Elderfield contradicts Lenihan on senior bondholders

HarshBuzz

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I recall him saying something like - you cannot default on this debt, these are the same bond holders that you are relying on to borrow from.
which is a line that has been shown time and time again to be false

did investors stop buying T-Bills after Lehmans went bust? They did not. :rolleyes:
 


smitchy2

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If you take a swipe off the senior bondholders you have to cut a similar % off all depositors.
That is the current Irish and EU law.

It is different in the US where bondholders are treated separate to depositors in banks.

The legislation can be changed here but it may not be able to happen if the Eu law supersedes it. This is what Elderfield is on about.
 

Hewson

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If you take a swipe off the senior bondholders you have to cut a similar % off all depositors.
That is the current Irish and EU law.

It is different in the US where bondholders are treated separate to depositors in banks.

The legislation can be changed here but it may not be able to happen if the Eu law supersedes it. This is what Elderfield is on about.
McWilliams maintains that no such law exists. Personally, I don't know. Do you have the relevant wording to hand?
 

He3

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FT Alphaville has picked up on this. All the Irish banks debt has been placed on the potential downgrade list.

I'd say Elderfield is probably on the receiving end of a tirade from Lenihan right about now.

That FT page is headed Fallout from the Irish government’s kitchen-sink bailout of Irish banks, with Fitch.

Dolphins Barn kitchen-sink might be a bit too colloquial for the FT.

He has never said it would be illegal.

It said that it was a legal requirement to treate Senior Debt and Depositors in the same way, and given that there is €50bn in deposits, and €16.5bn in Senior Debt, asking the Senior Debt holders to accept losses would result in an overall loss that would be greater than the loss involved in paying the Senior Debtors in full, as the Government would have to trigger the deposit guarantee.
Firstly what legislation backs this up and

This would not be a problem if we had let the garauntee expire as planned and burned depositors and bondholders.

The truth is simple, it's just the spin that is hard to keep up with.
If you take a swipe off the senior bondholders you have to cut a similar % off all depositors.
That is the current Irish and EU law.

It is different in the US where bondholders are treated separate to depositors in banks.

The legislation can be changed here but it may not be able to happen if the Eu law supersedes it. This is what Elderfield is on about.
McWilliams maintains that no such law exists. Personally, I don't know. Do you have the relevant wording to hand?
Let's have a source for the claim that it would be against EU law please.
 

Wakeupcall

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Well whoever they are:

  • Have enjoyed gambling and winning on Anglo in the years running up to the crash.
  • Have been guaranteed any losses subsequent to the crash
  • May have their entire ante refunded by the taxpayer with knobs on
  • Can re-enter the bond market or property market at the bottom with their full ante assured - multiplying the potential for personal wealth growth.
Bastards.

thats it in a nutshell. absolute ************************ing disgrace. anyone who currently supports FF / greens are also traitors.
 

MPB

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If you take a swipe off the senior bondholders you have to cut a similar % off all depositors.
That is the current Irish and EU law.

It is different in the US where bondholders are treated separate to depositors in banks.

The legislation can be changed here but it may not be able to happen if the Eu law supersedes it. This is what Elderfield is on about.
That law applies to the Bank in the case of insolvency, not to the State in the case of a guarantee.
 

nicht besonders

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nevermind
 
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Hewson

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That law applies to the Bank in the case of insolvency, not to the State in the case of a guarantee.
Is there anybody out there with a wig who can clarify this situation? Is there a binding legal imperative on the State to protect bondholders and depositors equally?

Where's Libero, aka Dirty Harry?
 

He3

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Is there anybody out there with a wig who can clarify this situation? Is there a binding legal imperative on the State to protect bondholders and depositors equally?

Where's Libero, aka Dirty Harry?
He's still staring at goosebump on that other thread....

Go ahead punk, make my day
 
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MPB

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Is there anybody out there with a wig who can clarify this situation? Is there a binding legal imperative on the State to protect bondholders and depositors equally?

Where's Libero, aka Dirty Harry?
He already clarified it on another thread. The law applies in the case of insolvency. The liquidator must treat Senior Debt and Deposits on an equal basis.

It does not apply to the Govt guarantee. Deposits can be protected without having to protect Bondholders.
 

Barnacle

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What am I missing here?
“The position is that under Irish law, senior debt obligations rank equally with deposits and other creditors. I have no plans to change this position.

“There is, therefore, no question of seeking to impose losses on holders of such debt in Anglo Irish Bank or, indeed, in any credit institution in the State through any legislative measures.’’
Is this only because they are currently guaranteeing deposits and senior debt till the end of the year. Prior to the extension, Junior Debt was also included in the guarantee. So after the end of the year they could withdraw the guarantee for Senior Debt.
 

Hewson

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He already clarified it on another thread. The law applies in the case of insolvency. The liquidator must treat Senior Debt and Deposits on an equal basis.

It does not apply to the Govt guarantee. Deposits can be protected without having to protect Bondholders.
That's clear. Thanks.
 

browner

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did investors stop buying T-Bills after Lehmans went bust? They did not. :rolleyes:
Lehmans wasn't covered bu any government guarantee. Nor was it a nationalised institution.
This may explain that difference.

If the government issues a full and complete guarantee and nationalises the bank and then says "F the bondholders" it could affect the sovereign debt market. Methinks T-bills are a slightly more attractive proposition than Irish sovereign debt!
 

Libero

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He already clarified it on another thread. The law applies in the case of insolvency. The liquidator must treat Senior Debt and Deposits on an equal basis.

It does not apply to the Govt guarantee. Deposits can be protected without having to protect Bondholders.
I can clarify things a bit more...

  • There is an urgent need for a new bank resolution framework, so that bondholders who have a loss imposed on them cannot cry 'event of default' and petition for the winding up of the bank. This is the general position supported by the IMF, BIS and EU Commission. See here: International position on bank resolution and bondholder haircuts
  • It was formally recommended by the IMF, months ago, that the Irish government institute such a framework, but it has not done so, and no relevant legislation features on the list recently announced at the commencement of the new Dáil term.
  • Unfortunately, there is less and less bondholder funds to be burnt. Since September 2008, billions worth of existing bonds have matured and been replaced with debt that is effectively state guaranteed in perpetuity.
 

Hewson

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I can clarify things a bit more...

  • There is an urgent need for a new bank resolution framework, so that bondholders who have a loss imposed on them cannot cry 'event of default' and petition for the winding up of the bank. This is the general position supported by the IMF, BIS and EU Commission. See here: International position on bank resolution and bondholder haircuts
    [*]It was formally recommended by the IMF, months ago, that the Irish government institute such a framework, but it has not done so, and no relevant legislation features on the list recently announced at the commencement of the new Dáil term.
    [*]Unfortunately, there is less and less bondholder funds to be burnt. Since September 2008, billions worth of existing bonds have matured and been replaced with debt that is effectively state guaranteed in perpetuity.
This is what is most worrying. Mistakes made at the outset are being compounded by an unwillingness to admit to them and we're all being carried along on a current of fear and inertia at Government level that will bleed us for two generations.

We must have done something really bad in a previous life.
 

nicht besonders

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This is what is most worrying. Mistakes made at the outset are being compounded by an unwillingness to admit to them and we're all being carried along on a current of fear and inertia at Government level that will bleed us for two generations.

We must have done something really bad in a previous life.
It gets worse and worse...
 

GDPR

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The government has tried to hold the line that senior bondholders must be paid in full. That line may not be sustainable for much longer.

Financial Regulator Matthew Elderfield has told a Dáil committee that the Government could enter negotiations with senior bondholders to share some of the cost of the bank bailout.

RT News: Financial Regulator will intervene with banks

When do the negotiations begin? And how much has been returned to senior bondholders at a wasteful 100% return rate so far?
You truly are an eejit.

Elderfield clearly said any negotiations would have to be entirely voluntary on the part of the bondholders, there could be no question of forcing them to take a cut.
 

MPB

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You truly are an eejit.

Elderfield clearly said any negotiations would have to be entirely voluntary on the part of the bondholders, there could be no question of forcing them to take a cut.
No, that would take courage and backbone.

Something FF never had.
 

jimbo99

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The Government seem totally unwilling to enter into any type of negotiations with these bondholders. Makes you wonder why and who are these bond holders. Their unwillingness to entertain the option may be explained if we knew who the bondholders were. Will we ever find out.
It makes you wonder why they are the Government.
 


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