Why are we bailing out Nationwide?

astaines

It looks as if we will be paying even more for Irish Nationwide (http://www.irishtimes.com/newspaper/breaking/2010/0512/breaking46.html). What I am completely missing is why. I can understand why someone might think that Anglo was of systemic importance. I think, myself, they would be wrong, but Anglo was big enough for the idea to be vaguely credible.

INBS, however, is a financial flyspeck. Under what circumstances would the complete collapse and total disappearance of INBS pose a systemic threat to the Irish economy? I can see that keeping it going, and keeping the jobs in place might be worth €250 to €500 million, similar to what EBS seem to be getting (http://www.irishtimes.com/newspaper/breaking/2009/1218/breaking52.html). However the actual sums proposed for INBS (€2.7 billion and rising fast) are silly.

Any ideas?
Anthony

Banned Account

I think it goes back to that wonderfully well thought out government guarantee, once it was offered to one, it was offered to all (unfair competition reasons) and INBS took full advantage.

who_ru

after that guarantee, which the hard nosed bankers panicked a totally out of his depth minister for finance into, every institution became "systemic".

a worse, more incompetent piece of financial management you will never find. it is and will continue to cost us dearly for many a year. Lenihan's reputation is forever ruined by it.

Liam Byrne

who_ru wrote: »

a worse, more incompetent piece of financial management you will never find. it is and will continue to cost us dearly for many a year. Lenihan's reputation is forever ruined by it.

....and yet some people view Lenihan as the most competent in this government. :rolleyes:

I tell ya, if I'd know he was going to sign our country away that night in October, I'd have set up a bank the week before!

Of course, we'll never know what went on at that meeting because there are no minutes and the inquiry was refused scope to find out.

George Orwell was only 26 years out :

the farmer = the British
the pigs = FF & their cronies

gurramok

I'd like to know the answer too. The previous excuse for the big banks was that their failure was too big for the economy hence save them.

Now INBS is tiny, whats the excuse now?

Sponge Bob

In a shutdown FF would lose a lot of councillors if their loan guarantees were called in and the councillors were bankrupted, that is why.

astaines

Just listening to RTE radio1. The inimitable Beverly Cooper-Flynn is on, and has agreed that INBS might be closed down. This is another €2.7 billion down the tubes. The really scary thing is that I agree with Liam that Brian is felt to the most competent of the current shower. It says a lot about the rest of them.

Liam Byrne

astaines wrote: »

The really scary thing is that I agree with Liam that Brian is felt to the most competent of the current shower.

Just to clarify - I certainly don't think he is, given that his ****-ups have been the worst ones (bank guarantee, NAMA) and have crippled us by driving us up a cul-de-sac regardless of how much more is revealed as time goes on.

All I said was that some people view him as the most competent.

Personally, I wouldn't give the guy a fiver to buy me a lotto ticket.

average_runner

What would of been the backlash if goverment didnt give the gaurnatees???

Who were the lenders to the banks?

cson

It's a very complicated situation so I'd cut Lenihan a bit of slack over it. The guy isn't qualified to be Minister for Finance and very few of his ministerial colleagues are qualified to be in charge of their portfolio's either. You have a guy with no Accounting or Finance background heading up the Accounting and Finance Dept of our State.

cson

average_runner wrote: »

Who were the lenders to the banks?

At a basic simplistic level; German and French banks.

20Cent

cson wrote: »

At a basic simplistic level; German and French banks.

So public money is going to a private bank once again.
This is crazy.


Join the march next Tuesday.

cson

20Cent wrote: »

Join the march next Tuesday.

What do you actually hope to achieve by the [and multiples of] march? Even if you storm the Dail and burn the place down, that money will still be owing. I'd tolerate that march if it had a specific purpose but it has none.

average_runner

So what would of happen if we did bail the banks out, would the French and German banks lost their money, what would be the consequences of that???

Sponge Bob

No consequences really ....but start the shutdown quick, get all the deposits out of it by end september wen the guarantee is up and then arrest and charge fingleton and his top management like the criminals they are.

Scarab80

Actually INBS is financed 50/50 by customer deposits and unsubordinated debt. Unsubordinated debt meaning that on default the holders have priority over other loans and securities. These are probably held by either other banks or institutional investors such as pension funds.

ei.sdraob

Irish Nationwide - an expensive delay



ugh oh :eek:

Liam Byrne

average_runner wrote: »

So what would of happen if we did bail the banks out, would the French and German banks lost their money, what would be the consequences of that???

Presume you mean "if we didn't".....

On the face of it, nothing, because it would mean that commercial investors invested in a private enterprise and lost money.

HOWEVER, those banks would probably look at the fact that the FF government refused to regulate properly, and unfortunately might look badly on Ireland's reputation.

And if they laid the blame where it should go, I would say they would DEFINITELY look badly on future FF governments, which is what I suspect FF are concerned about.

20Cent

cson wrote: »

What do you actually hope to achieve by the [and multiples of] march? Even if you storm the Dail and burn the place down, that money will still be owing. I'd tolerate that march if it had a specific purpose but it has none.

Let them know that people have had enough of this.
Public money pouring into private banks.


Any protest should be entirely peaceful of course.

cson

20Cent wrote: »

Let them know that people have had enough of this.
Public money pouring into private banks.


Any protest should be entirely peaceful of course.

And what exactly do you expect to happen then?

20Cent

cson wrote: »

And what exactly do you expect to happen then?

And this is exactly why we are in this mess.
No one protests and FF do it again and again.