Can we afford to throw good money after bad?

Are big banks too important to fail? It"s a question that has been asked and answered many times in the months since Lehman Brothers was allowed go to the wall last September, triggering what many believe was the true beginning of the recent global financial crisis. But does Ireland"s so-called 'zombie bank", Anglo-Irish, which the Government is preparing to pump €4 billion of taxpayers" money into in order to prop it up, fall into this critical category of financial institution. Could the Government allow it to fail or would this trigger financial meltdown in Ireland? It"s certainly a major dilemma for the Government. Fine Gael and its spokesperson, Richard Bruton, firmly believe it should be wound down in an orderly fashion. Finance Minister Brian Lenihan, on the other hand, is vehemently opposed to taking that route, saying closing Anglo would cost the taxpayer up to €60 billion, the estimated value of deposits in the institution covered by the State guarantee introduced last year. However, the difficulty now is that this bank - once Ireland"s third biggest - needs €4 billion in fresh capital for it to continue to operate. The question taxpayers are asking is why? This bank took extraordinary risks without any thoughts for the consequences, not to mention the dodgy hiding of former chairman Sean FitzPatrick"s loans and a directrors" loans scandal that also involved Irish Nationwide, When the crunch came, it failed and was only prevented from collapse when the Government stepped in to nationalise it to prevent a run on Anglo"s deposits. If €4bn of our money is injected into this bank, this money will disappear into the black hole at the centre of its balance sheet. €4bn is an enormous amount of money, particularly for a country in the grip of the greatest economic crisis in its recent history, but the Government appears intent on spending it to prop up this bank without any real hope of ever seeing any return on it. This move is, in the words of Professor Brian Lucey of Trinity College"s School of Business, a profoundly immoral, deliberate and calculated waste of taxpayers" funds. It is, he adds, spending money we do not have on a bank we do not need. It will certainly become a major drain on our meagre resources for years into the future at a time when taxpayers will continue to have to bear the burden of high taxes and wage cuts due, in no small part, to the activities and antics of the people at the top of banks like Anglo Irish. The Government says it must keep Anglo Irish Bank going as it is systemic to the entire banking sector in this country and the taxpayer has no choice. In spite of keeping it open as a going concern, it is not lending any money and is not going to be sold. Its new business model, or reinvention of itself, is still some way off, it would appear. It remains 'more toxic than plutonium', to quote Prof Lucey. While the alternative might be equally unpalatable, it does appear to be a complete fallacy to invest this amount of money even if the Government is committed to operating the bank as a going concern. Most taxpayers who are aghast at what has occurred in this country in the past 12 months would be prepared at this stage to see Anglo wound down in an orderly manner.