Ireland OKs world-leading bank guarantee

The sweeping deal commits Ireland to insure unlimited deposits and the interbank debts of six Dublin-based institutions totaling 440 billion euros ($600 billion) for the next two years.

Lawmakers in both houses of parliament overwhelmingly backed the emergency bill following 30 hours straight of debate--their first round-the-clock session since 1984. President Mary McAleese formally signed the bill into law.

Irish bank shares surged for the third straight day in celebration of a government policy designed to strengthen deposits and reassure foreign financiers that it's safe to lend money to Irish banks. The Irish Stock Exchange closed 5 percent higher, bucking Thursday's negative mood internationally.

But Ireland's left-of-center Labour Party complained that the government should have punished Ireland's banks for lending recklessly and rewarding themselves too richly.

Labour leader Eamon Gilmore said the chief executives of the six protected banks were paid a combined 13 million euros ($18 million) last year. He said Labour voted against the government plan "because we refuse to sign a blank check," and because it imposed no sanctions on the banks' overpaid leaders.

The European Union, Britain and other EU states battling their own banking crises complained that Ireland is promoting unfair competition.

In Brussels, EU competition spokesman Jonathan Todd said his department still hadn't received any formal explanation from Ireland about how its bank insurance program would work--and so had no way of knowing whether the EU will even clear the Irish plans as legal.

"Without notification we cannot undertake our analysis and we cannot take a decision," said Todd, who noted that authorities in Britain, Germany and several other European countries did seek advance EU approval for several emergency buyouts of failing banks over the past week.

Most other European countries cap their guarantees on deposits at 20,000 euros (about $28,000) and do not underwrite their banks' borrowings from other banks. France announced plans for an emergency summit Saturday during which EU financial chiefs would mull whether to raise those limits.