The Irish Bank Guarantee 2008 – A Silent Coup
June 30, 2013

C. Flower's Avatar

The Guarantee meeting of September 30th-October 1st 2008 was held at the request of AIB and BoI – it was one of those meetings held all the time in Ireland, unminuted, between Ministers, County Managers etc. and supplicant businessmen. They get together, and the supplicant says “my project is being held up by the planners” “the new regulation is going to put me out of business” “I want the concession for hotdogs at the Gathering” “I want the licence to dig gold out of Mount Leinster” etc. etc. Ministers and Managers say “what can we do ?” and get the plan changed, get the licence granted and so on. It is not a question of money changing hands, but of future directorships, golf club membership (Phil Hogan take note), being asked to join the consortium, well, being one of the boys, generally.

We know that AIB and the BoI came along to Cowen and Lenihan that night and asked for a guarantee. “Would you just pop out and have a coffee while we discuss it” an unnamed politician or civil servant said to them, and ten (or however many) minutes later, they were asked back in, and told that they had one.  Then the Regulator, Neary phoned the other banks that were covered. Next, individually, Ministers were rung up from the meeting in the middle of the night and told that a Guarantee had had to be put in place and they must give it the O.K.. Over three hours later, at 6.45 a.m. the world and the Irish people were told that “Ireland had guaranteed all its banks.”

The character of this meeting was that best referenced by the term “stroke.”  It was not a meeting of the government, as defined by the Constitution (at least 9 TDs), and there was no attempt to recall the Daíl to sit in emergency session overnight, as there was to be for the IRBC windup.  There were no bank experts there to give advice.  It was attended (according to Brendan Drumm) by two politicians, 2 civil servants and four bankers.  After the meeting Lenihan issued a meaningless “Letter of Comfort” indicating that the Government would cover bank losses.  The letter was pure sleight of hand, smoke and mirrors, whatever you want to call it, with no legal standing, in breach of the Constitution.  The ad hoc group of people in that room had no authority to make any such decision.

When the Daíl was told that a  bank guarantee was in place Cowan lied to the Daíl and said that the Guarantee had been agreed by Cabinet: “the Government.”…/document1.pdf

At the cabinet meeting the previous day, there had been some kind of “in principle” agreement for a guarantee, but the unlimited form unilaterally opted for by Cowen and Lenihan, covering all bondholders as well as depositors, has left us with an unsupportable financial burden.We would have been in order to occupy the Dail and demand he rescind.On the night of the “guarantee”, there was nothing to prevent Cowan from calling the Dail to an emergency sitting, as was done earlier this year for the IBRC wind up legislation.    

The Dail could have and should have voted against it and it would not have stood – but they were lied to and presented with a fait accompli  – told that the Bank Guarantee was already in place, taking all real value out of the debate.

Other Ministers were “ordered to approve” the decision, rather than consulted on it, in the insulting “incorporeal meeting” –  a series of phone calls to the homes of Ministers, in the small hours, of which Willie O’Dea and Mary Hanafin have written.

The whole tendency of Fianna Fail to take action out of the Dail Chamber during its term in office was commented on at the time as was the rule by tiny cabal, with just three people, Lenihan, Cowen and Coughlan acting as a super-cabinet, and with many government announcements made outside the Daíl.  Just how dangerous this was emerged when the Bank Guarantee manoeuvre was pushed through.

It was effectively a coup by the banks.   No tanks, or ranting Generals – just a shifty midnight hijacking of the political system that transferred billions in private debt onto the public.

Then, weeks went by. Lenihan did not seem to realise that his “bank guarantee” meant that MONEY HAD TO BE PUT INTO BANKRUPT BANKS.   That was why Drumm wanted to hit him.

Lenihan’s unconstitutional action had sold the country to the banks.

From the Anglo Irish Tapes:

Drumm re Lenihan

“‘Do you understand? Can I teach you just one piece?’ Not in that language, obviously, but can I teach you one piece of banking here? ‘When you’ve guaranteed somebody’s entire liabilities, it is smart to write a very small cheque to stop them being called! Which bit of that don’t you get?’ I don’t think he gets it.”
C. Flower  30 June 2013
Discussion on this on this thread at
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