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Should Irish bank bosses say sorry like their UK counterparts have done?

  • 10-02-2009 6:40pm
    #1
    Closed Accounts Posts: 13,992 ✭✭✭✭


    http://news.bbc.co.uk/2/hi/business/7880292.stm

    Its a simple question of acknowledgment. It may make a start to reconcile with the public opinion as well as their shareholders and the markets plus it might help give a small confidence boost for the sector.

    Irish bank bosses have been awfully quiet on their banks touching insolvency, not showing some responsibility for their reckless actions during the bubble years.

    So should they apologise? Would like to hear from bank employee posters as well on this!


«13

Comments

  • Closed Accounts Posts: 88,968 ✭✭✭✭mike65


    Yes, and then gracefully accept a p45.


  • Closed Accounts Posts: 1,398 ✭✭✭Phototoxin


    This is Ireland, in the realm of politics no one is accountable


  • Registered Users, Registered Users 2 Posts: 1,041 ✭✭✭José Alaninho


    They should apologise from behind bars.


  • Closed Accounts Posts: 6,123 ✭✭✭stepbar


    gurramok wrote: »
    http://news.bbc.co.uk/2/hi/business/7880292.stm

    Its a simple question of acknowledgment. It may make a start to reconcile with the public opinion as well as their shareholders and the markets plus it might help give a small confidence boost for the sector.

    Irish bank bosses have been awfully quiet on their banks touching insolvency, not showing some responsibility for their reckless actions during the bubble years.

    So should they apologise? Would like to hear from bank employee posters as well on this!

    What exactly would you like them to be sorry for?


  • Closed Accounts Posts: 6,443 ✭✭✭Red Sleeping Beauty


    I concur with my right honourable friends :)


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  • Closed Accounts Posts: 9,495 ✭✭✭Mr. Presentable


    Where's the point? Apologising won't undo what has been done, so what would be served by it?


  • Registered Users, Registered Users 2 Posts: 5,513 ✭✭✭Sleipnir


    The U.K. bosses saying sorry just pissed me off.

    "Hee hee, I'm so rich after all those bonuses I got for short term gains that put the bank at huge risk"
    "SORRY"

    (still rich....!)


  • Registered Users, Registered Users 2 Posts: 12,089 ✭✭✭✭P. Breathnach


    They should apologise from behind bars.

    If you want that, perhaps you might tell us what laws you think they have broken.


  • Closed Accounts Posts: 6,443 ✭✭✭Red Sleeping Beauty


    Rich people are notorious egotists,

    "Sorry" + humble pie = ?


  • Moderators, Social & Fun Moderators, Society & Culture Moderators Posts: 10,598 Mod ✭✭✭✭Robbo


    I really don't see what kind of help this type of mindless platitude will bring. Only a fully thought out "Naughty Step" system can get us out of this mess with Jo Frost as official government banking tsarina.


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  • Closed Accounts Posts: 2,737 ✭✭✭BroomBurner


    Their apologies were meaningless words.

    Maybe a review of the whole financial system, and putting a stop to how they were using loans and debts to get more money, etc. etc. would be better than an empty plaudit.


  • Hosted Moderators Posts: 1,713 ✭✭✭Soldie


    Or maybe we should blame ourselves for borrowing more than we could afford, and blame the government for creating a situation where that was even possible.


  • Closed Accounts Posts: 88,968 ✭✭✭✭mike65


    Hence the paperwork that should follow an apology.


  • Closed Accounts Posts: 2,737 ✭✭✭BroomBurner


    Soldie wrote: »
    Or maybe we should blame ourselves for borrowing more than we could afford, and blame the government for creating a situation where that was even possible.

    While hindsight is a wonderful thing, can you imagine the uproar from ordinary people if the Irish government decided to go against what every other country was doing and not open up the markets to them? Not to mention what the EU response would be.

    In fact, I don't even know if the government can be entirely to blame for this. The entire world was in on it.

    Any insights?


  • Closed Accounts Posts: 6,123 ✭✭✭stepbar


    Nobody disagrees with having a review of the finacial system. What annoys me is joe public and the retarded notion that the bankers should be sorry for something. Should bankers now be responcible for your house being worth less than it was 2 years ago? Or maybe Joe Public is a bit peeved off because the execs were massive bonuses. Christ Joe Public, you may hand back your bonuses, you probably didn't deserve them either!

    Next thing you'll see someone trying to blame bankers for global warming. If anything the Government is more responcible for allowing the property bubble happen than anyone else. Allowing developers to keep massive landbanks thus squeezing supply and increasing demand, allowing investors to have multiple properties without having some sort of property tax to negate the fact that one individual should have no need for any more than (perhaps) a holiday home, a private dwelling and 1 investment property, feeding the growth with Section 23 / 50, Hotel developments / Car parks with tax incentives and so on. Creating an economy where 1 job in 10 was in construction! Madness.


  • Closed Accounts Posts: 2,737 ✭✭✭BroomBurner


    Have to agree with you Stepbar, it was an entirely unsustainable system and shouldn't be allowed to happen again.


  • Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    stepbar wrote: »
    What exactly would you like them to be sorry for?

    Reckless lending to developers. Billions upon billions lent out to developers has lead to the near insolvency of the banking system.(bank guarantee has delayed that day for a short bit)
    Soldie wrote: »
    Or maybe we should blame ourselves for borrowing more than we could afford, and blame the government for creating a situation where that was even possible.

    Reckless lending to developers is where the present problems lie, not residential mortgages. Yes, when the next stage of mass defaulting of mortgages occurs, both lender and borrower are culpable.

    Of course, there was hardly any regulation from Neary.
    If you want that, perhaps you might tell us what laws you think they have broken.

    Fitzpatrick comes to mind, the Garda fraud squad are on the case. Reckless lending to developers, both here and abroad has lead to a near collapse of our banking system.
    Somehow banks never thought that asset values can decrease, pretty poor judgment.


  • Hosted Moderators Posts: 1,713 ✭✭✭Soldie


    While hindsight is a wonderful thing, can you imagine the uproar from ordinary people if the Irish government decided to go against what every other country was doing and not open up the markets to them? Not to mention what the EU response would be.

    In fact, I don't even know if the government can be entirely to blame for this. The entire world was in on it.

    Any insights?

    The problem is that the government did more than 'open up the markets' - they distorted them, in providing a ridiculous amount of cheap credit by meddling with interest rates, despite ample warning that doing so was unsustainable. Just how long did they think an economy based on selling houses to eachother was sustainble for anyway? None of the major parties made mention of the 'worrying times ahead' in their election manifestos in 2007, at least.

    I feel little sympathy for those who took out 100% mortgages for amounts they would never have been able to afford in normal circumstances, and are now spending their time wagging their fingers at anyone but themselves.
    gurramok wrote:
    Reckless lending to developers is where the present problems lie, not residential mortgages.

    But ultimately who was responsible for this 'reckless lending'? The government provided incentive for the banks to loan by having artificially low interest rates, the banks did what they're in business to do - make money. Were we to expect the banks to act more conservatively in spite of the government enticing them to do otherwise?


  • Registered Users, Registered Users 2 Posts: 13,203 ✭✭✭✭jmayo


    stepbar wrote: »
    What exactly would you like them to be sorry for?

    Perhaps a couple of them might apologsie for dragging this country's reputation through the gutter, not to mention increasing the interest we pay on borrowing.
    Have I even mentioned how they have screwed all the taxpayers by lumping us with massive debts.

    Also a couple need to apologise to shareholders who bought shares in their bank.
    Shares that were artifically held up by bank giving loans to golden circle to buy the banks own shares.
    In most countries that would be seen as semi illegal, but I guess Ireland is different once again.

    Perhaps then we can move along to fact that directors effectively hid loans, and moved these loans to another facilitating financial institution, so that they would not appear on annual auditied accounts.

    Then of course there is fact that another institution moved large billion euro deposit into another instution at finanical year end.
    Was this another distortion of the stability of the institution ?

    Of course a brass neck in your business seems to be a prerequsite as shown by the ones at the top.
    Oh of course you shout, they nothing illegal.
    Ever heard of the word ethics in your business?
    By the looks of it, it is one word not appeaing much in banking manuals.

    BTW did you get your raise ?
    Don't answer that, Mods may deem that badgering the poster and we wouldn't wnat to that.

    I am not allowed discuss …



  • Closed Accounts Posts: 88,968 ✭✭✭✭mike65


    Soldie wrote: »
    T


    But ultimately who was responsible for this 'reckless lending'? The government provided incentive for the banks to loan by having artificially low interest rates, the banks did what they're in business to do - make money. Were we to expect the banks to act more conservatively in spite of the government enticing them to do otherwise?

    The Gubberment were helpless, the ECB sets the rates (for Germany/France, not us).


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  • Closed Accounts Posts: 6,123 ✭✭✭stepbar


    gurramok wrote: »
    Reckless lending to developers. Billions upon billions lent out to developers has lead to the near insolvency of the banking system.(bank guarantee has delayed that day for a short bit)



    Reckless lending to developers is where the present problems lie, not residential mortgages. Yes, when the next stage of mass defaulting of mortgages occurs, both lender and borrower are culpable.

    Of course, there was hardly any regulation from Neary.



    Fitzpatrick comes to mind, the Garda fraud squad are on the case. Reckless lending to developers, both here and abroad has lead to a near collapse of our banking system.
    Somehow banks Joe Public never thought that asset values can decrease, pretty poor judgment.

    Reckness lending? Jeasus you'd sware the banks went up to the CIF and said "Here boys, share a 100billion amoungst ye there and shur don't worry about paying it back... there's load more where that came from!!!"
    The bank forms an opinion based on what the borrower discloses, professional advice (valuers, estate agents) and from internal resources. People gave out when the banks were giving 92%, they gave out when some offered 100% and when some others started offering 120% Joe Public was happy.

    Some of our lessor known banks in this country were well known to hand out mortgages (up to 45 years) in some cases to individuals on work permits and god knows what else. Of course a lot done through dodgy brokers who knew how to bend the truth.

    As for Fitzpatrick, no one has yet been able to tell us exactly what laws he broke. So what about the fraud squad investigating? Only rag top public would expect a retarded reaction like that :rolleyes: If there was a law broken I suspect he'd be now eating soup behind bars in Mountjoy.


  • Closed Accounts Posts: 88,968 ✭✭✭✭mike65


    stepbar wrote: »
    If there was a law broken I suspect he'd be now eating soup behind bars in Mountjoy.

    Any case will be years in the compiling and when/if a case is proven (on papar) months before a date is set and the trial, if that ever happened would take weeks, and then he wouldn't go to jail anyway.


  • Registered Users, Registered Users 2 Posts: 1,041 ✭✭✭José Alaninho


    stepbar wrote: »
    If there was a law broken I suspect he'd be now eating soup behind bars in Mountjoy.

    I can give no simpler response to such naivety than to laugh my head off. :rolleyes: You really think the members of Fianna Fail's cosy cartel are accountable to any corporate laws? Wake up.

    *sigh*


  • Closed Accounts Posts: 6,123 ✭✭✭stepbar


    jmayo wrote: »
    Perhaps a couple of them might apologsie for dragging this country's reputation through the gutter

    LOL. The Government had no problem doing that one themselves

    , not to mention increasing the interest we pay on borrowing.

    Last time I heard the ECB rate fell.


    Have I even mentioned how they have screwed all the taxpayers by lumping us with massive debts.

    In return for equity stakes yeah?

    Also a couple need to apologise to shareholders who bought shares in their bank.
    Shares that were artifically held up by bank giving loans to golden circle to buy the banks own shares.
    In most countries that would be seen as semi illegal, but I guess Ireland is different once again.

    Buy a few shares did we?

    Perhaps then we can move along to fact that directors effectively hid loans, and moved these loans to another facilitating financial institution, so that they would not appear on annual auditied accounts.

    With respect, it's nobody's business who much or for what purpose a person has borrowed money for. Sloppy by SP but nothing illegal.

    Then of course there is fact that another institution moved large billion euro deposit into another instution at finanical year end.
    Was this another distortion of the stability of the institution ?

    Probably has better deposit rates. LOL

    Of course a brass neck in your business seems to be a prerequsite as shown by the ones at the top.
    Oh of course you shout, they nothing illegal.
    Ever heard of the word ethics in your business?
    By the looks of it, it is one word not appeaing much in banking manuals.

    So lending money is not ethical now?

    BTW did you get your raise ?

    I'll happily answer that one. No. Did you get yours?

    .


  • Closed Accounts Posts: 6,123 ✭✭✭stepbar


    I can give no simpler response to such naivety than to laugh my head off. :rolleyes: You really think the members of Fianna Fail's cosy cartel are accountable to any corporate laws? Wake up.

    *sigh*

    Well then you might "nievely" tell us what law you "think" he broke? Answers on a postcard, eh?

    You're one of the very reasons I hate Joe Public at the moment. Very "simple" indeed :rolleyes:


  • Registered Users, Registered Users 2 Posts: 4,577 ✭✭✭jaffa20


    Bank employee here and i aint apologising because you causes a 100% mortgage. :pac::pac:


  • Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    stepbar wrote: »
    Reckness lending? Jeasus you'd sware the banks went up to the CIF and said "Here boys, share a 100billion amoungst ye there and shur don't worry about paying it back... there's load more where that came from!!!"
    The bank forms an opinion based on what the borrower discloses, professional advice (valuers, estate agents) and from internal resources. People gave out when the banks were giving 92%, they gave out when some offered 100% and when some others started offering 120% Joe Public was happy.

    Some of our lessor known banks in this country were well known to hand out mortgages (up to 45 years) in some cases to individuals on work permits and god knows what else. Of course a lot done through dodgy brokers who knew how to bend the truth.

    As for Fitzpatrick, no one has yet been able to tell us exactly what laws he broke. So what about the fraud squad investigating? Only rag top public would expect a retarded reaction like that :rolleyes: If there was a law broken I suspect he'd be now eating soup behind bars in Mountjoy.

    You sidestepped the issue. There is a rant in your first paragraph about the CIF. The rest is regarding residential mortgaging and soup.

    Now, i ask you a question regarding the present situation which has resulted in danger for Irish banks.

    Do you think any of the banks were engaged in reckless lending to developers both here and in the UK?

    Please justify your answer.


  • Closed Accounts Posts: 6,443 ✭✭✭Red Sleeping Beauty


    jaffa20 wrote: »
    Bank employee here and i aint apologising because you causes wanted a 100% mortgage. :pac::pac:

    Bank bosses, bank bosses!


  • Registered Users, Registered Users 2 Posts: 1,041 ✭✭✭José Alaninho


    stepbar wrote: »
    Well then you might "nievely" tell us what law you "think" he broke? Answers on a postcard, eh?

    You're one of the very reasons I hate Joe Public at the moment. Very "simple" indeed :rolleyes:

    So reckless and irresponsible banking practices leading to one of the worst recessions this country has ever faced, backed up by a brainless government intent on pleasing their wealthy party backers, is not a crime? Well it f*ckin should be.

    Oh, and just to add, you are one of the very reasons I believe that the Irish people will never learn a damn lesson and not take this **** off the bankers anymore.

    And one more thing: I agree that the slew of middle-class, pseudo-D4 twats who borrowed beyond their means and lived it up with money that wasn't even theirs share some of the responsibility for this; but the lion's share of the blame must lie squarely on the shoulders of those who duped them into it.


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  • Registered Users, Registered Users 2 Posts: 15,443 ✭✭✭✭bonkey


    gurramok wrote: »
    think any of the banks were engaged in reckless lending to developers both here and in the UK?

    Nope.

    The banks were recklessly involved in derivatives markets, which they were reliant on to support other activities.

    Had the derivatives markets not imploded, the banks would have been absolutely fine and dandy had the Irish housing market collapsed. The home-owners, developers and so on might have been in trouble, but not the banks. While it might be small comfort, on the global scale, the Irish housing market is chump change. The Irish banks were more than covered...as long as the derivatives market served its purpose.

    Unfortunately, the global derivatives markets went first, and the knock-on from that caused the Irish housing market to go, which is what in turn caused the housing development market to stall, which is where the banks needed to fall back on the derivatives that had already turned toxic on them.

    So no...it wasn't the lending which was reckless. It was the means of securing the lending.

    But hey...its just details.


  • Closed Accounts Posts: 6,123 ✭✭✭stepbar


    gurramok wrote: »
    You sidestepped the issue. There is a rant in your first paragraph about the CIF. The rest is regarding residential mortgaging and soup.

    Now, i ask you a question regarding the present situation which has resulted in danger for Irish banks.

    Do you think any of the banks were engaged in reckless lending to developers both here and in the UK?

    Please justify your answer.

    By saying what? The residental market is intricately linked to the property developers. If you're trying to say that property developers went into their banks fcukless about what they wanted to borrow money for then you are seriously misreading the suitation. As I have already stated, the bank forms an opinion based on what the borrower discloses, professional advice (valuers, estate agents) and from internal resources. Some were perhaps more agressive than other because they wanted business. Simple as. A retailer who wants business cuts prices or does something different to differentiate themselves. Same difference.

    The word "reckless" would seem to suggest that an individual was somewhat rash or indifferent to the consequences of what would happen. The very reason why you have credit dept in banks is so such a suitation is not allowed to happen (where by some individual would be able to lend large amounts on the fly). Lenders could be guilty of poor judgement but reckless is a term I strongly disagree with because it's just so far from the truth it's not funny.


  • Closed Accounts Posts: 6,123 ✭✭✭stepbar


    I love this line
    but the lion's share of the blame must lie squarely on the shoulders of those who duped them into it.

    The bankers "duped" Joe Public into borrowing money to buy houses? LOL
    So reckless and irresponsible banking practices leading to one of the worst recessions this country has ever faced, backed up by a brainless government intent on pleasing their wealthy party backers, is not a crime? Well it f*ckin should be.

    Politics in all walks of life. Well if it ain't young jimmy who didn't get on the county team its Cowan and the boys sticking brown ones down their jocks. Don't you just love it, eh?


  • Registered Users, Registered Users 2 Posts: 1,041 ✭✭✭José Alaninho


    I'm glad I have amused you... at least my time has not been totally wasted.

    May I ask you a question then stepbar? Who do you think should take the blame for our current situation? The collective middle-classes? Or is it merely a global problem over which we have no control, and therefore no-one is to blame?

    No malice intended, just curious as to your opinion....


  • Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    reckless:
       1. utterly unconcerned about the consequences of some action; without caution; careless (usually fol. by of): to be reckless of danger.
    2. characterized by or proceeding from such carelessness: reckless extravagance.
    bonkey wrote: »
    Nope.

    The banks were recklessly involved in derivatives markets, which they were reliant on to support other activities.

    Had the derivatives markets not imploded, the banks would have been absolutely fine and dandy had the Irish housing market collapsed. The home-owners, developers and so on might have been in trouble, but not the banks. While it might be small comfort, on the global scale, the Irish housing market is chump change. The Irish banks were more than covered...as long as the derivatives market served its purpose.

    Unfortunately, the global derivatives markets went first, and the knock-on from that caused the Irish housing market to go, which is what in turn caused the housing development market to stall, which is where the banks needed to fall back on the derivatives that had already turned toxic on them.

    So no...it wasn't the lending which was reckless. It was the means of securing the lending.

    But hey...its just details.

    You've missed something, but hey its just details. You're timing is wrong.

    The derivatives market imploded a full year(Aug 2007) after the Irish housing bubble started to collapse(Aug 2006) so passing the buck does not work.
    Irish lending was continuing at full speed to developers before Aug 2007. They over exposed themselves to these risks as a portion of their loan books hence that is reckless.
    stepbar wrote:
    By saying what? The residental market is intricately linked to the property developers. If you're trying to say that property developers went into their banks fcukless about what they wanted to borrow money for then you are seriously misreading the suitation. As I have already stated, the bank forms an opinion based on what the borrower discloses, professional advice (valuers, estate agents) and from internal resources. Some were perhaps more agressive than other because they wanted business. Simple as. A retailer who wants business cuts prices or does something different to differentiate themselves. Same difference.

    The word "reckless" would seem to suggest that an individual was somewhat rash or indifferent to the consequences of what would happen. The very reason why you have credit dept in banks is so such a suitation is not allowed to happen (where by some individual would be able to lend large amounts on the fly). Lenders could be guilty of poor judgement but reckless is a term I strongly disagree with because it's just so far from the truth it's not funny.

    So we have words like 'more aggressive'. Ok, lets pick Irish Nationwide as they were probably one of the worst exposed. Nice little article here saying
    (http://www.irishtimes.com/newspaper/finance/2008/1212/1228864713498.html) Irish Nationwide is...
    Credit rating agency Fitch said in September that 80 per cent of the building society's loans are to commercial and residential property development and investment, while 45 per cent of the loan is on British property, mostly in London.

    The above is reckless in my opinion, it was lent without thinking of the consequences. Same for Anglo who have been mostly in the news.

    I suggest you read this regarding all lending by Irish banks
    http://archives.tcm.ie/businesspost/2008/06/15/story33690.asp
    The banks could face big problems. The capital base on which they loaned the €386.3 billion mentioned above is only €44.3 billion.

    This means any significant write-offs could cause difficulties. In fact, it’s worse than that because, once a bank starts making losses, it is required to deduct them from its capital base, reducing the amount it can lend by about ten times the loss.

    This will reduce the availability of loans, thus accelerating the rate at which the money supply contracts and making it even harder for people to service their debts. This could create a negative cycle which would be damaging to the financial system and to our economy.

    This too is reckless. They all need to say sorry.


  • Closed Accounts Posts: 6,123 ✭✭✭stepbar


    I'm glad I have amused you... at least my time has not been totally wasted.

    May I ask you a question then stepbar? Who do you think should take the blame for our current situation? The collective middle-classes? Or is it merely a global problem over which we have no control, and therefore no-one is to blame?

    No malice intended, just curious as to your opinion....

    You first. I rather not have my opinion deconstructed by someone who hasn't given much of an opinion to date. Oooo sorry, shur you think it's all the bankers fault don't ya :rolleyes:


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  • Closed Accounts Posts: 6,123 ✭✭✭stepbar


    gurramok wrote: »

    So we have words like 'more aggressive'. Ok, lets pick Irish Nationwide as they were probably one of the worst exposed. Nice little article here saying
    (http://www.irishtimes.com/newspaper/finance/2008/1212/1228864713498.html) Irish Nationwide is...


    The above is reckless in my opinion, it was lent without thinking of the consequences. Same for Anglo who have been mostly in the news.

    I suggest you read this regarding all lending by Irish banks
    http://archives.tcm.ie/businesspost/2008/06/15/story33690.asp


    This too is reckless. They all need to say sorry.

    For what? You seem to have a fixation with reckless lending? Should the bankers say sorry for global warming?


    INBS lent people money to buy / build office blocks and the like. Admitantly when you're feeding off the dropping of the bigger banks, you might be a bit more agressive for business. It doesn't mean that INBS lended wrecklessly. Poor judgement =/= Wreckless. You don't know what security was taken or what wealth the individual had at the time which would have backed up the loan. You're assuming worse case scenario (i.e every loan going bad, individuals can walk away, no rent roll etc).


  • Registered Users, Registered Users 2 Posts: 1,041 ✭✭✭José Alaninho


    stepbar wrote: »
    You first. I rather not have my opinion deconstructed by someone who hasn't given much of an opinion to date. Oooo sorry, shur you think it's all the bankers fault don't ya :rolleyes:

    Not entirely the bankers, no. The government who turned a blind eye to this carry-on are as much to blame as the scumbags who still sit in their plush CEO offices and still make 1 million+ a year, while ordinary people are expected to foot the bill for their carefree attitude to people's money. Something about that just strikes me as, well.... wrong.

    Enough of an opinion for you?


  • Closed Accounts Posts: 2,034 ✭✭✭deadhead13


    An apology from the banks would just let the finance minister from the same period off the hook i.e. Brian Cowen.


  • Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    stepbar wrote: »
    For what? You seem to have a fixation with reckless lending? Should the bankers say sorry for global warming?


    INBS lent people money to buy / build office blocks and the like. Admitantly when you're feeding off the dropping of the bigger banks, you might be a bit more agressive for business. It doesn't mean that INBS lended wrecklessly. Poor judgement =/= Wreckless. You don't know what security was taken or what wealth the individual had at the time which would have backed up the loan. You're assuming worse case scenario (i.e every loan going bad, individuals can walk away, no rent roll etc).

    Now thats been ridiculous equating global warming meltdown to a financial system meltdown.
    Poor judgment without thinking of the consequences equals recklessness. It seems your coming from the angle that none of these institutions never heard of housing/commercial bubbles before?

    These banking institutions had a bet on both types of bubbles to make money and they lost. That is reckless. No matter what words are applied like 'aggressive', 'poor judgment' etc, they do not hide recklessness.


  • Registered Users, Registered Users 2 Posts: 27,644 ✭✭✭✭nesf


    gurramok wrote: »
    You've missed something, but hey its just details. You're timing is wrong.

    The derivatives market imploded a full year(Aug 2007) after the Irish housing bubble started to collapse(Aug 2006) so passing the buck does not work.
    Irish lending was continuing at full speed to developers before Aug 2007. They over exposed themselves to these risks as a portion of their loan books hence that is reckless.

    You're reading what you want to read in his arguments rather than what's there. He said the banks are in the trouble they are in because of the international banking crisis, he did not say the housing bubble burst because of the international crisis.


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  • Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    nesf wrote: »
    You're reading what you want to read in his arguments rather than what's there. He said the banks are in the trouble they are in because of the international banking crisis, he did not say the housing bubble burst because of the international crisis.

    No nesf.

    The guy said the following:
    'Unfortunately, the global derivatives markets went first, and the knock-on from that caused the Irish housing market to go, which is what in turn caused the housing development market to stall, which is where the banks needed to fall back on the derivatives that had already turned toxic on them.'

    Note: knock-on.

    What he said was that the downing of the derivatives market caused the housing market to stall, that is not true. The housing market stalled a full year beforehand. He put the cart before the horse where the horse should be before the cart.


  • Registered Users, Registered Users 2 Posts: 27,644 ✭✭✭✭nesf


    gurramok wrote: »
    No nesf.

    The guy said the following:
    'Unfortunately, the global derivatives markets went first, and the knock-on from that caused the Irish housing market to go, which is what in turn caused the housing development market to stall, which is where the banks needed to fall back on the derivatives that had already turned toxic on them.'

    Note: knock-on.

    What he said was that the downing of the derivatives market caused the housing market to stall, that is not true. The housing market stalled a full year beforehand. He put the cart before the horse where the horse should be before the cart.

    You're correct, I misread it.


  • Registered Users, Registered Users 2 Posts: 5,336 ✭✭✭Mr.Micro


    What harm would it do for the banks to say sorry? Our UK counterparts have done so. It would certainly move things along with the public IMO, instead of the banks sitting in their empty ivory tower counting houses.

    Regardless of the rights or wrongs or whether the banks wee reckless in their lending, one thing is certain prudence and conservative caution went out the window globally.


  • Closed Accounts Posts: 6,123 ✭✭✭stepbar


    gurramok wrote: »
    Now thats been ridiculous equating global warming meltdown to a financial system meltdown.

    I agree, just like its utterly ridiculous equating poor judgment to recklessness. Hense the comment I made in the first place. The word reckless is banded around like a wrecking ball. Reckless is lending to those who have no income. I know of no loan that was given to an individual / company who had not the capacity to repay a loan back at the time the loan was given (either from personal income, wages, rental income, other property to offer as security and so on).

    The exact thing happened in the UK 20 years ago and no bank went under. We were unfortunate that the recession also co-insided with a global credit crunch. An please don't misconscrew me by saying the credit crunch was to blame for the Irish property prices going south. The dogs on the street knew it was going to happen eventually. What they didn't anticipate was the speed of it and the fall out from the credit crunch.


  • Registered Users, Registered Users 2 Posts: 5,336 ✭✭✭Mr.Micro


    If the banks were using derivatives to back up their loans here is an interesting piece written in 2006 stressing the risks and the complexities of using such methods....... our banks or others obviously did not read this.

    The dangers of derivatives

    By Cris Sholto Heaton Sep 27, 2006
    Cris Sholto Heaton

    Warren Buffett once referred to derivatives as ‘financial weapons of mass destruction’. Many pundits have gone as far as to warn that these instruments could bring down the financial system. But few people understand the alphabet soup of CDOs, CDSs and ABCDSs that appear regularly in the financial news. So what are derivatives and just how dangerous are they?
    What are derivatives?

    The first question is easily answered; the second less so. Derivatives have been around for centuries, with crude versions stretching back two millennia or more. They first evolved as a way for farmers and merchants to manage the risk of crop prices moving against them; a farmer who wanted to be certain what price he would get for his grain at harvest could use forwards or futures contracts to lock in a price in advance. In time, speculators became a crucial part of derivatives markets. They had no interest in hedging their own exposure, but instead used derivatives to bet on the prices of agricultural commodities.

    The same basic principles apply today, but derivatives have become far more complex than simple punts on pork bellies. There are derivatives that allow people to bet on and hedge against movements in currencies, interest rates, shares, debt, property and more besides. The market is vast; the International Swaps and Derivatives Association (ISDA) says the total notional amount of derivatives outstanding was $236trn at the end of 2005, up 20% on 2004 (although “gross credit exposure” – the amount at risk on the contracts at any point – is probably less than 5% of that, according to the Bank for International Settlements).

    There are several important points to bear in mind with derivatives. The contracts themselves are a zero-sum game – for every winner there must be a loser. Many are enormously complex, requiring advanced mathematics to get a handle on how they work. The hedge funds and banks that trade them make extensive use of leverage – trading with a very small amount of their own capital and a very large amount of borrowed money – to juice up returns. All this can make derivatives extremely risky – and there’s plenty of evidence that supposedly sophisticated, professional investors often don’t fully understand how much risk they’re taking on.

    http://www.moneyweek.com/investments/stock-markets/the-dangers-of-derivatives.aspx


  • Registered Users, Registered Users 2 Posts: 5,744 ✭✭✭kleefarr


    What a farce.

    [rant]
    The poor sods that have lost their jobs and are having trouble paying the mortgage won't be able to just say sorry and keep their house. So why should these fackers be allowed to get away with "sorry" and just make millions disappear without being asked for it back or even be given more to help them out. I think it's an complete and utter piss take.[/rant]

    :mad:


  • Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    Yes Mr Micro. They jumped in without thinking of the consequences hence reckless.
    stepbar wrote: »
    I agree, just like its utterly ridiculous equating poor judgment to recklessness. Hense the comment I made in the first place. The word reckless is banded around like a wrecking ball. Reckless is lending to those who have no income. I know of no loan that was given to an individual / company who had not the capacity to repay a loan back at the time the loan was given (either from personal income, wages, rental income, other property to offer as security and so on).

    Ah now, where is it defined that 'Reckless is lending to those who have no income'?

    I tried googling but cannot find what you are saying but a zillion articles giving out about reckless bank lending.:D
    Only the US ones talk about Ninja(no income, no job applicants) but another zilllion European articles still say European banks which were not involved in Ninja were engaged in 'reckless lending' on their own territories.

    Can you clarify?


  • Registered Users, Registered Users 2 Posts: 5,336 ✭✭✭Mr.Micro


    gurramok wrote: »
    Yes Mr Micro. They jumped in without thinking of the consequences hence reckless.



    Ah now, where is it defined that 'Reckless is lending to those who have no income'?

    I tried googling but cannot find what you are saying but a zillion articles giving out about reckless bank lending.:D
    Only the US ones talk about Ninja(no income, no job applicants) but another zilllion European articles still say European banks which were not involved in Ninja were engaged in 'reckless lending' on their own territories.

    Can you clarify?

    I agree gurramok, the article I cited states that for every winner there is a loser. This practice therefore to back up loans was a massive complex gamble that was reckless indeed, as the piece states
    Warren Buffett once referred to derivatives as ‘financial weapons of mass destruction’. Many pundits have gone as far as to warn that these instruments could bring down the financial system. Which has happened.


  • Registered Users, Registered Users 2 Posts: 27,644 ✭✭✭✭nesf


    Mr.Micro wrote: »
    If the banks were using derivatives to back up their loans here is an interesting piece written in 2006 stressing the risks and the complexities of using such methods....... our banks or others obviously did not read this.

    I'm not sure if the Irish banks were very guilty of this (they haven't been effected by the large writedowns based on CDO losses that have been reported by American and European banks).


    Speaking more generally, the problem wasn't "derivatives" though, it was specifically ones mortgage based ones. The currency derivatives markets for instance are fine. I don't really want to get into the specifics but there are fundamental differences between most derivatives (even so called "exotic" ones) and the mortgage backed ones.


    Edit: Just to clarify a little:

    The short answer is that there is a world of difference in pricing a derivative for something that's based on the current price of some asset and in pricing a derivative based on what history shows as realistic behaviour for that asset. Specifically, the pricing of a mortgage backed CDO requires you to form a judgement of how likely default is for all of the (potentially hundreds) of mortgages that form it. The only way you can do this is by looking at historical patterns of default which is very prone to error for obvious reasons (past performance doesn't guarantee future returns etc et al). There's also specifically a problem in that corporate debt backed CDOs are far better vehicles because market participants can see public records of the accounts of different companies so they can judge creditworthiness better. The markets have no such access to information on all the individual mortgage holders.

    On the other hand, pricing a derivative based on where Eurodollar will be in several months time is a very different proposition. For one thing you can glean a lot of information from the present Eurodollar price, the present Future prices for deliver of Eurodollars at different three monthly intervals etc. You can observe the present price of an asset, you can't directly observe someone's creditworthiness.

    The central simple tenet is, the market can only work if it can accurately price things, which couldn't happen with mortgage backed CDOs.

    If you want to discuss this further we can do it in the Economics forum. :)


  • Registered Users, Registered Users 2 Posts: 43,313 ✭✭✭✭K-9


    nesf wrote: »
    I'm not sure if the Irish banks were very guilty of this (they haven't been effected by the large writedowns based on CDO losses that have been reported by American and European banks).

    Indeed, that does seem to be the case.

    Our problem seems to be reckless lending as regards property, especially, commercial property.

    Sean Dunne being a case in point. Lending on a site that didn't have the required planning to make it viable was madness. The muppets who did it got an award!

    Mad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.



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