Lenihan: "What makes me angry is those who have brought us to this place"

Libero

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There's been a bit of a debate here about Lenihan's own culpability and whether he should be angry with himself.

Let's park that for a moment and consider who we all agree bear a large part of the responsibility for the crash and the current crisis...
(A) The reckless bankers
(B) The negligent regulators
(C) The greedy property developers
(D) The gombeen politicians, especially Bertie Ahern and Brian Cowen

Now let's ask whether Brian Lenihan has acted towards these people as would a man who feels anger towards them.

(A): Declined to appoint High Court inspectors with teeth. Has stood by as the ODCE and Garda investigations into Anglo seem to run into sand. Responds to hard questions from Joan Burton with tart observation she should approach Gardai with any evidence of wrongdoing. Refuses to change insolvency laws, even when openly flouted by Sean Fitzpatrick and his wife, and even when this results in greater losses to a nationalised bank.

(B): Personally OK'd and defended the massive, inappropriate pay-offs to departing regulators, no matter how this confirmed Ireland's image as home to negligent regulation and a general cowboy culture in finance. Has not supported any changes to rules governing Oireachtas committees so that former regulators could be the subject of enquiry there. Recruited an insider (albeit a good one in Honohan) to run a banking inquiry with limited terms of reference.

(C): NAMA can be defended as an honest attempt to sort out the banks, with merely some delay in making developers face their obligations. But why turn it into a black box in terms of information on how developers are being made face those obligations? Was that necessary for market confidence, or necessary for something else entirely?

(D): When Bertie Ahern was under pressure over the Tribunals, shortly before he stepped down, Brian Lenihan did not have to publicly support him, culminating in a gutsy defence in the Dáil. But he did. Same with Willie O'Dea, and the same last week with Brian Cowen. Those were deeply tribal performances, and unnecessary given Lenihan's stature in his own party.

Sorry, Mr. Biryani, but I can't look at any of the above and view it like the bank guarantee as decisions forced on the Minister, and with no easy alternatives. One by one by one, Lenihan has acted like a man onside with those responsible, rather than one angry at them.

I'd like to believe Lenihan shares our anger, but his actions betray him.
 


sondagefaux

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OK chaps, just to point out (as I am new here);

1) In terms of where I am coming from (banking, with an in depth knowledge of law & the regulatory side), I think that your whole notions of how much extra we are on the hook for as a result of decisions taken since 2007, is far less than you would believe. Since the Lehmans collapse, everything has been a zero sum game. The alternative to the taxpayers picking up the tab, was individual depositors suffering which would have made the Gaybo scenes at Anglo's AGM even worse. I think everything that has been done since then is just tinkering around the edges, the amount saved by screwing bondholders etc is minor in the great scheme of things.

2) As a result of (1) I think you are attributing far greater power and consequently blame to BL.

3) Regardless of 1 or 2, the statement by the man was clearly intended to encompass everything that happened to get our banks to this state.

I simply don't see, no matter what any of you say, how the minister for what ever title other than finance had in terms of real power during the period in which damage was done.

Its very easy now to say he should have stood up , resigned etc, when the whole country, includign the unions and the opposition at the time were fully on board with the same policies.

OTOH, I do think McCreevey, Ahern & Cowen have the lions share of the blame, since they were the people with the genuine power at the time.
Brian Lenihan was a member of the cabinet before 2007. Under the priniciple of collective cabinet responsibility he bears as much responsibility as the three Muppeteers.

Brian Lenihan supported policies which led to the following results:

At €7bn by 2005, the cost of various tax breaks to the Exchequer was three times bigger than income tax receipts. As much as €3bn of that may have been property related. That's 75 per cent of what needs to be found in Budget 2010.

It's not as if no one shouted stop -- plenty of people did. But the relentless lobby machine of the construction industry and other vested interests was stronger.

By 2004, even investors thought the property tax gravy train had to brake. Economic consultants Indecon told the State they had run beyond their course and should be phased out, as did a later Goodbody report.

But pressure from builders' lobby group CIF and other vested interests saw then Finance Minister Charlie McCreevy roll over many property tax sweeteners for two more years.

A rush of planning permissions were lodged in 2004 and 2005 as people raced to stockpile on tax reliefs in the expectation that many would be axed. In 2004 alone, 350 applications for hotel projects were made.

Finally, in 2006, then Finance Minister Brian Cowen put the kibosh on many -- but extended the qualifying deadline on others to 2008.

He actually brought in a new property tax incentive as late as 2007. The Mid-Shannon Corridor Tourism Infrastructure Investment Scheme, which takes in his own constituency area in Offaly.

Ill-fated schemes are now getting nobbled by the recession and may get Nama-ed. Not stopping them sooner also meant banks continued throwing money at doomed projects for a few years longer, racking up more Nama-destined property debt.

Below are some of the most legendary tax reliefs that fuelled the boom.

Investment houses and offices

This was the jewel in the crown of crazy Celtic Tiger property speculation. The lure of Section 23 convinced many they were property investment magnates, from high-roller Galway-tent tycoon types to shopkeepers and solicitors.

It allowed tax-free rental income over a long number of years for buyers, and relief even on furbishing costs, in areas that needed "rejuvenating", from inner-city Dublin to rural outposts.

It stoked up the building of sprawling housing estates to an almost unhinged rate near the peak of the boom.

Tiny, overpriced apartments in Dublin and other cities were an early feature. Then investment apartments sprang up everywhere else, from Castlerea to Carraroe.

Incredibly, tax-free rental income applied not only on the new property, but on any other property you owned when you bought a qualifying Section 23 property.

The tax breaks also applied to commercial and other property, and a similar scheme, Section 50, rewarded student accommodation investments.

Suddenly everyone from teachers and civil servants (and God help us, even journalists) were talking about their "property portfolios".

Maverick investors signed up with maverick banks which peddled 90-100 per cent investor mortgages and interest-only packages.

For those who invested after 2005 or so, the financial burden of the mortgage would not be met by rental income. Plummeting rents mean that's even more painfully the case now. Mortgage defaults on these properties could explode when the ECB eventually raises interest rates.

Hotels

Some €329m worth of tax breaks were given for hotels between 2004 and 2007. Uber-generous incentives allowed investors to offset the full cost of their investment against tax over seven years.

No wonder they mushroomed up all over the place.

But while tourism rose by 70 per cent since 1996, hotel bedrooms rose by more than double that, at 150 per cent.

Now the Nama project has become a hotel manager on top of everything else, as hotel investments have gone zombie in droves.

Investors get hit for a massive tax clawback if these premises close down before a seven-year lifespan. As many are cannibalising each other's business it seems inevitable that some will have to be shuttered. Even the industry body, the Irish Hotels Federation, is calling for it.

Several of the 10 top Nama developer names have hotel investments, including Bernard McNamara, and Johnny Ronan and Richard Barrett of Treasury Holdings.

Holiday Homes

Estimated to have cost the State €380m in total, Fine Gael leader Enda Kenny introduced the first holiday home tax-break scheme when he was Tourism Minister in 1995. More would follow.

Aimed at driving development in down-at-heel coastal towns and villages, schemes like Section 48 allowed investors in holiday homes to offset the cost of the property against all their income, on condition that they made them available for tourists to rent for 10 years.

It was a backbench TD/local builder's wet dream. Tic-tac houses and apartments sprang up in places like Carrick-on-Shannon, Enniscrone and Lahinch. The numbers built actually doubled the size of some small towns and villages.

But even with the surge in staycations, many of these holiday homes remain empty this summer.
Economy derailed by tax-break gravy train - Irish, Business - Independent.ie

From the Department of Finance's Task Strategy Group in 1999/2000, years before the bubble turned into a crash:

the majority of the beneficiaries of property tax relief schemes are high net worth individuals or corporate investors. The introduction of further tax incentive schemes even in times of exchequer surpluses does not assist the policy of continuing to lower tax rates and widen the base from which taxes can be levied. The possibility that tax incentives for property development have contributed to the emergence of asset price inflation cannot be discounted. Such reliefs may not be the most appropriate and cost effective way of promoting the development of an area or promotion of a undertaking given the present economic climate with record growth and increasing construction costs.
Perhaps as a cabinet member, Brian Lenihan should have read this report and opposed the property tax breaks?

BTW, if he's that disgusted with the people who got us into this mess, including the present Taoiseach, why doesn't he resign and support a motion of no confidence in the goverment?
 

Tomas Mor

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Lenny should look in the mirror and see himself, Bertie & Biffo amongst others.
 

ChickenBiryani

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ChickenBiryani

The initial mistake he made was the nature and scope of the guarantee. That is the pivotal point.

I don't think its the pivotal point in this thread. As I said before, and in other threads (god that sounds like Brian Cowen:)), I think the biggest problem facing us is the current account deficit. I think the amount that could have been contributed by bondholders is immaterial relative to us clocking up a €20bn per annum deficit. But none of that matters.

This thread, as far as I can see from the OP was about a statement BL made about his personal anger at what got us to the point of even having to decide on a bank guarantee or budget cuts in the first place.

People seem to be suggesting that he has no right to say this either

(a) as a member of FF, or
(b) because he was somehow part of the cabal that was responsible, which I disagree with, as nobody has yet managed to illustrate how he was in a relevant position of power durign the period in which I believe the damage was really done.
 

DCon

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This final point conjures up the following very likely scenario:

1. Developer takes out a 100 million loan for a project
2. He pays for the land - 25 million say - and leaves 75 million on deposit in Anglo, paying subcontractors out of that until the bubble bursts.
3. Anglo gets Nationalised.
4. Developer salts away the 75 million thanks to Fianna Fail removing the "unnecessary clause" in the nationalisation legislation at the last minute
5. Developer's loan of 100 million transferred to NAMA; taxpayer pays for some portion of the original loan.
6. Tax-payer "recapitalises" Anglo for the rest of the original 100 million loan.
7. Lord Henry Mountcharles witnesses developers toasting NAMA in Spain.
Replace Developer with lot of Developers, and replace 100 million with 10 -20 thousand million..
 

FakeViking

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I happen to agree with points 1-4, but I believe the reasons for those things are political not financial or economic.

My own philosophy is that while I understand the principles behind Keynesian deficit spending during recessions, there are limits to it, and sometimes a short sharp shock is preferable to death of a 1000 cuts.

I think we should default and radically restructure the public services & taxation systems but I have no doubt if those things were done tomorrow you would be criticising him for it too.

But this is a moot point and not reason for me to suggest that a man who believes otherwise has nefarious motives, which is at the core of this. Thats the point of a democracy. We elect and appoint people, they take decisons on our behalf, not all of which we agree with. It doesnt mean they are enemies of the state.
We are getting a bit off topic here! Regardless of whether Lenihan is guilty of high treason or just utterly incompetent, he did sit at the Cabinet table, he did have access to all the Cabinet memos (although he probably didn;t bother reading them). He participated in the decision making, and now with one infantile giggle he's trying to blame the downfall of our country on others.
 

sondagefaux

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I don't think its the pivotal point in this thread. As I said before, and in other threads (god that sounds like Brian Cowen:)), I think the biggest problem facing us is the current account deficit. I think the amount that could have been contributed by bondholders is immaterial relative to us clocking up a €20bn per annum deficit. But none of that matters.

This thread, as far as I can see from the OP was about a statement BL made about his personal anger at what got us to the point of even having to decide on a bank guarantee or budget cuts in the first place.

People seem to be suggesting that he has no right to say this either

(a) as a member of FF, or
(b) because he was somehow part of the cabal that was responsible, which I disagree with, as nobody has yet managed to illustrate how he was in a relevant position of power durign the period in which I believe the damage was really done.
He was in the cabinet, he was a FF TD. What more evidence do you need?


Are you saying that he was powerless to resist the policies of the three Muppeteers?

That he couldn't have, heaven forbid, publicly announced his opposition to the property tax breaks that inflated the bubble to insane proprotions?

And please don't say he didn't know enough about finance and economics prior to 2007 to be able to make judgements about the policies the government was pursuing.

If he knew feck all then, how come he's Minister for Finance now?
 

DCon

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You honestly believe that when a development starts the bank just hands over 100M? The final loan cost of the entire development which will take maybe 2 years and they just hand it over up front?
Nobody has any idea what the banks were doing during the boom, but what they were not doing was ensuring correct loan valuation or documentation.

If you do not believe me, you might believe the head of NAMA.

However, our own detailed due diligence on a loan by loan
examination has revealed a troubling picture of poor loan documentation, of assets not
properly legally secured and of inadequate stress-testing of borrowers and loans
- all
born of a mindless scramble to funnel lending into one sector at considerable pace and
of a reckless abandonment of basic principles of credit risk and prudent lending. As a
consequence of a number of factors - the fall in property values, a detailed scrutiny of
loan and security documentation and a sober assessment of the prospects for the
underlying property which secures loans
http://www.nama.ie/Publications/2010/NAMAChiefExecutiveStatementToJointOireachtasCommittee13Apr2010.pdf
 

greengoose2

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Builder Joe O'Reilly, a friend of Fianna Fail, frolics in the sun as NAMA takes over his Anglo debts

Isn't the tinternet great. The stuff you can retrieve can be illuminating. Now our new banker buddy may regale us with loads of figures but this thread is about Saint Lendahand's anger. Maybe his wig/hairdye would get damaged in that pool. He's jealous. petunia

And the developer – a high-profile Fianna Fail supporter who is friendly with the Lenihan family – has plenty to smile about as he adjusts his parasol to shade himself from the 35°C heat in the Portuguese paradise.


Chinese proverb; One picture is worh a thousand words.
 

ChickenBiryani

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He was in the cabinet, he was a FF TD. What more evidence do you need?


Are you saying that he was powerless to resist the policies of the three Muppeteers?

That he couldn't have, heaven forbid, publicly announced his opposition to the property tax breaks that inflated the bubble to insane proprotions?

And please don't say he didn't know enough about finance and economics prior to 2007 to be able to make judgements about the policies the government was pursuing.

If he knew feck all then, how come he's Minister for Finance now?
Sorry to let the facts get in the way of a good old fashioned verbal lynching, but to the best of my knowledge, Brian Lenihan only made cabinet in 2007. Prior to that he had a minor junior ministry.

Look, I agree with many of the points that have been made on the mistakes of government. I can't defend them. I just think you lot are letting your furious anger cloud everything at this stage, and there is literally nothing BL can say that you will not criticise him for.

As regards his aptitude for finance, what relevance does that have? Since as long as I can remember and this goes for all parties (i'm 38) , having an actual qualification for a job means nothing in irish government. hence the overwhelming preponderance of teachers on all sides of the house.
 

Goldencircle

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Get real, every member of FF is responsible for their time in Government.
Every single one of them are culpable. Brave Brian is a complete scumbag. Only a fool would think other wise.
 

Asparagus

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That umbrella would have sold for about 180k if it was built by joe in Dublin in 2007 -

1-4 bed des res open plan accomodation. Retractable roof and mobile foundations.
 

He3

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There's been a bit of a debate here about Lenihan's own culpability and whether he should be angry with himself.

Let's park that for a moment and consider who we all agree bear a large part of the responsibility for the crash and the current crisis...
(A) The reckless bankers
(B) The negligent regulators
(C) The greedy property developers
(D) The gombeen politicians, especially Bertie Ahern and Brian Cowen

Now let's ask whether Brian Lenihan has acted towards these people as would a man who feels anger towards them.

(A): Declined to appoint High Court inspectors with teeth. Has stood by as the ODCE and Garda investigations into Anglo seem to run into sand. Responds to hard questions from Joan Burton with tart observation she should approach Gardai with any evidence of wrongdoing. Refuses to change insolvency laws, even when openly flouted by Sean Fitzpatrick and his wife, and even when this results in greater losses to a nationalised bank.

(B): Personally OK'd and defended the massive, inappropriate pay-offs to departing regulators, no matter how this confirmed Ireland's image as home to negligent regulation and a general cowboy culture in finance. Has not supported any changes to rules governing Oireachtas committees so that former regulators could be the subject of enquiry there. Recruited an insider (albeit a good one in Honohan) to run a banking inquiry with limited terms of reference.

(C): NAMA can be defended as an honest attempt to sort out the banks, with merely some delay in making developers face their obligations. But why turn it into a black box in terms of information on how developers are being made face those obligations? Was that necessary for market confidence, or necessary for something else entirely?

(D): When Bertie Ahern was under pressure over the Tribunals, shortly before he stepped down, Brian Lenihan did not have to publicly support him, culminating in a gutsy defence in the Dáil. But he did. Same with Willie O'Dea, and the same last week with Brian Cowen. Those were deeply tribal performances, and unnecessary given Lenihan's stature in his own party.

Sorry, Mr. Biryani, but I can't look at any of the above and view it like the bank guarantee as decisions forced on the Minister, and with no easy alternatives. One by one by one, Lenihan has acted like a man onside with those responsible, rather than one angry at them.

I'd like to believe Lenihan shares our anger, but his actions betray him.
Quite a CV there.
 

DCon

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There's been a bit of a debate here about Lenihan's own culpability and whether he should be angry with himself.

Let's park that for a moment and consider who we all agree bear a large part of the responsibility for the crash and the current crisis...
(A) The reckless bankers
(B) The negligent regulators
(C) The greedy property developers
(D) The gombeen politicians, especially Bertie Ahern and Brian Cowen


I'd like to believe Lenihan shares our anger, but his actions betray him.
Didn't he also personally approve Rody Molloy's nice handshake?

And try and pretend he didn't at a later date..
 

ChickenBiryani

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Ok chaps I get the picture. Brian Lenihan is hated on P.ie and anyone who tries to say otherwise is opened up to ridicule and derision. I shall say no more on the topic.
 

He3

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Ok chaps I get the picture. Brian Lenihan is hated on P.ie and anyone who tries to say otherwise is opened up to ridicule and derision. I shall say no more on the topic.
Your observations on the very reasonable post by Libero would be welcome even so!
 

bokonon

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You are deluded !! ...You honestly believe that when a development starts the bank just hands over 100M? The final loan cost of the entire development which will take maybe 2 years and they just hand it over up front?
I'm afraid you're the deluded one if you believe this didn't happen here. Your point would be correct if you were talking about a legitimate and regulated operation but we are talking about Anglo under Fianna Fail.

Here's some testimony from NAMA (July 11) that might help you realise exactly how Anglo (and the other banks) - facilitated and enabled by Lenihan - have transferred your money to the cosy cartel:
The chief executive of Nama, Brendan McDonagh, has said that there was "an extraordinary surprise" when Nama discovered the banks had been allowing developers to use free cashflow for purposes other than paying loan interest.

The chairman of Nama, Frank Daly, said the banks had shown a "sentimental or emotional attachment" to the 10 biggest borrowers that Nama would no longer show.

The banks could have taken a charge over a borrower's income, Mr McDonagh said, yet when Nama asked about this, the developers said the banks had never asked.
 
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Libero

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Ok chaps I get the picture. Brian Lenihan is hated on P.ie and anyone who tries to say otherwise is opened up to ridicule and derision. I shall say no more on the topic.
I don't think my post contained any ridicule or derision (which is ususual for me).

Do you want to try replying to it, or insist instead on characterising it as something else?
 

froggus

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Ok chaps I get the picture. Brian Lenihan is hated on P.ie and anyone who tries to say otherwise is opened up to ridicule and derision. I shall say no more on the topic.
He turned a disaster into a catastrophe. He also "brought us to this place".
 


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