Why did we not just let BOI/Anglo/AIB sink?

pog it

I have a simple question and I'd really appreciate real facts (I don't believe Nama was the only option).

Why did we not cut off the Irish banks completely and give some of the billions we gave those three banks to the depositors in the banks so that deposits were safe and then help new banks, foreign or Irish, to operate here instead and have that money available for lending. Old employees to be employed in new banks as a condition.
Shareholders would lose out (they have anyway).

gandalf

I don't they could contimplate BoI or AIB going down but Anglo should have been let go under imho.

The reason given for rescuing Anglo was that it was feared their collapse would have taken down one of the smaller Irish banks.

Liam Byrne

They could have cleared out the top level of BoI and AIB, and then set up an insurance fund to protect them from the Anglo cesspit, and then let Anglo rot as it deserved.

thirtythirty

pog it wrote: »

I have a simple question and I'd really appreciate real facts (I don't believe Nama was the only option).

Why did we not cut off the Irish banks completely and give some of the billions we gave those three banks to the depositors in the banks so that deposits were safe and then help new banks, foreign or Irish, to operate here instead and have that money available for lending. Old employees to be employed in new banks as a condition.
Shareholders would lose out (they have anyway).

Well then who picks up the bill? You realise that while the banks were at fault lending willy nilly, it's the BUILDERS who are the real people at fault. They borrowed all that money to build a ridiculous numbers of hotels and apartment blocks with no forward planning about how they might perform (and thus be able to repay the loans the builders took out on them). When they went looking for a new loan for a new project, they quoted the previous project as an asset, even though it itself was a loan! It's like paying credit cards with credit cards except with crazy sums of money. All those zombie hotels and apartments need to be paid for. Clearly the builders can't and won't, so then the bill lies with the banks, who can't absorb that amount of debt.

So, if we left them and if they tried to - they wouldn't have enough capital to lend AT ALL, and the country would probably collapse. Even still the banks would be flat broke, collapse, and if that happened, the logistics of transferring every financial connection each bank had would be absolutely insane. As a very simple example, who is going to take on mortgages, and how do they translate?

As for "starting a new irish bank" - with what, money out of the air? And you would never ever get a foreign bank to "come to ireland", because A) every bank is having it's own financial problems equal to or worse than AIB and BoI. And what sort of institution would enter a market that caused the collapse of the 3 biggest financial institutions in the country, and left a massive unpaid bill....that has to be paid by someone. Halifax has already pulled out of Ireland entirely.

Oh, and do you mean "depositors", or "debtors"? There's quite a distinction...

Btw, this is only a very simplistic view. I don't know much about the financial sector at all really, but you can already start to see some of the intricices of your suggestion.

Liam Byrne

spottyelephant wrote: »

Well then who picks up the bill? You realise that while the banks were at fault lending willy nilly, it's the BUILDERS who are the real people at fault.

What gives you that idea ?

The banks had a crazy business model, which involved giving money to people who couldn't pay it back.

I'll say it again; I told a bank that I could afford a certain amount, and they said they would give me nearly double it.

Who's fault is that if I can't pay it back ? I've told them the truth, so in my view it's their f**k up for wanting to give me more.

What business knowingly gives someone something that they know that person can't pay for ?

thirtythirty

Liam Byrne wrote: »

What gives you that idea ?

The banks had a crazy business model, which involved giving money to people who couldn't pay it back.

I'll say it again; I told a bank that I could afford a certain amount, and they said they would give me nearly double it.

Who's fault is that if I can't pay it back ? I've told them the truth, so in my view it's their f**k up for wanting to give me more.

What business knowingly gives someone something that they know that person can't pay for ?

Wow. Really!?. So it's THEIR fault for believing you were trust worthy. Why would you accept a loan that that you know you can't pay back?

I hardly think they really did believe you couldn't pay back when they gave the money. They obviously had rubbish checking procedures yes, but ultimately they gave out a LOAN. Which implies it's going to be paid back....anyway that's off-topic and clearly you must be linked in with that industry somehow, so I'm not going to go into a circular discussion with you! I'm just stating facts, not speculating.

Count Dooku

Because bondholders would lose everything. They considered bank bonds as safe investment and will use all power, what they have to prevent their lose
Don’t forget that ruling elites and bondholders are very often the same people.

Fat_Fingers

Ango is builders banks. It’s of no systemic importance and should be allowed to go.

bamboozle

Liam Byrne wrote: »

What gives you that idea ?

The banks had a crazy business model, which involved giving money to people who couldn't pay it back.

I'll say it again; I told a bank that I could afford a certain amount, and they said they would give me nearly double it.

Who's fault is that if I can't pay it back ? I've told them the truth, so in my view it's their f**k up for wanting to give me more.

What business knowingly gives someone something that they know that person can't pay for ?

i dare act the devil's advocat and say it was neither the banks nor the builders it was the Financial Regulator/Central Bank/Government for failing to regulate the financial & Banking markets in Ireland and for caving into builders/speculators/banks demands and allowing 30-40 year mortgages, 100% mortgages, section 23 and other reliefs, reduced income tax on gains made from selling land....the list goes on and it just proves that the government created this overheated property market while the Financial Regulator and Central bank sat idely by.

gandalf

To be honest it was multiple failure by politicians, regulators, banks, developers, unions, in fact most of us (I bought one of the shoebox apartments in Dublin so I'm guilty too!).

Banks like AIB and BoI can't really be allowed to fail imho as they cover the whole of the economy but Anglo was the builders bank and rather than wasting money on what all commentators are now calling a "zombie bank" it should have been allowed sink with that money used to get credit to the SME's who are being strangled to death at the moment with the lack of credit. I suppose that was unconscionable for FF as so many of their sponsors and donors were involved with Anglo.

Fat_Fingers

Correct. Ango is nothing but another FF Galway tent.

SLUSK

In Sweden they handled the bank rescue much better. The banks that were bailed out were nationalized and the shareholders left with nothing. Then after they had cleaned up the balance sheets they were sold back to private investors.

In my opinion Sweden should have let these banks fail outright, but this solution that Sweden had is at least better than the solution Ireland has which was basically a massive bailout of shareholders. In Sweden no shareholder was bailed out.

Liam Byrne

spottyelephant wrote: »

Wow. Really!?. So it's THEIR fault for believing you were trust worthy.

What ?

I told them I couldn't pay back more than what I had originally requested/told them I could pay.

And they didn't believe that was my limit.

What's that got to do with me being trustworthy ?

If anything, it shows that they didn't believe me (i.e. not trustworthy).

For the record, I didn't accept it. But if I had it would have been their fault; I'd told them that I couldn't afford that much.

spottyelephant wrote: »

I hardly think they really did believe you couldn't pay back when they gave the money.

Actually, as I said, I didn't take it. I'm not stupid or reckless.

spottyelephant wrote: »

Which implies it's going to be paid back....

Despite the fact that I'd clearly told them that I couldn't afford to pay it back ?

spottyelephant wrote: »

anyway that's off-topic and clearly you must be linked in with that industry somehow, so I'm not going to go into a circular discussion with you! I'm just stating facts, not speculating.

I'm in no way linked in with that industry, so yes, you are speculating.

My point is one clear example that it was possible (if you were so inclined) to be given money even if you told banks that you couldn't pay that amount back.

And if someone offers you that, and you say "you do know I can't pay" and they still give it to you, then yes, it is their fault.

BluntGuy

SLUSK wrote: »

In Sweden they handled the bank rescue much better. The banks that were bailed out were nationalized and the shareholders left with nothing. Then after they had cleaned up the balance sheets they were sold back to private investors.

In my opinion Sweden should have let these banks fail outright, but this solution that Sweden had is at least better than the solution Ireland has which was basically a massive bailout of shareholders. In Sweden no shareholder was bailed out.

Thank you for pointing this out. I've seen Lenihan and supporters of NAMA cite Sweden as an example of a successful NAMA on a number of occassions now, without acknowledging the numerous differences.

Anglo should've been allowed to fail. We are a small nation, we do not need, nor can we afford, to prop up all the losers.

BoI and AIB should've been nationalised and merged and Anglo should've been allowed sunk, because it is going to sink anyway. It is an unviable trashheap of a bank.

We have more or less temporarily nationalised the banks anyway... just... without any of the benefits (to us).

SLUSK

For anyone who is interested these articles tells a bit more how Sweden handled its banking crisis in the 90's.
http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5580831.ece

ei.sdraob

SLUSK wrote: »

In Sweden they handled the bank rescue much better. The banks that were bailed out were nationalized and the shareholders left with nothing. Then after they had cleaned up the balance sheets they were sold back to private investors.

In my opinion Sweden should have let these banks fail outright, but this solution that Sweden had is at least better than the solution Ireland has which was basically a massive bailout of shareholders. In Sweden no shareholder was bailed out.

Did you not get the memo?

Our NAMA solution is much better! we will make loadz of profitz!! we cant go wrong, property can only ever go up!!!



Sorry I couldn't resist I gave up arguing in parallel thread that giving money to Anglo and whole NAMA thing is a terrible idea, it seems alot of people here on this forum have actually bought the **** on a stick that's being sold to the population by the Greens and FF

SLUSK

ei.sdraob wrote: »

Did you not get the memo?

Our NAMA solution is much better! we will make loadz of profitz!! we cant go wrong, property can only ever go up!!!



Sorry I couldn't resist I gave up arguing in parallel thread that giving money to Anglo and whole NAMA thing is a terrible idea, it seems alot of people here on this forum have actually bought the **** on a stick that's being sold to the population by the Greens and FF

We thank you for the Kool-Aid, reverend Bertie...

pog it

spottyelephant wrote: »

Oh, and do you mean "depositors", or "debtors"? There's quite a distinction...

Btw, this is only a very simplistic view. I don't know much about the financial sector at all really, but you can already start to see some of the intricices of your suggestion.

If i meant "debtors" I would have written "debtors".
I understand the difference

Also.. sorry but Nothing you have stated outlines 'the intricacies' of the my suggestion. Sorry dude.

And... of course foreign banks would be interested in starting up here with the boost of capital from government if need be (a tiny percentage of what Nama is getting!)

pog it

Count Dooku wrote: »

Because bondholders would lose everything. They considered bank bonds as safe investment and will use all power, what they have to prevent their lose
Don’t forget that ruling elites and bondholders are very often the same people.

Count this is really interesting. Can you explain this further to me please?

1. Do we know how much bondholders invested in the banks and 2. how much interest they were guaranteed on that investment?

congo_90

I don't understand why we had to save all 3 banks? As others have stated we do not need anglo. As others pointed out this was the cowboys builders bank.
I never understood the concept of un incomplete building being allowed to be used as an asset either.

That's like telling me to buy a car but only the windscreen wipers in the hope that one day i'll get an airbag. :rolleyes:

Surely the idea of bailing the banks out should fix a situation. It seems to me that the developers and ultimatly the w*nkers who put us in half ass built houses, using backhander money to politions (under investigation) are to blame.

The developers should not be allowed to walk free and to continue to try salvage a market which is flooded neck deep in developments which even during the good times people wouldn't want or use!
Look at all the hotels in Tallaght ffs.

Right now I know a certain friend of a developer using money to get a tax relief. It seems to fall down to the builder being good friends with polititions.

If I was in gov I'd damn well make sure each builder who took advantage of the tax paying citizen was made pay their dues in anyway possible. Stick em on the dole with the rest of us and render them homeless or shame them to live in an 'affordable house' in one of their developments!

/rant

MaceFace

ei.sdraob wrote: »

Did you not get the memo?

Our NAMA solution is much better! we will make loadz of profitz!! we cant go wrong, property can only ever go up!!!



Sorry I couldn't resist I gave up arguing in parallel thread that giving money to Anglo and whole NAMA thing is a terrible idea, it seems alot of people here on this forum have actually bought the **** on a stick that's being sold to the population by the Greens and FF

Anglo and NAMA are two completly different things.
I also don't understand why we saved Anglo. I would have thought that we could have recapitalised BOI and AIB for the money they lost in Anglo, but it may have been that if Anglo was allowed to fail, the others would also have fallen.
I just don't think we will ever have an answer because we are not privy to what happened that night in Leinster House.

ei.sdraob

MaceFace wrote: »

Anglo and NAMA are two completly different things.
I also don't understand why we saved Anglo. I would have thought that we could have recapitalised BOI and AIB for the money they lost in Anglo, but it may have been that if Anglo was allowed to fail, the others would also have fallen.
I just don't think we will ever have an answer because we are not privy to what happened that night in Leinster House.

ah bejesus

we keep hearing that Anglo would have brought down other banks

but absolutely no figures or facts to back up this statement from anyone

youve been sold a dud, face it

gandalf

ei.sdraob wrote: »

ah bejesus

we keep hearing that Anglo would have brought down other banks

but absolutely no figures or facts to back up this statement from anyone

youve been sold a dud, face it

Apparently the feeling was it would have taken down one of the smaller banks with it and that was the excuse used to bail it out.

Personally I would have let it fail and if one of the smaller ones went as well so be it. As was said we could have used the money used to prop it up Anglo to capitalise the main banks with the proviso that they started to get some meaningful credit flowing to the SME's who are the real life blood of employment in Ireland.

Bill2673

deadtiger wrote: »

To be honest it was multiple failure by politicians, regulators, banks, developers, unions, in fact most of us (I bought one of the shoebox apartments in Dublin so I'm guilty too!).

.

You got it dear right there Dead Tiger, IMHO.

People who say, "it was all the banks fault" or "it was all FF's fault" or "it was all the developers fault".....immediately I just think stop right there pal you don't know what you're on about.

Clearly it was all of the above, but the wider public is hugely culpable also.


I bought a house in 2005. I remember viewing a modest 2 bedroom house in a working class area of Dublin. There were 65 people viewing the place I was there. They divided them into groups of 15 and we waited until it was the turn of our group. And at the time, the asking price for the gaff was about 40% higher than what it might sell for now.

No developer/bank/ politician was telling these people to go out and buy a house!!!

Moreover, does anyone find it ironic that at the time Fianna Fail was overseeing a housing bubble that got us into this mess, that their popularity was never higher. And now that they are making a fairly decent effort to get us out of the mess (compared to other European countries) their popularity has never been lower.

Ismhunter

This thread is in need of someone who can actually give us a good answer to op's question. So far all we have is uninformed opinions of the situation which is all we hear in every day life regarding the situation as well.

the_syco

Banks exist to make money. If the banks in Ireland were allowed to sink, who in their right mind would invest in a new bank in Ireland?

gandalf

the_syco wrote: »

Banks exist to make money. If the banks in Ireland were allowed to sink, who in their right mind would invest in a new bank in Ireland?

Businesses exist to make money, If the businesses in Ireland were allowed to sink, who in their right mind would invest in a new business in Ireland? :rolleyes:

Oh wait some are failing but that hasn't stopped new ones being born even during these challenging times. Therefore if a bank isn't viable it should be allowed to sink especially one as rotten as Anglo.

BluntGuy

the_syco wrote: »

Banks exist to make money. If the banks in Ireland were allowed to sink, who in their right mind would invest in a new bank in Ireland?

Who in their right mind is going to invest in a new bank in Ireland now?

Since it is evident that the government will not allow its banks of choice to fail, and thus hands them an unfair advantage, there would be little point in trying to compete in this economic environment.

MaceFace

Ismhunter wrote: »

This thread is in need of someone who can actually give us a good answer to op's question. So far all we have is uninformed opinions of the situation which is all we hear in every day life regarding the situation as well.

No worries. Let me pop down to Leinster House at lunch time and get Lennie to register for boards
If he is a bit busy running the country to engage with the likes of us, then we may have to make do with what we have.

As for the OPs question. I have answered this a few times over the last few months, but again, it is my very humble opinion.

So again, to recap, if the Anglo was allowed to fail or the guarantee was not put in place, there is a high probability that BOI and AIB would have followed. That would also have resulted in EBS, Nationwide and probably PTSB to follow (as none of them would have been able to source money from the internation market).

Now you get into what would happen if Ireland didn't have a banking system. Only read on if you can't see the obvious.

All deposits would be tied up in legal wranglings for somewhere between weeks and months and anyone with more than the existing state guarantee would have lost their money.
There would be almost zero credit in the economy which would have probably resulted in an unemployment rate of >30% (maybe a lot more).

The banks would have been liquidated and the loan books packaged up and sold to the highest bidder.

The owners of the loan books would have Ireland by the short and curlies for the next few decades as anyone with a variable rate loan could have their rates multiplied by as much as the holder wants. You would be stuck as you would be in negative equity and not able to sell your house or move to another institution as any bank that would come in to fill the void would have no interest in taking over your loan.

As for the actual country itself, it would have defaulted meaning we ask the IMF to come in and help.

The rest is just plain armageddon.

ocokev

Merge AIB & BOI together with the state and an international bank as majority share holders. Get rid of the idiots running these institutes and when the good times roll sell the surplus banks IE if AIB & BOI have a banks in prime locations in a town sell one.
Utilise Anglo as a bad bank and hold all the NAMA accounts from the other banks effectivally shutting shop and when the good times come sell their assets.
You cant just say look at the sweedish model cos they were different times there wasn't a global recession then so recovery was quicker and the government had a share in a growth buisness.

BrownianMotion

MaceFace wrote: »

No worries. Let me pop down to Leinster House at lunch time and get Lennie to register for boards
If he is a bit busy running the country to engage with the likes of us, then we may have to make do with what we have.

As for the OPs question. I have answered this a few times over the last few months, but again, it is my very humble opinion.

So again, to recap, if the Anglo was allowed to fail or the guarantee was not put in place, there is a high probability that BOI and AIB would have followed. That would also have resulted in EBS, Nationwide and probably PTSB to follow (as none of them would have been able to source money from the internation market).

Now you get into what would happen if Ireland didn't have a banking system. Only read on if you can't see the obvious.

All deposits would be tied up in legal wranglings for somewhere between weeks and months and anyone with more than the existing state guarantee would have lost their money.
There would be almost zero credit in the economy which would have probably resulted in an unemployment rate of >30% (maybe a lot more).

The banks would have been liquidated and the loan books packaged up and sold to the highest bidder.

The owners of the loan books would have Ireland by the short and curlies for the next few decades as anyone with a variable rate loan could have their rates multiplied by as much as the holder wants. You would be stuck as you would be in negative equity and not able to sell your house or move to another institution as any bank that would come in to fill the void would have no interest in taking over your loan.

As for the actual country itself, it would have defaulted meaning we ask the IMF to come in and help.

The rest is just plain armageddon.

That is pure speculation. You have no way to justify your assumption that one failure would bring down the entire banking system.
Conversely nobody here can prove that one failure wouldn't have brought down the system.

However one of the responsibilities of the regulator was to ensure that nobody was 'too big to fail'. It would not be unreasonable in that light to assume that Anglo could have fallen without dragging everything with it. Provided of course the regulator did its job.:pac:

BluntGuy

MaceFace wrote: »

So again, to recap, if the Anglo was allowed to fail or the guarantee was not put in place, there is a high probability that BOI and AIB would have followed. That would also have resulted in EBS, Nationwide and probably PTSB to follow (as none of them would have been able to source money from the internation market).

This is incorrect.

You seem to have followed Lennie's "systemic importance" crap.

Pumping money into Anglo is simply doing more and more damage of "the system". It is a sinking ship, an unviable bank that will never be viable again.

At least BOI and AIB have some hints of viability in them and can be salvaged. We could've more easily given capital and assistance to help these banks work through their Anglo loans, rather than attempt to prop up an entire failed bank. In fact, our approach to dealing with Anglo is now starving the other banks of valuable, scarce resources - the zombified mess of an organisation getting priority every step of the way.

Anglo should've been allowed fail.

Many economists take this view.

The rest of your post is irrelevant.

Perhaps Lenihan thought he was doing the right thing, but we can see how bad Anglo's situation is now. We need to stop shovelling cash into that disaster of a bank and focus on the other more viable financial institutions. He is simply wasting more money.

opinion guy

congo_90 wrote: »

Right now I know a certain friend of a developer using money to get a tax relief. It seems to fall down to the builder being good friends with polititions.

So report them. This kind of crap being allowed happen in the first place is the cause of the problem.

ei.sdraob wrote: »

ah bejesus

we keep hearing that Anglo would have brought down other banks

but absolutely no figures or facts to back up this statement from anyone

youve been sold a dud, face it

I agree. Also why could NAMA not just have covered Anglo instead of all of the banks ?

BluntGuy wrote: »

Who in their right mind is going to invest in a new bank in Ireland now?

Since it is evident that the government will not allow its banks of choice to fail, and thus hands them an unfair advantage, there would be little point in trying to compete in this economic environment.

+1. This move of propping up all the banks is very anti-competitive imo. They are essentially artificially resuscitating a cartel. It's insanity.

Anglo should be have been let go to the wall with others nationalised if necessary. If anglo collapsing was such a threat to the others, NAMA'ing up Anglo's debts only would have protected the others.

MaceFace

BluntGuy wrote: »

This is incorrect.

You seem to have followed Lennie's "systemic importance" crap.

Pumping money into Anglo is simply doing more and more damage of "the system". It is a sinking ship, an unviable bank that will never be viable again.

At least BOI and AIB have some hints of viability in them and can be salvaged. We could've more easily given capital and assistance to help these banks work through their Anglo loans, rather than attempt to prop up an entire failed bank. In fact, our approach to dealing with Anglo is now starving the other banks of valuable, scarce resources - the zombified mess of an organisation getting priority every step of the way.

Anglo should've been allowed fail.

Many economists take this view.

The rest of your post is irrelevant.

Perhaps Lenihan thought he was doing the right thing, but we can see how bad Anglo's situation is now. We need to stop shovelling cash into that disaster of a bank and focus on the other more viable financial institutions. He is simply wasting more money.

Maybe you can expalin why you think I am incorrect in my assumption that the collapse of Anglo would not have resulted in a run on BOI or AIB?
Is this just your opinion, or do you have something to back it up by?

BluntGuy

MaceFace wrote: »

Maybe you can expalin why you think I am incorrect in my assumption that the collapse of Anglo would not have resulted in a run on BOI or AIB?
Is this just your opinion, or do you have something to back it up by?

Likewise, can I ask you to back up your assumption that the other banks would sink?

So again, to recap, if the Anglo was allowed to fail or the guarantee was not put in place, there is a high probability that BOI and AIB would have followed. That would also have resulted in EBS, Nationwide and probably PTSB to follow (as none of them would have been able to source money from the internation market).

I am assuming myself, that your assumption is based on the fallacy that Anglo is of systemic importance.

It is not. It is a business bank, with a very focused market. A market which is dried up and will be for the foreseeable future. This is not of systemic value.

I shall not elaborate any further until you spell out exactly why you believe Anglo should not be allowed sink.

dragonbet

Liam Byrne wrote: »

What business knowingly gives someone something that they know that person can't pay for ?

DRUG DEALERS...!!!!!!


EDIT........ sorry I mean bankers

woodseb

It seems a lot of people are using 'nationalisation' and 'letting the bank fail' as interchangable things....

Can some of you who are suggesting that we should have let all the banks 'fail' quantify how much the Irish government would have had to pay out to replace depositors money under the original guarantee?

ei.sdraob

woodseb wrote: »

It seems a lot of people are using 'nationalisation' and 'letting the bank fail' as interchangable things....

Can some of you who are suggesting that we should have let all the banks 'fail' quantify how much the Irish government would have had to pay out to replace depositors money under the original guarantee?

why dont you quantify how many more billions we will have to put into the banks

gandalf

woodseb wrote: »

It seems a lot of people are using 'nationalisation' and 'letting the bank fail' as interchangable things....

Can some of you who are suggesting that we should have let all the banks 'fail' quantify how much the Irish government would have had to pay out to replace depositors money under the original guarantee?

I have a feeling that the amount that would have to be paid out to depositors would be a lot less than is being poured into Anglo Irish now? I did have a quick search but couldn't find figures on their deposit account levels, anyone know where I could find this figure?

meditraitor

BluntGuy wrote: »

I am assuming myself, that your assumption is based on the fallacy that Anglo is of systemic importance.
.

Thats what it looks like, couldnt agree more

as for the reasons anglo was not let fail, mmmm

Who are the bondholders in this bank? Are they Irish or more importantly International.....

AIB and BoI needed to be nationalised and re-launched in about 5 years when some stabiltiy reached the market, then we might have seen some profit from our investment (taxpayer)

woodseb

ei.sdraob wrote: »

why dont you quantify how many more billions we will have to put into the banks

The thread is about 'why we didn't let all 3 banks fail' - quantifying the cost of letting the banks fail crucial to any sensible debate before we try to put a cost on the current plan.

I'll give you a start - AIB had customer deposits of EUR93bln at the end of 2008

woodseb

deadtiger wrote: »

I have a feeling that the amount that would have to be paid out to depositors would be a lot less than is being poured into Anglo Irish now? I did have a quick search but couldn't find figures on their deposit account levels, anyone know where I could find this figure?

I agree that letting anglo fail did warrant consideration.....

....Anglo had EUR19.2bln in retail deposits in Sept 2008

opinion guy

meditraitor wrote: »

Thats what it looks like, couldnt agree more

as for the reasons anglo was not let fail, mmmm

Who are the bondholders in this bank? Are they Irish or more importantly International.....

AIB and BoI needed to be nationalised,merged, streamlined and re-launched in about 5 years when some stabiltiy reached the market, then we might have seen some profit from our investment (taxpayer)

FYP

ei.sdraob

woodseb wrote: »

The thread is about 'why we didn't let all 3 banks fail' - quantifying the cost of letting the banks fail crucial to any sensible debate before we try to put a cost on the current plan.

I'll give you a start - AIB had customer deposits of EUR93bln at the end of 2008

and how many billions of bad assets do AIB have?

that 93billion in deposits can be transferred or sold to a good bank, theres plenty of banks who wouldn't mind 93 billion worth of customer accounts

gandalf

woodseb wrote: »

The thread is about 'why we didn't let all 3 banks fail' - quantifying the cost of letting the banks fail crucial to any sensible debate before we try to put a cost on the current plan.

I'll give you a start - AIB had customer deposits of EUR93bln at the end of 2008

Yes and people have already said that AIB and BoI should not have been allowed to fail because they have tentacles in all aspects of everyday life in this country.

Anglo Irish on the other hand did not. Therefore they should have been allowed to fail. Any ideas on how much they had on deposit compared to how much they had on loans. Also bear in mind that the guarantee only covered the first €100,000 on deposit.

ei.sdraob

woodseb wrote: »

....Anglo had EUR19.2bln in retail deposits in Sept 2008

please remind us again how many billions have been given to Anglo already

and how many more will be given in coming years?

gandalf

woodseb wrote: »

I agree that letting anglo fail did warrant consideration.....

....Anglo had EUR19.2bln in retail deposits in Sept 2008

Thanks for that (where did you find that figure?).

I am sure a lot of the depositors in there went over the €100,000 threshold under the guarantee scheme so that would not have been the payout amount.

woodseb

ei.sdraob wrote: »

and how many billions of bad assets do AIB have?

that 93billion in deposits can be transferred or sold to a good bank, theres plenty of banks who wouldn't mind 93 billion worth of customer accounts

when you let a bank fail - it becomes a bumfight for the bondholders for the assets - it is likely the deposits would be sold - but it is not certain the full amount would be recovered and it would take an amount of time......in the meantime people would have no access to their savings and would be calling on the government to stump up

kmick

It may seem counter intuitve but they could not afford to. They would have been obliged to pay out to all depositors and ALSO all bond holders as these are preferential creditors i.e. they would be paid before depositors. They were guaranteeing the depositors but they were betting on the fact they would never have to pay out as they were propping up the banks.

Thats why the banks are now sticking up two fingers at the government over lending to smal businesses etc. While the deposit guaratntee is in place they will not be allowed to fail so why should they bother risking giving out any money.

woodseb

ei.sdraob wrote: »

please remind us again how many billions have been given to Anglo already

and how many more will be given in coming years?

i've already conceeded that Anglo may have been let fail :rolleyes:

deadtiger wrote: »

Thanks for that (where did you find that figure?).

I am sure a lot of the depositors in there went over the €100,000 threshold under the guarantee scheme so that would not have been the payout amount.

the figures are available on their annual accounts,

before the anglo nationalisation the guarantee actually was only 20k so the total figure would have been lower - though it doesn't take into account the economic chaos of the majority of the country's savings in the 3 banks being under threat/in limbo for a time when you are trying to set a template for economic recovery

BrownianMotion

woodseb wrote: »

The thread is about 'why we didn't let all 3 banks fail' - quantifying the cost of letting the banks fail crucial to any sensible debate before we try to put a cost on the current plan.

I'll give you a start - AIB had customer deposits of EUR93bln at the end of 2008

You stated original guarantee, that was 90% of deposit to a max of 20k. So that 93bn figure is irrelevant.

We have given Anglo 4bn so far with another 6bn on the way. So that's a 10bn fund to meet deposit guarantees straight away, not including what was given to BOI and AIB.

Have you any figures on numbers of accounts rather than the sum of the amounts held in the accounts as this is more relevant?

Btw I'm not arguing for letting all 3 banks fail here as I wouldn't agree with the logic for that, but it would be interesting to quantify the initial cost of such an action.