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We need an immediate inquiry into the bank guarantee

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Nov 10, 2009
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The late night talks with bankers followed by the offer of a guarantee they say they didn't ask for. 2 cabinet ministers making the decision while the rest phoned in their agreement -including all of those in Dublin e.g., Gormley. He could have cycled there in 25 minutes.
Who now believes Lenihan and Cowen's incredible version of events on the blanket bank guarantee?

From Willem Buiter’s Maverecon:
"When Ireland was about to be swept away by a wave of global financial mistrust triggered by the Irish government’s decision to guarantee effectively all liabilities of its banks, the then German Finance Minister Steinbruck made the amazing statement (which he obviously had not checked with his coalition partners, his Chancellor or his voters) that the Eurozone countries would not let one of their own go into default".
FT.com | Willem Buiter's Maverecon

(William Buiter: Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC; adviser to international organisations, governments, central banks and private financial institutions).

"...Ireland was about to be swept away by a wave of global financial mistrust triggered by the Irish government’s decision to guarantee effectively all liabilities of its banks."

Lenihan says the blanket guarantee was a masterstroke! Another confirmation of how shockingly irresponsible it was. Guaranteeing the existing bondholders of the banks, rather than future bondholders, was totally unnecessary and indeed inexplicable. I believe it was the single most irresponsible financial decision of any democratic west European government since World War 2. This is further confirmation of the urgent and immediate need for an independent, fearless, mainly non-Irish & non-Irish led expert team to swiftly investigate the extraordinary events surrounding it.

It is also confirmation of the even more urgent need to stop the loss of €40Bn through NAMA.

What do you think?
 


consultant

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Does it matter what we think now?

NAMA was proposed, left to lie there while FF and the Greens ignored ALL independent concerns and the main opposition parties acted aghast and made tutting noises. Then FF, the Greens and the media assumed the unchallenged mantle that NAMA is the only show in town while all but Burton continued to tut.

A further case of Ireland being sold out to the expedience of parochial politics.

The only real opponents to this sell-out were/are Vincent Browne and Shane Ross who legitimately questioned why the banks shouldn't be allowed pay for their mistakes and if necessary, collapse. I would add others like Mick Wallace to the enlightened on reflection.

The government, NAMA and the banks should be gotten rid of and if necessary, the IMF invited in right now.

By the way, where is all the fiscal and employment support we were promised for our 'Yes' vote to Lisbon?
 

eyeswideopen

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NAMA and the Banks Guarantee are still there and have plenty of damage to do.

The government of Dubai have said they will not give any Guarantees - and its is a State owned company that's bust.
 

Cassandra Syndrome

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The Irish Banks are rife with dodgy loans. They are terrified of it being exposed by Market forces and are doing anything to avoid any of the banks go bankrupt. Its a bit like King Canute and the tide.
 
Joined
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Does it matter what we think now?

NAMA was proposed, left to lie there while FF and the Greens ignored ALL independent concerns and the main opposition parties acted aghast and made tutting noises. Then FF, the Greens and the media assumed the unchallenged mantle that NAMA is the only show in town while all but Burton continued to tut.

A further case of Ireland being sold out to the expedience of parochial politics.

The only real opponents to this sell-out were/are Vincent Browne and Shane Ross who legitimately questioned why the banks shouldn't be allowed pay for their mistakes and if necessary, collapse. I would add others like Mick Wallace to the enlightened on reflection.

The government, NAMA and the banks should be gotten rid of and if necessary, the IMF invited in right now.

By the way, where is all the fiscal and employment support we were promised for our 'Yes' vote to Lisbon?
If we don't make our government hierarchy face responsibility they will keep offending and keep allowing the banks to offend. This was a terrible €400 Bn decision. We need to know the truth ASAP.
 

nonpartyboy

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Dec 24, 2006
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FF have been shown to be completely corrupt, any new government should simply refuse to honour any deals that ff did that are clearly not in the taxpayers interest and i would go right back to ray burke and the flogging off of national assets.The new government should simply state all government deals in future will be done with complete transparency with the taxpayers interest put first.
 

SideysGhost

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FF have been shown to be completely corrupt, any new government should simply refuse to honour any deals that ff did that are clearly not in the taxpayers interest and i would go right back to ray burke and the flogging off of national assets.The new government should simply state all government deals in future will be done with complete transparency with the taxpayers interest put first.
+1

Corrupt deals done by crooks to benefit their mates - not the people - should all be repudiated by a new, clean government (assuming of course that a new government was a) clean and b) actually cared about the interests of the people)

There's a long, long list going back over many years of corrupt FF rule that need to be investigated and simply torn up if there is any whiff of corruption. That includes the Corrib oil & gas deals; NTR and a a lot of related transport PPP scams; co-location and the corrupt deals given out by Harney to her husband's clients in Quest and UPMC; the bank Guarantee and NAMA; corrupt State property rental agreements; corrupt contracts for the storage of e-voting machines; corrupt appointments to thousands and thousands of non-jobs in local councils and quangos in every corner of the land; corrupt supply contracts for every good and service imaginable; corruption in the Gardaí; corrupt legislation protecting cartels and giving tax breaks to croneys and skewing almost every internal market in favour of the connected (most obviously but by no means limited to land/property and the publicans); corruption corruption corruption CORRUPTION everywhere you look.
 

cyberianpan

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The late night talks with bankers followed by the offer of a guarantee they say they didn't ask for. 2 cabinet ministers making the decision while the rest phoned in their agreement -including all of those in Dublin e.g., Gormley. He could have cycled there in 25 minutes.
Who now believes Lenihan and Cowen's incredible version of events on the blanket bank guarantee?

From Willem Buiter’s Maverecon:
"When Ireland was about to be swept away by a wave of global financial mistrust triggered by the Irish government’s decision to guarantee effectively all liabilities of its banks, the then German Finance Minister Steinbruck made the amazing statement (which he obviously had not checked with his coalition partners, his Chancellor or his voters) that the Eurozone countries would not let one of their own go into default".
FT.com | Willem Buiter's Maverecon

(William Buiter: Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC; adviser to international organisations, governments, central banks and private financial institutions).

"...Ireland was about to be swept away by a wave of global financial mistrust triggered by the Irish government’s decision to guarantee effectively all liabilities of its banks."

Lenihan says the blanket guarantee was a masterstroke! Another confirmation of how shockingly irresponsible it was. Guaranteeing the existing bondholders of the banks, rather than future bondholders, was totally unnecessary and indeed inexplicable. I believe it was the single most irresponsible financial decision of any democratic west European government since World War 2. This is further confirmation of the urgent and immediate need for an independent, fearless, mainly non-Irish & non-Irish led expert team to swiftly investigate the extraordinary events surrounding it.

It is also confirmation of the even more urgent need to stop the loss of €40Bn through NAMA.

What do you think?
Eamonn20Bn plus interest

1) the way you quote above is confusing, here is the actual text :

FT

For small peripheral European nations, the threat of sovereign insolvency is therefore a real one, unless EU fiscal solidarity can be relied upon to bail them out. When Ireland was about to be swept away by a wave of global financial mistrust triggered by the Irish government’s decision to guarantee effectively all liabilities of its banks, the then German Finance Minister Steinbruck made the amazing statement (which he obviously had not checked with his coalition partners, his Chancellor or his voters) that the Eurozone countries would not let one of their own go into default.
Of course international markets got concerned... the Irish State took on huge / unknown risk with the guarantee.

2) About the only aspect of the guarantee that anyone serious disagrees with was the decision to guarantee the risk capital (most of it subordinated bonds)

An inquiry does need to be made.... but on level headed terms

There's a straight multi billion loss to us here : Anglo: overlooked loans re-categorisation scandal is the biggest and we'll pay for it.... and I find it odd that people don't query actual 100% clear wrongdoing such as that more

cYp
 

eyeswideopen

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Nov 6, 2009
Messages
260
Eamonn20Bn plus interest

1) the way you quote above is confusing, here is the actual text :

Of course international markets got concerned... the Irish State took on huge / unknown risk with the guarantee.

2) About the only aspect of the guarantee that anyone serious disagrees with was the decision to guarantee the risk capital (most of it subordinated bonds)

An inquiry does need to be made.... but on level headed terms

There's a straight multi billion loss to us here : Anglo: overlooked loans re-categorisation scandal is the biggest and we'll pay for it.... and I find it odd that people don't query actual 100% clear wrongdoing such as that more

cYp
Cyp - so far as I am concerned the Guarantee and the Nationalisation of NAMA were criminal. Anglo Irish is under Gard investigation. There is nothing that would shock me about its dealings. There was sufficient information before Nationalisation to know that dealings were improper and I'm sure that we as yet have no idea of the full extent of the losses for which we were made responsible.
 

cyberianpan

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Cyp - so far as I am concerned the Guarantee and the Nationalisation of NAMA were criminal. Anglo Irish is under Gard investigation. There is nothing that would shock me about its dealings. There was sufficient information before Nationalisation to know that dealings were improper and I'm sure that we as yet have no idea of the full extent of the losses for which we were made responsible.
Anglo at best could be described as a hedge fund abusing a banking license... I'd tend towards describing it as a criminal enterprise

But if Anglo, or any bank goes bust, these are the people liable to loose money:

1) Equity from shareholders
2) Risk capital from bond holders
3) Deposits/liquidity funding
4) Common gadener creditors (caterers , equipment etc)

With Anglo 1 was wiped out...
as I say the question is is around 2 and why more wasn't wiped out. Nobody questioned this thread much at the time:Anglo Seeks to buy back $4.5bn debt.

As for 3... I don't think 3 can ever be wiped out... especially not when the Financial Regulator was policing Anglo and saying all fine (meaning enough of 1 & 2 to cover losses)... wiping out 3 would lead to chaos

As for 4: some money would be got from wiping them out... not much... and most of them were honest Joes

People have to examine carefully what they mean by "letting a bank go bust"... there's anger out there... but just letting banks go

.... doesn't actually nab the culprits



Anglo's Executive management... and one non-executive director are who I have my eyes on... and the thread I referenced above has them cold.

cYp
 
Joined
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Messages
37
Recategorising the debt was an outrageous decision by Anglo. It must be investigated. Guaranteeing the bondholders was an outrageous decision by our elected government. I have no problem with guaranteeing the depositors. Every government has done that. The blanket guarantee was a catastrophic error. It will be hugely costly and only German support stopped it from being disastrous. Our bank investor/developer government almost destroyed the country. As it is they have hugely damaged it. We need an immediate inquiry and the halting of NAMA.
 
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The blanket guarantee almost brought down the country but was sold as the world’s cheapest bailout. Grotesque. It was followed by the regulator resigning not over the state of the banks but over another issue. The regulator was given a hugely generous retirement deal even though the government blamed him for EVERYTHING they did wrong. Unbelievable. Why not suspend him on full pay or simply declare that the government had no confidence in him if he was completely at fault? The regulator then refused to give evidence before the Oireachtas and has not publicly spoken since. Why was his retirement package not made conditional on a full accounting for his stewardship? Bizarre. His boss, the head of the Central Bank, was allowed to retire in his own time (after first having his retirement deferred). Meanwhile those at fault in the private sector have all retired with generous packages and have been replaced by insiders as chairmen and CEOs at the two major banks. The boards of the two major banks are almost intact. Unprecedented. The events of the last year have been many times more GUBU than anything under Haughey.

Lenihan says he has transformed the culture of Irish banking. All the evidence shows he is maintaining it. We need an immediate inquiry into the bank guarantee and the collapse of our banks.
 
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Vincent Browne criticised it on its anniversary.

"...On September 29, 2008, Brian Cowen and Brian Lenihan deferred in awe to international capital, at potentially enormous cost to this society, via a bank guarantee that far exceeded any similar guarantee given by any other state, as stated by Patrick Honohan, the newly discovered guru on these matters. (Although he was just down the road from Government Buildings on September 29, he was never called on while the fateful decisions were made).

The banks had acted criminally (literally) and anti-socially over the previous decades and had been brought to the verge of collapse because of their own reckless and greed-fuelled pursuit of private profit.

Then, the state bailed them out, at enormous cost to society, to appease wealthy depositors (less wealthy depositors were already guaranteed up to €100,000), bondholders and the interbank market.

A new state bank could have been created within days, to keep the supply of credit going. That wasn’t on the agenda.

The government had to defer to the super-rich and international financiers. Lethal deference. That same deference caused the state to remain passive while children were raped and brutalised in clerically-run institutions.

That deference caused the state to agree to fund 90 per cent of the reparations for this abuse and allowed the Catholic bishops to continue to be managers of primary schools around the country.

Deference to hospital consultants allowed them to blackmail the state to command exorbitant salaries. Deference to judges is integral to our judicial system. Deference to Lords, Sirs, Excellencies, Ministers.

There’s even deference to tax exiles; otherwise, why are they not taxed on their Irishearned income, as US tax exiles are taxed on their Americanearned incomes?

In memory of that potentially fatal deference to international finance, the anniversary of September 29, 2008 should be commemorated every year, starting on Tuesday."

Deference will again be the undoing of the Irish | The Post
 

cyberianpan

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Vincent Browne criticised it on its anniversary.

"...

Then, the state bailed them out, at enormous cost to society, to appease wealthy depositors (less wealthy depositors were already guaranteed up to €100,000)
In North Korea they wiped wealthy depositors down to €520 each

Times: North Koreans in misery as cash is culled

I suppose wiping the wealthy down to €100,000 could be a good start on the transition to communism. Given a few decades we could wipe the wealthy down to €1 each.

cYp
 

Dreaded_Estate

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Anglo at best could be described as a hedge fund abusing a banking license... I'd tend towards describing it as a criminal enterprise

But if Anglo, or any bank goes bust, these are the people liable to loose money:

1) Equity from shareholders
2) Risk capital from bond holders
3) Deposits/liquidity funding
4) Common gadener creditors (caterers , equipment etc)

With Anglo 1 was wiped out...
as I say the question is is around 2 and why more wasn't wiped out. Nobody questioned this thread much at the time:Anglo Seeks to buy back $4.5bn debt.

As for 3... I don't think 3 can ever be wiped out... especially not when the Financial Regulator was policing Anglo and saying all fine (meaning enough of 1 & 2 to cover losses)... wiping out 3 would lead to chaos

As for 4: some money would be got from wiping them out... not much... and most of them were honest Joes

People have to examine carefully what they mean by "letting a bank go bust"... there's anger out there... but just letting banks go

.... doesn't actually nab the culprits



Anglo's Executive management... and one non-executive director are who I have my eyes on... and the thread I referenced above has them cold.

cYp

I would separate out 3) into depositors and liquidity providers. You may feel they should be treated the same but they should definitely be in separate categories.

Liquidity providers are professional investors and there is a very strong case they don't deserve the same protection as depositors.

Your point on the Financial Regulator is over egging their responsibility IMO. They are there to regulate not to provide backing for investment decisions.

I have worked in 2 separate companies that provided liquidity financing as you call it to banks and Irish banks. Not of them would touch Anglo with a barge poll even though they were offering the highest sterling rates in the markets. They had to offer these rates because they were perceived as risky and this is 6 years!

If the smart investors knew Anglo was risky 6 years ago why should the stupid be completely bailed out?
 

cyberianpan

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I would separate out 3) into depositors and liquidity providers. You may feel they should be treated the same but they should definitely be in separate categories.

Liquidity providers are professional investors and there is a very strong case they don't deserve the same protection as depositors.

Your point on the Financial Regulator is over egging their responsibility IMO. They are there to regulate not to provide backing for investment decisions.

I have worked in 2 separate companies that provided liquidity financing as you call it to banks and Irish banks. Not of them would touch Anglo with a barge poll even though they were offering the highest sterling rates in the markets. They had to offer these rates because they were perceived as risky and this is 6 years!

If the smart investors knew Anglo was risky 6 years ago why should the stupid be completely bailed out?
Banks are given banking licenses. They are not given hedge fund licenses (such don't exist in any case)

With a banking license comes extraordinary power. There's almost 2,000 staff between the CB & Financial Regulator.

Liquidity providers - or depositors - are treated the same according to what can be done with their funds. Some banks chose to get all that type of funds from the market (e.g. Northern Rock) others choose to get nearly it all from depositors (e.g. Irish banks 10 years ago)

The CB & Financial Regulator are meant to (under Basle , CAD etc) regulate the banks. Pretty much the most crucial thing they are meant to do is to ensure that the banks maintain sufficient bulwark of risk capital (pure cash, subordinated bonds etc) in order that the liquidity providers or depositors funds are kept safe. Furthermore as you work in the markets you are likely well aware that the "liquidity providers" are mostly backed by common gardener depositors in other countries. The notion of Ireland raiding the monies of German pensioners would not go down so well... indeed the ECB pretty much "forbade" it . Yes folks you knew stayed away from Anglo, as in event of collapse, getting their monies back would take ages, and might even need ECB aid (like what we got)

Fine Gael's banking plan for example , specifically ensured that neither the liquidity providers nor depositors would suffer loss of funds. Suggesting that they do so would be unfair as the FR was meant to keep his eye on the ball, also a lesser reason is that it would simply lead to chaos.

cYp
 

Oldira1

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In North Korea they wiped wealthy depositors down to €520 each

Times: North Koreans in misery as cash is culled

I suppose wiping the wealthy down to €100,000 could be a good start on the transition to communism. Given a few decades we could wipe the wealthy down to €1 each.

cYp


You never miss an opportunity to defend the indefensible do you?

The bank guarantee was the greatest crime perpetrated on this nation since partition. We have been robbed blind.
 

Oldira1

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In North Korea they wiped wealthy depositors down to €520 each

Times: North Koreans in misery as cash is culled

I suppose wiping the wealthy down to €100,000 could be a good start on the transition to communism. Given a few decades we could wipe the wealthy down to €1 each.

cYp
First step to communism or the last step of the market? Thats what the market is.....when things go pear shaped you get wiped out.
 
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Morgan Kelly has been proved right on everything. He said the guarantee was to bail out the developers e.g., Sean Dunne and he was right. NAMA's business plan gives special treatment to the huge developers because like FF TDs they are in first class. They never lose. The rest of us travel in the ordinary economy.
 


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