huge swings in support in future elections. It is a moot point as to when these huge swings will occur. Could the organizational structures of the larger parties blunt the severity of such swings?

The next general election is due in 2012.-assuming that the FF/Green coalition survives. If the economy has not rebounded strongly FF will lose marginal seats. This would be sufficient to send the party into opposition unless it could cobble together a coalition with Labour.

• Fine Gael 35% (+2%)
• Fianna Fail 30% (+4%)
• Labour 14% (-1%)
• Greens 5% (-1%)
• Sinn Fein 8% (-2%)
• Independents/Others 8% (+0%)

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