September 2015        

Don’t privatise the banks?

Nicola Lawlor

Very early in the present crisis the CPI argued against nationalising the banks, on the grounds that this would be socialising tens of billions in debts, would bankrupt the state, and would create conditions for a general downward restructuring of the economy. The party introduced and popularised the slogan “Repudiate the debt” as the clearest anti-imperialist class position, which attempted to challenge both the Irish establishment and the European Union and indeed the global financialised economy.
     Seven years later the crisis has not gone away, either for working people or for capital. Instability remains, and working people continue to be made to pay for capital’s problems. The banks, in particular AIB and Permanent TSB, are not out of the woods by any stretch of the imagination, but both are returning slowly to profitability and have provisions made—taxpayers’ money—for their debts (impaired loans, distressed assets, non-working book, etc.).
     So, given that the state imposed the burden of such gigantic losses on our shoulders, now that there are signs of profitability should we not be arguing for holding the banks as public entities, not just to pay back the money received but as valuable state assets to help pay for vital services, as lending agencies that can be directed towards strategic and sustainable investment and as part of a progressive future housing policy?
     The banking industry in Ireland previously had a public side, which was used for strategic investment and a degree of planned economic development. The privatisation of this is a small part of the beginning of the collapse of the industry.
     Obviously a government led by Fine Gael or Fianna Fáil will not do this; but is the correct progressive policy to demand a continued majority public holding of AIB and PTSB?
     Fine Gael’s and Fianna Fáil’s policy has been for the state to provide for the losses and to privatise the profits through either share sales or outright privatisation at the appropriate time. The banking policy of both these parties has been to drive up house prices. NAMA is premised on this basis; and for the provisions to be adequate for the bad books of these banks, house prices must not drop and preferably should rise.
     For house prices to rise, supply needs to be restricted, and demand needs to outweigh supply. The more demand, the quicker the increase in house prices. To a large degree this has succeeded and is part of the reason for the improved state of Irish banks, but at the deliberate cost of increased homelessness, exorbitant rents, and the total waste of vacant and unoccupied dwellings and buildings remaining unused around the country.
     At the electoral level, Fine Gael and Fianna Fáil know who their voters are, and many of these are in negative equity, not homeless, and so they have done their political calculations on the impact of their banking policy, and it suits their electoral agenda.
     Their policy of socialising losses and privatising profits is class-based and has been implemented with violence and aggression against working people and communities.
     We opposed the socialisation of losses. Should we not also oppose now the privatisation of profits?

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