THE SOLIDARITY Fund, which was set up after the 2013 bailout to fund social coherence will by amendment of the law governing its operation become a vehicle offering assistance to the depositors of Laiki which went bankrupt and the bank bondholders. Finance Minister Harris Georgiades made it clear that the money to be given to the victims of the haircut would be assistance and not ‘compensation’ as that would imply the state was accepting legal liability for the 2013 haircut.
The establishment of a fund to offer assistance to the bank bondholders and the Laiki depositors who lost all their deposits above €100,000 was an election promise by President Anastasiades, aimed at countering the pledge of rival candidate, Nicolas Papadopoulos, to fully compensate the bondholders who saw their bank bonds turn into junk. Anastasiades’ promise was more pragmatic as he made clear that the state did not have the ability to cover the losses, but was prepared to offer some assistance, over a period of several years.
As was reported on Monday, the state would deposit €25 million in the fund to get it going. The move had the support of all the parties, none of which wanted to be seen denying the alleged victims of the haircut of assistance. Nobody dared to say that the state had no moral, political or legal obligation to offer assistance to people that had chosen to invest in bank bonds because of the high return offered. It is not the state’s responsibility to help out individuals that made bad investment decisions and lost their money.
Bondholders should have sued the banks for compensation instead of demanding the taxpayer covered their losses. The pandering politicians would not dare say this, especially at election time, when one candidate was promising to fully compensate these people with the taxpayer’s money. The depositors of Laiki have a more legitimate claim, as they had entrusted their money to the bank and this trust was betrayed, but why should the taxpayer pick up the bill? On what moral or legal grounds is the taxpayer obliged to compensate the depositors of a bankrupt bank?
The claims of those that suffered should be heard in the courts and the court should rule on the legitimacy of the claims rather than the executive deciding to offer assistance, for the sake of votes. That the idea for this fund was crystallised during the presidential election campaign says it all. It was yet another gambit for the president to win (or deprive his opponent of) votes. That is the only reason deputies are now talking about a fund which has no justification.