In this afternoon’s sitting of Tynwald (Thursday 23^rd) members voted overwhelmingly in favour of an amended depositors’ compensation scheme that will potentially cost the taxpayer up to £150 million.

Treasury Minister, Alan Bell MHK argued that the Government needed to share the burden with the banks, in providing cash to compensate investors if a bank fails, in order to protect the reputation of the Island as a responsible finance centre.

He, and other members speaking in favour of the amendment to the scheme only recently approved at an emergency sitting of Tynwald, said that the whole foundation of the Island’s finance sector was at stake; and this necessitated extraordinary measures - which reflects the extraordinary circumstances in the global financial markets and the reactions of other jurisdictions to this crisis.

Although only one member, believed to be Liberal Vannin party leader, Peter Karran MHK voted against the proposal, several members expressed reservations about the scheme, most notably Michael MHK, David Cannan; who was roundly criticized by Chief Minister Tony Brown for being irresponsible with some of his comments.

Even the ‘new’ boys ‘club’ of Juan Watterson (Rushen), David Quirk (Onchan), Geoff Corkish (West Douglas), Graham Cregeen (Santon & Malew) and Tim Crookall (Peel) did a swift u-turn on their previously held view that taxpayers’ money should not be put at risk and voted in favour.

Answering questions posed by members during the debate, Mr Bell said that government’s role will be to provide ‘liquidity’ in the event the compensation scheme is triggered. This should enable payments to be made quite quickly, he said, instead of having to wait an uncertain amount of time before the liquidator could make a payout or money was made available by the banks through the compensation scheme.

The new scheme now also provides cover, up to a maximum of £20,000, to charities and other classes of investor not previously covered in the October 9^th Order.

The new scheme limits the exposure of banks in the scheme to a maximum of £350,000 per year, rather than the £500,000 previously proposed, and aggregate of £200 million.

Mr Bell and the Chief Minister were at pains to point out that although this will not satisfy everybody it is still much better than an offer in some other jurisdictions, such as the Channel Islands.

Mr Bell also made it clear to Members that the IOM’s ‘AAA’ credit rating will not be affected by the proposed scheme. It was pointed out that the taxpayers’ £150 million is a sum that is affordable. (If that is the case why not underwrite other ‘failures’ such as the collapse of building firms who often leave small Manx businesses and sole traders in dire financial straights.)

Throughout the debate reference was made to the situation at Kaupthing Singer Friedlander, but Mr Bell was quick to point out that the bank had not yet failed and representations would be made at the court hearing tomorrow (Friday 24^th) to delay a decision on winding the bank up.

Remarks were also made that the situation was not the fault of the bank, the government or the FSC, which has been dubbed by some as the ‘Failed Supervision Commission’, and that individual depositors should have exercised more caution before investing in an Icelandic Bank; which will not come as a surprise to seasoned watchers of IOM politics.

Reassuring noises were made though about the chances of ‘recovering’ some of the £500 million pounds plus ‘transferred’ on the direction of the FSC to the London division of the bank. David Callister, MLC, citing the MEA affair, suggested that the Manx authorities should be off to the High Court in London to demand the money back.