I'd like to throw a controversial idea out there.
I don't even find it at all self-evident that the government should force banks to lend or extend credit to Irish businesses.
To make an analogy, consider oil. Ignoring the arguments about peak oil just to make this point, assume that the price starts to rise as oil finally starts to run out. Many businesses depend on cheap oil. In such a scenario should the government subsidize oil? I would argue that they should not. The businesses should either pass on the costs to their customers (if they can) or need to adopt their business model in the new high-cost oil environment. You do not want government funds going into defunct business models which would not be viable without direct or indirect government money being poured into subsidising the cost of one of their inputs.
The cost of credit (and everything is cost; pay enough and someone WILL lend you money) is an input cost for business too. The era of cheap and easy credit may well have been a historical blip and businesses should not depend on it's existence for their viability. Businesses which depend on cheap credit need to adopt to the current environment by passing the cost onto their customers or else, if they cannot function without cheap credit, they should simply cease trading. At the other end of the scale to most Irish SMEs we saw that Northern Rock's mortgage business model was dependent on cheap and easy credit but there was no call for the British government to subsidise it's business model.
I don't even find it at all self-evident that the government should force banks to lend or extend credit to Irish businesses.
To make an analogy, consider oil. Ignoring the arguments about peak oil just to make this point, assume that the price starts to rise as oil finally starts to run out. Many businesses depend on cheap oil. In such a scenario should the government subsidize oil? I would argue that they should not. The businesses should either pass on the costs to their customers (if they can) or need to adopt their business model in the new high-cost oil environment. You do not want government funds going into defunct business models which would not be viable without direct or indirect government money being poured into subsidising the cost of one of their inputs.
The cost of credit (and everything is cost; pay enough and someone WILL lend you money) is an input cost for business too. The era of cheap and easy credit may well have been a historical blip and businesses should not depend on it's existence for their viability. Businesses which depend on cheap credit need to adopt to the current environment by passing the cost onto their customers or else, if they cannot function without cheap credit, they should simply cease trading. At the other end of the scale to most Irish SMEs we saw that Northern Rock's mortgage business model was dependent on cheap and easy credit but there was no call for the British government to subsidise it's business model.