Michael Somers on Pat Kenny

Dreaded_Estate

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-Says senior bondholders should not have been guaranteed.

-Says the CB would have been aware of potential problems at the banks when he withdrew deposits.
 


Dreaded_Estate

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-Says he thought NAMA was a mistake from the beginning.

-NAMA is being too aggressive with discounts.
 
G

Gimpanzee

The great thing about him is that he is a straight talker. His defence of the banks in regard to McDonagh's accusation regarding the valuations was interesting.
 
B

Boggle

Interesting listening. Basically saying the present govt have a vested interest in seeing NAMA being pushed through (they have tied their coats to it) and so new govt required to fix it.
 

Watcher2

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-Says he thought NAMA was a mistake from the beginning.

-NAMA is being too aggressive with discounts.
The whole NAMA discounts really is a red herring. If they over pay, they will make a bigger loss on the back end. If they under pay, more bailout is required.

One reason why the NAMA project was/is such a big mistake. Its a lose/lose scenario.
 

CorkHurler

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The NTMA were always a lot better at talking their book than actually running it. But fair play to him though, he's a top class PR merchant. The famous annual NTMA Christmas knees up isnt the same without him.
 

just_society3

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The NTMA were always a lot better at talking their book than actually running it. But fair play to him though, he's a top class PR merchant. The famous annual NTMA Christmas knees up isnt the same without him.
Usual shoot the messenger. He knew Anglo was a basketcase and that NAMA was seriously flawed, and did the honourable thing and resigned his position once it became clear to him that the govt wouldn't listen to a word he said. He has integrity and a proven record.

FF shill. Should be ashamed of yourself.
 

johnfás

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Why do people love Somers so much? He is simply saying what the vast majority of economists have said over the past 12 months. Somers was paid a million a year to borrow money during the easiest period to borrow money in history. It was not exactly the most difficult job. He is right of course that the bond holders should not have been guaranteed - but most posters here know that too and don't need Somers' opinion to reinforce their own.
 

CorkHurler

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Usual shoot the messenger. He knew Anglo was a basketcase and that NAMA was seriously flawed, and did the honourable thing and resigned his position once it became clear to him that the govt wouldn't listen to a word he said. He has integrity and a proven record.

FF shill. Should be ashamed of yourself.
I think you'll find that he retired from the NTMA. He's a public interest director with AIB.
 
G

Gimpanzee

Why do people love Somers so much? He is simply saying what the vast majority of economists have said over the past 12 months. Somers was paid a million a year to borrow money during the easiest period to borrow money in history. It was not exactly the most difficult job. He is right of course that the bond holders should not have been guaranteed - but most posters here know that too and don't need Somers' opinion to reinforce their own.
Maybe if everyone else who had an easy job borrowing money at that time had as unremarkable a legacy as Somers we'ed be ok.

Specifically, I think his Oireachtas Committee appearance in 2008 or early 2009 where he suggested he had no faith in NAMA marked him as a rare breed of insider.
 

CorkHurler

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Why do people love Somers so much? He is simply saying what the vast majority of economists have said over the past 12 months. Somers was paid a million a year to borrow money during the easiest period to borrow money in history. It was not exactly the most difficult job. He is right of course that the bond holders should not have been guaranteed - but most posters here know that too and don't need Somers' opinion to reinforce their own.
+1, also look at the performance of the NPRF during the period 2002 - 2008 against a market benchmark, it was woeful. But Mick Somers would prefer to highlight that he reduced the annual interest bill on the national debt at a time when interest rates were falling, something anyone could have done.
 

johnfás

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Maybe if everyone else who had an easy job borrowing money at that time had as unremarkable a legacy as Somers we'ed be ok.

Specifically, I think his Oireachtas Committee appearance in 2008 or early 2009 where he suggested he had no faith in NAMA marked him as a rare breed of insider.
Irish people have got to start thinking about what they want and then allow their philosophy to stand on its own two feet. The idea of sticking people like Somers on a pedestal is simply a continuation of the same out pump em up and then beat em down nonsense which has governed Irish political and societal discourse over the last century.
 

Watcher2

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+1, also look at the performance of the NPRF during the period 2002 - 2008 against a market benchmark, it was woeful. But Mick Somers would prefer to highlight that he reduced the annual interest bill on the national debt at a time when interest rates were falling, something anyone could have done.
Not sure if Somers was responsible at the time but during the celtic tiger and beyond, he didn';t quite rewduce the national debt as most people are led to believe. The only reason people think the debt ratio fell was because it related to our falsley balooning gdp. The actual amount of debt between 1995 and 2007 stayed within a 2bn range (36 - 38).
 

Boy M5

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CJH appointed him to the nascent NTMA - when it wasn't easy for the state to borrow. Somers contributed to our recovery.
Surely the question is whether he should have spoken out further? Maybe he did speak out to Ahern, McCreevy, Biffo, & Lenihan
 

adrem

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The guy is a chancer !!

He reckons he knew the banks were phucked, told no-one, but thats not his problem.

He was the highest paid financial service employee of the State at the time. His analysis of the banks was that they were becoming insolvent. He knew that the CB and FR and DoF were all advising the minister otherwise but he kept his counsel. That's just not acceptable. He had a responsibility to contact the MoF in Sept 2008 and say - keep out of the banks. Even if CB, FR, DoF had over-ruled him at least he would have done his bit.

Look - any idiot can work out that the only way we could have avoided this situation (after 2007 I mean) was to burn all the bondholders. The problem is that the only way to burn all the bondholders would be to collapse all the banks. Even with that the pari passu ranking issue in our insolvency regulations mean that we would have to equally burn all deposits over 100k. Benefit being that the "private sector" ie the bondholders and depositors would be carrying this problem not the State. Problem is that those same bondholders would not have agreed to fund Ireland Inc or Irelands lazarus banks so we would STILL have ended up with the IMF in to help.

The Govt took the EU/ECB/British Govt approach - take the heat off with a temporary measure then when it became clear how bad things were (thanks Michael) you only burn sub debt but not senior debt and not depositors. No senior debt in Northern Rock was burned, no senior debt in Bradford & Bingley was burned. It was also a pragmatic decision given our budgetary position.

Perhaps the wrong decision - but a reasoned decision given the information then available (again thanks Michael). Maybe the correct thing to do at the time would have been to collapse the banks and bring in the IMF to secure the State - don't recall much appetite for that though? Not sure exactly how the economy would be better off from that either but maybe.
 
G

Gimpanzee

Irish people have got to start thinking about what they want and then allow their philosophy to stand on its own two feet. The idea of sticking people like Somers on a pedestal is simply a continuation of the same out pump em up and then beat em down nonsense which has governed Irish political and societal discourse over the last century.
I agree completely. We are obsessed with an instant solution. Every talk show has a list of guru's that are the answer. Last night Fintan O'Toole was advocating Paul Summervile, Niall Fitzgerald and someone else as some sort of latter day Three Wise Men. Either that or its Michael O'Leary and David McWilliams.

Somers is nonetheless interesting for his views. Who else publicly advocates burning the senior bond holders and defends the banks in the face of the discounts? Doesn't make him right, but makes him worth hearing, just like others.
 

Boy M5

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I agree completely. We are obsessed with an instant solution. Every talk show has a list of guru's that are the answer. Last night Fintan O'Toole was advocating Paul Summervile, Niall Fitzgerald and someone else as some sort of latter day Three Wise Men. Either that or its Michael O'Leary and David McWilliams.
There is no instant solution, just sensible decisions to be made & leadership to be shown (this requires communication)

The body politic needs an infusion from outside politics.

O'Leary running the country? Is that why he is growing that little moustache?
 
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In his irish times article he is critical of NAMA for realising the debts of the bank up front. Essentially he advocates letting the banks hide the problems for longer in an attempt to repair themselves? He is a typical banker.
 

Dreaded_Estate

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The guy is a chancer !!

He reckons he knew the banks were phucked, told no-one, but thats not his problem.

He was the highest paid financial service employee of the State at the time. His analysis of the banks was that they were becoming insolvent. He knew that the CB and FR and DoF were all advising the minister otherwise but he kept his counsel. That's just not acceptable. He had a responsibility to contact the MoF in Sept 2008 and say - keep out of the banks. Even if CB, FR, DoF had over-ruled him at least he would have done his bit.

Look - any idiot can work out that the only way we could have avoided this situation (after 2007 I mean) was to burn all the bondholders. The problem is that the only way to burn all the bondholders would be to collapse all the banks. Even with that the pari passu ranking issue in our insolvency regulations mean that we would have to equally burn all deposits over 100k. Benefit being that the "private sector" ie the bondholders and depositors would be carrying this problem not the State. Problem is that those same bondholders would not have agreed to fund Ireland Inc or Irelands lazarus banks so we would STILL have ended up with the IMF in to help.

The Govt took the EU/ECB/British Govt approach - take the heat off with a temporary measure then when it became clear how bad things were (thanks Michael) you only burn sub debt but not senior debt and not depositors. No senior debt in Northern Rock was burned, no senior debt in Bradford & Bingley was burned. It was also a pragmatic decision given our budgetary position.

Perhaps the wrong decision - but a reasoned decision given the information then available (again thanks Michael). Maybe the correct thing to do at the time would have been to collapse the banks and bring in the IMF to secure the State - don't recall much appetite for that though? Not sure exactly how the economy would be better off from that either but maybe.
The options never were just confined to allowing the banks fail or giving the exact guarantee we gave. There were plenty of options in between.

It would have been possible to increase the deposit guarantee to 1m, or some other larger figure that covers 99.99% of deposits.
We could have enacted crisis banking resolution legislation that would have allowed us to impose losses on senior bondholders without closing down the banks immediately.

The guarantee of existing bondholders achieved nothing. I've pointed to the quote from Patrick Honohan where he agrees with this so I won't do it again.

Yes this option would have been messy but it would cost us have far less than the option chosen. The markets have given up on us and the IMF are here. If this had happened 2 years ago when we wound down the banks we would be 50bn better off right now. And I don't even think the IMF would have been needed.
 


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