What are "the bankers" supposed to have done, anyway?

bakkiesbotha

It's nice to have a convenient scapegoat and everything, but what did they actually do? And who exactly is everyone so angry at?

Anglo's chairman took out personal loans and engaged in some creative accounting to conceal them. They also inflated their balance sheet with those loans from Irish Nationwide. Not sure why the man in the street is so incensed by this, but this is all that I am actually aware of.

So what is the problem? That they made poor lending decisions?

Gone Drinking

I wish i could somehow pull down my trousers and just take a poo in this thread

Blazer

bakkiesbotha wrote: »

It's nice to have a convenient scapegoat and everything, but what did they actually do? And who exactly is everyone so angry at?

Anglo's chairman took out personal loans and engaged in some creative accounting to conceal them. They also inflated their balance sheet with those loans from Irish Nationwide. Not sure why the man in the street is so incensed by this, but this is all that I am actually aware of.

So what is the problem? That they made poor lending decisions?

What planet are you from?

The reason that joe soap is so pissed off because the Government is using the money raised from us to bail them out of their piss poor decisions.
At the moment it looks like the Gov is bailing out the banks and the developers at an absolute massive cost to the taxpayers.

hobochris

The Bankers killed my mother and raped my father!

:pac:

johnny_knoxvile

they interferred with badgers.

enda1

bakkiesbotha wrote: »

It's nice to have a convenient scapegoat and everything, but what did they actually do? And who exactly is everyone so angry at?

Anglo's chairman took out personal loans and engaged in some creative accounting to conceal them. They also inflated their balance sheet with those loans from Irish Nationwide. Not sure why the man in the street is so incensed by this, but this is all that I am actually aware of.

So what is the problem? That they made poor lending decisions?

People like a scapegoat. this country is too busy looking at everyone else to see themselves. Neither the banks nor the government ****ed us over, we ****ed ourselves

hobochris

Sc@recrow wrote: »

What planet are you from?

The reason that joe soap is so pissed off because the Government is using the money raised from us to bail them out of their piss poor decisions.
At the moment it looks like the Gov is bailing out the banks and the developers at an absolute massive cost to the taxpayers.

The problem is that the Joe soap doesn't realize that had the government not acted and bailed out the banks the entire country would be ****ed,With investors bailing out at an alarming rate, the banks would have gone bankrupt with everyone's money practically disappearing. Then the Joe soap really would suffer.Its the only good thing this shambles of a government has done.

RandolphEsq

bakkiesbotha wrote: »

So what is the problem? That they made poor lending decisions?

They did yore ma

jumpguy

From expand yore horizons

https://www.youtube.com/watch?v=Q0zEXdDO5JU

https://www.youtube.com/watch?v=iYhDkZjKBEw

Remember, Ireland has that problem + the construction bubble bursting.
Anglo Irish Bank was a great example of making completely retarded lending decisions, the greed and then subsequent deception by trying to cover it up. Do you realise by their balance sheets, if an investor believe them and invested 1000's/pension/whatever into the bank he'd be investing in a lie?

spurious

enda1 wrote: »

People like a scapegoat. this country is too busy looking at everyone else to see themselves. Neither the banks nor the government ****ed us over, we ****ed ourselves

I wish I could say I enjoyed it.

Board Senseless

hobochris wrote: »

The problem is that the Joe soap doesn't realize that had the government not acted and bailed out the banks the entire country would be ****ed,With investors bailing out at an alarming rate, the banks would have gone bankrupt with everyone's money practically disappearing. Then the Joe soap really would suffer.Its the only good thing this shambles of a government has done.

People can't credit anyone with what didn't happen, they can only blame them for what did.

Expresso Bongo

Don't worry about it OP. It's far to complicated to understand. That's why we elect politicians, to take care of stuff so we can get back to watching tv and eating foods we like.

FishFood

Its not a secret that the Banks made poor risk decisions for the short term gain of making money.

However it seem that the current opinion is to entirely blame the 'Bankers', but what about:

a) the developers who overborrowed way beyond their means and saturated the property market with overpriced houses and apartments.
b) the government who were making squillions in taxes/charges from said properties etc even though they were warned the market was far too heavily invested in properties.
and c) the average joe soap on the street who borrowed 100% mortgages even though they all knew well what they were paying for was overpriced to the max.

Lets face it people, we are all to blame, but god forbid the 'average' person takes any responsibility for it. God no, better to blame the Banker who forced the offer letter down your throat to sign while stealing your soul, oh wait....you signed it!

We were all making money, all was fine, but now none of us are and if it makes people feel better to blame the Banks, fine. But im fairly sick of getting in a taxi and having the driver lecture me on the filthy bankers...talk about hypocritical...


And all this talk of bailing out the Banks, of course you have to bail out the Banks! Imagine the chaos if the Banking system collapsed, what about all the deposits/current accounts etc that your money is in? The Banks are necessary, fact.

Biggins

enda1 wrote: »

People like a scapegoat. this country is too busy looking at everyone else to see themselves. Neither the banks nor the government ****ed us over, we ****ed ourselves

Such a broad general statement! Jeeze...
You'd be much better off if you actually went and looked into the actual details of the issue.
Your statement above reveals just how much (or little) you actually know about the matter but is quick to rush to judgement anyway. :rolleyes:

TPD

Hey, I didnt take out a loan, or mortgage an overpriced house, or lend money to people who couldnt pay it back...

It's everybody elses fault! I'm in the clear! Woo

Biggins

The Perfect Drug wrote: »

Hey, I didnt take out a loan, or mortgage an overpriced house, or lend moeny to people who couldnt pay it back...

It's everybody elses fault! I'm in the clear! Woo

You'd be so lucky!
Where do you think part of the old/new levy's/taxes from your wages is going?

senordingdong

They gave massive loans to lots people that couldn't re-pay them.
Now the govt. has to bail them out, lest the entire economy collapse.

To put it shortly.

TPD

Biggins wrote: »

You'd be so lucky!
Where do you think part of the old/new levy's/taxes from your wages is going?

To silly baxtards, but I dont feel too bad as the grant I get comes from them too!

enda1

senordingdong wrote: »

They gave massive loans to lots people that couldn't re-pay them.
Now the govt. has to bail them out, lest the entire economy collapse.

To put it shortly.

People took out massive loans and then couldn't repay them.

Take some fooking responsibility Ireland!

ixoy

enda1 wrote: »

People took out massive loans and then couldn't repay them.

I don't think people defaulting on the loans is the issue.
It's that the developers went to the banks to build yet more property on the expectation that people would buy these great new, finely-built apartments. The banks looked at our buying pattern, figured "Everyone can always use another apartment!", lent the money but suddenly people - for a variety of reasons - didn't want any more shoe-boxes and the banks, having lent the money, went "Opps" and the developers went "Opps" 'coz they couldn't re-pay them and we didn't go to a good place.
So the banks are at fault for making lending decisions based on an inability to project a downturn in property demand and lending based on such, the developers are responsible for same, and many people are responsible in the sense they fueled these purchases/lending-decisions by making all (banks and developers) thinking we'd always pay for these places.

'Course I'm not responsible 'coz I never bought but that doesn't make me feel much better because I'm still paying and - were I to lose my job - I'd get even less from the government because I chose to save rather than "invest". Thanks everyone else!

hobochris

People seem to be under the naive impression that the banks have a duty to the country, They don't, they are businesses, There primary goal is to make money not make sure some idiot doesn't borrow to much from them.

At the end of the day, If you borrowed money for a loan,car, house etc.. and you now find yourself in financial trouble you need to look a little closer to home rather then at the banks and developers(who's primary goal is also to make money) when assigning blame.

Snakeblood

ixoy wrote: »

I don't think people defaulting on the loans is the issue.
It's that the developers went to the banks to build yet more property on the expectation that people would buy these great new, finely-built apartments. The banks looked at our buying pattern, figured "Everyone can always use another apartment!", lent the money but suddenly people - for a variety of reasons - didn't want any more shoe-boxes and the banks, having lent the money, went "Opps" and the developers went "Opps" 'coz they couldn't re-pay them and we didn't go to a good place.
So the banks are at fault for making lending decisions based on an inability to project a downturn in property demand and lending based on such, the developers are responsible for same, and many people are responsible in the sense they fueled these purchases/lending-decisions by making all (banks and developers) thinking we'd always pay for these places.

'Course I'm not responsible 'coz I never bought but that doesn't make me feel much better because I'm still paying and - were I to lose my job - I'd get even less from the government because I chose to save rather than "invest". Thanks everyone else!

I don't see how it's people's fault that they were driving the prices up by buying. I mean, it's not ideal, but the bank should be looking at the risk involved in the case and going 'No, you don't make enough to justify that place'. It's their job, they're supposed to assess the risk and economic factors, and then lend other people's money to qualified buyers.

If they fcuked up their job to such an extent that they were giving the money out without proper checks and forecasting, then that's on them not on anyone who asked for money and was given it.

Long Onion

What the bankers did was stop banking. They moved from the traditional model of banking based on taking deposits from x and lending it to y for a higher interest rate. Instead they began to use the money markets to fund their borrowings. In 2007 HBOS borrowed more money from the money markets than the entire Italian Government!

Unlimited money being available removed the brake that should have been there under the traditional model. The regulator failed to regulate this and the government failed to make sure the regulator did his job. We re-elected the government who made ever increasing tax breaks available to the developers and increased the output of the construction industry when they should have been slowing it by removing incentives.

We then as consumers, failed to exercise constraint and borrowed up to our oxsters, often overstating income to buy that dream shoe box. We also sought out the bank shares with the best dividends and wanted our bank to make as much money as the next one.

It's a ridiculous mess in which we nearly all have a hand act or part. Don't forget that the Unions didn't dissuade banks from increasing profit margins as it suited them to be able to use this as leverage in the partnership talks.

Remember that it's not just the loans to developers that baffle the principles of economics - as far as i'm aware, Elan has never made a profit yet it continues to have massive borrowings. Setanta collapsed with massive debts - who lends such vast sums to entities who don't generate profits? - Go figure.

SEPT 23 1989

no one really needs a home or a car or loan to expand a business

what the hell were you people all thinking of

senordingdong

enda1 wrote: »

People took out massive loans and then couldn't repay them.

Take some fooking responsibility Ireland!

And the banks should have known better than to give out these loans.

Yes, everyone in Ireland should start taking responsibility, starting with the banks.

Board Senseless

Can't we all do it simultaneously?

ejmaztec

hobochris wrote: »

People seem to be under the naive impression that the banks have a duty to the country, They don't, they are businesses, There primary goal is to make money not make sure some idiot doesn't borrow to much from them.

At the end of the day, If you borrowed money for a loan,car, house etc.. and you now find yourself in financial trouble you need to look a little closer to home rather then at the banks and developers(who's primary goal is also to make money) when assigning blame.

I think that you've got this the wrong way round. When the ordinary individual approached the lenders, they had to match the criteria laid down by the lenders, or they didn't get the loan.

With the big developers, the banks just threw money at them, crossed their fingers, and hoped for the best.

mobius42

enda1 wrote: »

People like a scapegoat. this country is too busy looking at everyone else to see themselves. Neither the banks nor the government ****ed us over, we ****ed ourselves

Speak for yourself. I didn't vote FF in the last election nor did I believe their crap about continued prosperity. I didn't take out a huge mortgage or make ridiculous property speculations. Yet, I'm faced with pretty grim employment opportunities and a reduction in public services because of other peoples' greed and stupidity. This situation is the fault of the gullible, naive fools who voted for the current government and the unscrupulous, incompetent bankers & property developers.

If anything, my generation has been ****ed by the generation spending money they didn't have on holiday homes and luxury cars they didn't need. The government have taken on €90 billion of debt at the taxpayers' expense because of this. How long will it take to repay that? How much money will be lost that could have been used elsewhere? They'll spend that on bailing out property developers but they won't pay the tiny fraction of that to keep a much needed ward in Crumlin Childrens' Hospital open?!

At this stage, I have no intention of staying in this country when I graduate because A) The job prospects are dire and the attitude of people in this country means that the economy and political situation is not likely to change for years. Next time round (which will be 2012 because few people in this country [with the exception of the elderly] have the balls to stand up for themselves) people will vote in Fine Gael and they won't do much better.

Blazer

The Perfect Drug wrote: »

Hey, I didnt take out a loan, or mortgage an overpriced house, or lend money to people who couldnt pay it back...

It's everybody elses fault! I'm in the clear! Woo

woohoo...me too...It's great having total bills of about €200 a month while every other sucker is struggling
Of course thanks to all ye cvnts that bought houses I'm now getting the arse taxed off me ye're all a bunch of fcukers :mad:

El Siglo

It was an unsustainable pattern of economic growth, in which banks and developers capitalised on, very simple. It's easy to say to people now 'well you shouldn't have borrowed that money...' but it's not the fault of the general public who weren't borrowing like Sean Dunne et al. Really, do you honestly think that the number of non-developers borrowing from the likes of Anglo, AIB, Permanent TSB etc... could even non-developers cause debt equivocal to that of property developers? So, the assumption that the general public borrowing for housing drove us into the ground is ridiculous. Remember the state of our economy was a triumph of the western world, lowest unemployment in Europe at one stage under 5%. Really, our economy was built on (excuse the pun) on an overinflated housing market, demand from consumers for housing was driven by government doctrine (i.e. social housing is for poor people only, private housing for the rest), also private renting was seen as money down the drain for most people and it was totally unregulated market until 2-3 years ago. So why not invest in your property with a mortgage at an incredibly low interest rate? Either way you can sell it in the future and still make a profit (e.g. basing this on the growth of house prices before the decline). Developers, the government (policy and legislation) and banks are the primary problem, developers for obvious reasons, banks because they loaned to absolutely everyone based on an unsustainable pattern of economic growth, banking practices were unmonitored and unregulated. One of the key things overlooked in this discussion, is that if the government wasn't so neoliberal in it's outlook on social and affordable housing, if it wasn't so dependent on developers etc... more people could be saved from crippling debt and mortgage repayments. But because the government was steadfast in it's belief that banks could fund property developers, and that property developers could supply housing at an overinflated price with stamp duty that everything would be alright.

deadhead13

enda1 wrote: »

People took out massive loans and then couldn't repay them.

Take some fooking responsibility Ireland!

Large porperty developers taking out massive loans they couldn't repay is the main problem - reckless borrowing and reckless lending. I take absolutely no responsibility for the mess the country is in. If you do....well, that is entirely up to you.

Nodin

ejmaztec wrote: »

I think that you've got this the wrong way round. When the ordinary individual approached the lenders, they had to match the criteria laid down by the lenders, or they didn't get the loan.

With the big developers, the banks just threw money at them, crossed their fingers, and hoped for the best.

...and allowed a disproportionately large amount of cash to go to the property market, thus endangering all the eggs by over-reliance on one basket.

dloob

The banks forced people into their branches at gun point and forced them to borrow 100% mortgages :pac:

deadhead13

dloob wrote: »

The banks forced people into their branches at gun point and forced them to borrow 100% mortgages :pac:

NAMA's purposed 90 billion euro bank bailout is not as a result of individuals defaulting on their mortgages.

dresden8

FishFood wrote: »

Lets face it people, we are all to blame, but god forbid the 'average' person takes any responsibility for it. God no, better to blame the Banker who forced the offer letter down your throat to sign while stealing your soul, oh wait....you signed it!

We were all making money, all was fine, but now none of us are and if it makes people feel better to blame the Banks, fine. But im fairly sick of getting in a taxi and having the driver lecture me on the filthy bankers...talk about hypocritical...

This is a lie. The people who propogate it are liars.

We weren't all making money off property. We didn't all take out 100% mortgages. Some of us did it right and we are getting fncked over to save FF's developers mates.

Even though this is to "bail out the banks" the real effect is to shelter developers and their political lap-dogs from the consequences of their actions, not ours.

Rest assured developers will not have to rely on the mercy of the Simon Community when NAMA have "vigorously" collected their debts.

Total bullsht.

ejmaztec

Nodin wrote: »

...and allowed a disproportionately large amount of cash to go to the property market, thus endangering all the eggs by over-reliance on one basket.

Too fupping true.:(

tech77

Biggins wrote: »

You'd be so lucky!
Where do you think part of the old/new levy's/taxes from your wages is going?

I think what he was going for was
"i'm blameless" rather than "i'm not getting fcuked over for this".

Everyone gets fcuked over.
Blame varies from person to person though.

Biggins

tech77 wrote: »

I think what he was going for was
"i'm blameless" rather than "i'm not getting fcuked over for this".

Sadly true.

tech77 wrote: »

Everyone gets fcuked over.

...unless your a politician! :mad:

See top link in signature!

bakkiesbotha

My understanding of banking is as follows: A bank borrows money from A, and then lends that money to B. B pays back the bank more than than the bank has to pay back A, and the bank's profit is the difference. An old lady's deposit in a bank account is a loan to the bank, just as much as an overnight reverse repo on the money markets.

So, at a fundamental level, it is the same as any other business. Banks acquire inventory (loans) and sell them on at a higher price.

Recently there was a boom in inventory and demand for loans, so the banks did more business, taking in loans and selling them on. Again, fundamentally no different from a business supplying, say, car seats.

Then the demand dried up and the banks ended up sitting on a pile of worthless inventory. Again, something that can and does happen to any other business at the end of a boom.

Services end up with more staff than they can use and have to let them go, taking losses in the process. Producers and providers and shops end up with warehouses full of stuff that nobody wants. And banks end up with a lot of loans on their books that they end up taking losses on, just like all the other businesses.

So, my question was really what reason Joe Public had for expecting bankers to be somehow immune from this business cycle?

Wertz

hobochris wrote: »

There primary goal is to make money not make sure some idiot doesn't borrow to much from them.

But it's in their best interests that said idiot doesn't borrow too much from them, lest they can't get it back...in order for them to make money, they should be lending responsibly...performance bonus culture means that individuals were being rewarded on "sales" figures...the incentive to be responsible at an individual/branch level is undermined.
What we needed was proper regulation, but we didn't get it because this country is too small and everyone in the financial sector just scratch each other's backs, regulator included.

Bankers haven't broken any law as such...the trouble is that there were no "laws" to protect from this thing happening.

tech77

Long Onion wrote: »

What the bankers did was stop banking. They moved from the traditional model of banking based on taking deposits from x and lending it to y for a higher interest rate. Instead they began to use the money markets to fund their borrowings. In 2007 HBOS borrowed more money from the money markets than the entire Italian Government!

Unlimited money being available removed the brake that should have been there under the traditional model. The regulator failed to regulate this and the government failed to make sure the regulator did his job. We re-elected the government who made ever increasing tax breaks available to the developers and increased the output of the construction industry when they should have been slowing it by removing incentives.

We then as consumers, failed to exercise constraint and borrowed up to our oxsters, often overstating income to buy that dream shoe box. We also sought out the bank shares with the best dividends and wanted our bank to make as much money as the next one.

It's a ridiculous mess in which we nearly all have a hand act or part. Don't forget that the Unions didn't dissuade banks from increasing profit margins as it suited them to be able to use this as leverage in the partnership talks.

Remember that it's not just the loans to developers that baffle the principles of economics - as far as i'm aware, Elan has never made a profit yet it continues to have massive borrowings. Setanta collapsed with massive debts - who lends such vast sums to entities who don't generate profits? - Go figure.

Dunno a lot about economics tbh but not a bad summary i'd say.

Ishmael

hobochris wrote: »

There primary goal is to make money not make sure some idiot doesn't borrow to much from them.

That doesn't make sense. The bank should assess the likelyhood that anyone they give a loan to will be able repay the loan. For example, a bank is not going to loan a homeless, unemployed person money as the it is very unlikely that they will get the money back. If the bank has loaned somebody too much money, then they obviously haven't assessed that person's ability to repay correctly. But thats probably me being a little pedantic about how you phrased that line.

Anyway, The main culprits are the people who were buying up more property than they needed to make profit from it. This is where the false demand was originating from. Developers were developing to meet demand and banks were lending to help developers develop. I'm not saying that the banks and developers are exempt from blame, i'm sure they could have loaned on stricter terms and the developers could have developed less. There was not a whole lot of restraint shown by these profiteers and it is their greed that has caused this, or made it a lot worse than it really should be.

themont85

dresden8 wrote: »

This is a lie. The people who propogate it are liars.

We weren't all making money off property. We didn't all take out 100% mortgages. Some of us did it right and we are getting fncked over to save FF's developers mates.

Even though this is to "bail out the banks" the real effect is to shelter developers and their political lap-dogs from the consequences of their actions, not ours.

Rest assured developers will not have to rely on the mercy of the Simon Community when NAMA have "vigorously" collected their debts.

Total bullsht.

How do you know what NAMA will do with the developers who default?

The setting up of NAMA isn't to 'bail out the banks', its to get money moving around the economy.

Blazer

themont85 wrote: »

How do you know what NAMA will do with the developers who default?

The setting up of NAMA isn't to 'bail out the banks', its to get money moving around the economy.

well that's the plan anyway...so where's this money?

Snakeblood

Sc@recrow wrote: »

well that's the plan anyway...so where's this money?

To be scrupulously fair to Nama, it hasn't actually started yet, so we have yet to see what effect it will have on the economy\banking.

I'd bet the 1 cent I have left that it'll spin uncontrolled through the economy like a wrecking ball, destroying everything in its path though.

mobius42

themont85 wrote: »

How do you know what NAMA will do with the developers who default?

The setting up of NAMA isn't to 'bail out the banks', its to get money moving around the economy.

And to accomplish that they're giving the banks €90 billion, in the hope that by next year the banks will have started lending money again. They're robbing Peter to pay Paul in the hopes that Paul will lend Peter some money back in a year or so.

dresden8

themont85 wrote: »

How do you know what NAMA will do with the developers who default?

We're not all gullible fools. Some of us have worked out how things work around here.

themont85 wrote: »

The setting up of NAMA isn't to 'bail out the banks', its to get money moving around the economy.

Yeah.

I would imagine in 5 years time or so when even the likes of you have to admit NAMA is a total and absolute failure, there will be a change in government policy where it will make "economic sense" to "work with" the developers and throw loads of money at them to "ensure a return" and avoid national bankrupcy.

Once more around the merry go round.

Biggins

Sc@recrow wrote: »

well that's the plan anyway...so where's this money?

Yep - a LOT of people are asking that - and it ain't happening!

thomond2006

"Sensible debate in After Hours" shocker

:eek::eek::eek:

Blazer

thomond2006 wrote: »

"Sensible debate in After Hours" shocker

I know..it's absolutely shocking..
I'm actually going to post a thread in Ranting and Raving entitled " wtf with sensible posts in AH??".

gillo_100

People have commented that Mr Joe Public shouldn't have taken 100% loans and should be taking some responsibilty for borrowing so much and buying thier new luxry cars etc.

What you are forgeting is Mr Joe public is a plumber, is a car sales man, is a hair dresser. Mr Joe public is not someone given responsiblity of the country or who knows all the details of global econmics. So when Joe see his friends buying a big house, He goes to his banks ask they're advice, after all it is thier buisness so they should know better, they say sure go ahead its no problem. So Joe takes his big loan.

Its true Joe helped get us into this problem but is it really Joe's fault that during his apprenticship he was out sick the day they covered economics.

While banks are businesses they still have responsibilties. Would you be happy with your doctor if he prescibed you a medicine without telling you about the side effects.