Anglo thought back-to-back loans had approval

thebman

Reminds me of when almost anything else goes wrong in Irish society.

Everyone points fingers at everyone else with nobody accepting blame for anything until the media (they hope) forget about it and move on to something else and the public get no answers.

We know have the regulator and the central bank claiming they didn't approve it when the banks are saying the opposite.

Seems like a classic case of trying to create FUD and confuse the matter in the hope it goes away.

http://www.rte.ie/business/2010/0618/anglo.html

Internal Anglo Irish Bank documentation reveals executives believed that the Central Bank and Financial Regulator were 'positively disposed' to back-to-back loans worth €7.45 billion provided by Irish Life and Permanent.

The report also shows that Anglo entered reciprocal deals with Merrill Lynch, Royal Bank of Scotland, AIG and Hypo Real Estate.

The back-to-back loans of €7.45 billion, dressed up as customer deposits, are under investigation by the corporate enforcer Paul Appleby.

Anglo documentation said the transaction allowed Irish Life and Permanent to 'reduce its reliance on European Central Bank repurchase funding'. It also said the deal 'acknowledged past assistance from the counterpart (Irish Life and Permanent) and to position us for future potential arrangements.'.

'There was a clear perception of implicit support from the Central Bank for Allied Irish Bank and Bank of Ireland. They were universally perceived as too big to fail in an Irish context. The other banks did not enjoy this same level of implicit support,' the document added.

The internal report said that the Financial Regulator and the Central Bank were concerned that Irish banks were doing little to co-operate and assist each other and 'in doing so avoid stress to the wider financial system and were encouraging greater co-operation and mutual assistance.'

The document said Anglo Irish Bank 'entered into these transactions in the belief that the Financial Regulator/Central Bank was positively disposed to the nature and type of such a transactions.'

It said discussion over the past year had 'supported this assertion'.

It added that Anglo was told by Irish Life and Permanent it had held discussions with 'senior / middle management' at the Financial Regulator and Central Bank about 'being facilitated and facilitating transactions' to ensure market confidence in the shape of the balance sheets of both Irish Life and Permanent and Anglo Irish Bank.

In a statement released in February 2009, the Financial Regulator said it utterly rejected any suggestion that it would have encouraged the type of circular transactions that occurred between Anglo Irish Bank and Irish Life & Permanent.

'The Authority views the various issues that emerged in relation to the transactions involving these institutions as completely unacceptable,' the statement added.

Someones telling porkies. Click the link for the whole article, I've ended up putting in most of it though when trying to extract the important points. I can't help but think that the banks are telling the truth in this instance and that the regulator knew more than they are letting on.

Banned Account

I too believe that the regulator was more implicated in this type of shenninigans than anyone is letting on - a big golden handshake and into the sunset with you so you now have no obligation to answer any questions.

That said - this doesn't excuse the banks for trying to partake in financial alchemy. If my boss allows me to engage in fraud, it doesn't necessarily low from this that fraud is now acceptable. As an adult human being, I should still know that my actions are wrong.

As with all aspects of the crisis, it's not possible to apportion blame to a single party, even for part of the crisis - it's really a cumulative problem, many parties with a portion of the blame to shoulder.

thebman

Fitzcaraldo wrote: »

I too believe that the regulator was more implicated in this type of shenninigans than anyone is letting on - a big golden handshake and into the sunset with you so you now have no obligation to answer any questions.

That said - this doesn't excuse the banks for trying to partake in financial alchemy. If my boss allows me to engage in fraud, it doesn't necessarily low from this that fraud is now acceptable. As an adult human being, I should still know that my actions are wrong.

As with all aspects of the crisis, it's not possible to apportion blame to a single party, even for part of the crisis - it's really a cumulative problem, many parties with a portion of the blame to shoulder.

I agree with you but it doesn't excuse the regulator for lying about what they knew about and I'd quite frankly love for them to be caught out on it so we can hopefully have a media noise frenzy and maybe get some useful reform.

flutered

people we are in ireland with f.f. at the helm.

thebman

flutered wrote: »

people we are in ireland with f.f. at the helm.

Which is why the people have to push harder for change

Banned Account

thebman wrote: »

I agree with you but it doesn't excuse the regulator for lying about what they knew about and I'd quite frankly love for them to be caught out on it so we can hopefully have a media noise frenzy and maybe get some useful reform.

I think that reform, from the regulatory side is well underway with the appointment of Matthew Elderfield, so I don't see so much of a need for noise on this front. It's funny how people were taken aback by how the Quinn insurance saga was handled. There was a bit of uproar on many peoples behalf as they felt he was being too strict.

This is the problem with change in this country - we get so used to the status quo that we resist any procedural changes in the belief that it screw things up. That said, there is definately a balance to be struck between regulating well and allowing business to be transacted - for years this balance was askew in favour of the institutions, now it is beginning to be rectified though the process will take time and upset a few applecarts along the way.

thebman

Fitzcaraldo wrote: »

I think that reform, from the regulatory side is well underway with the appointment of Matthew Elderfield, so I don't see so much of a need for noise on this front. It's funny how people were taken aback by how the Quinn insurance saga was handled. There was a bit of uproar on many peoples behalf as they felt he was being too strict.

This is the problem with change in this country - we get so used to the status quo that we resist any procedural changes in the belief that it screw things up. That said, there is definately a balance to be struck between regulating well and allowing business to be transacted - for years this balance was askew in favour of the institutions, now it is beginning to be rectified though the process will take time and upset a few applecarts along the way.

Yes my problem is we will mostly see a few hard decisions with no new procedures to back them up and then a return to the norm once they think all the newspapers are done with the story.

Banned Account

thebman wrote: »

Yes my problem is we will mostly see a few hard decisions with no new procedures to back them up and then a return to the norm once they think all the newspapers are done with the story.

Hmmm, don't know about that. I am open to being proved wrong but I would like to think that Matthew Elderfield is serious about turning the regulation around. Increasing capital requirements, moving from light touch regulation to a more rules based approach - I hope that i'm right, but you never know in this damn country!

Liam Byrne

Fitzcaraldo wrote: »

Iwe get so used to the status quo that we resist any procedural changes in the belief that it screw things up

I don't think it has anything to do with the "status quo".

I think it's more that most government-inspired changes either (a) do screw things up (b) cost us more or (c) both.

thebman

Fitzcaraldo wrote: »

Hmmm, don't know about that. I am open to being proved wrong but I would like to think that Matthew Elderfield is serious about turning the regulation around. Increasing capital requirements, moving from light touch regulation to a more rules based approach - I hope that i'm right, but you never know in this damn country!

Yes my real worry isn't the current regulator, it is in a few years when he leaves as FF keep pushing him to do things he believes to be bad practice and then they replace him with a lapdog again.

I also worry about these people in the banks monitoring board meetings that are supposed to report any problems with the banks to the regulator as they will obviously be pampered to be more leniant than is necessary as seems to be the case with most of our regulators which is why our cosy regulation system is failing us so badly.

dan_d

The problem is that our "system" has been exposed for the fraud that it is. A close family relative works in the auditing dept of one of our banks, and she says that getting info from their branches for audits in say the UK or the US is never a problem...paperwork is always up to date and readily available, because these countries have to comply with their own regulatory systems in their own countries as well as the internal auditing systems of the bank. But when you go looking for the same paperwork in Ireland....the answer is inevitably "oh but it's not my job to do that"...and the paper work is either not available or months out of date.Something that has been backed up by recent paper reports on "missing" documentation from DDDA meetings, HSE receipts etc.

The last thing we need to worry about is that our businesses won't be able to trade due to regulation. Of course they will.Every other country in the world has a decent regulatory system and functions better than we do, with more stability. To me, we need to let Matthew Elderfield work away - let him set up a system and hire people. Fresh people means you can train them in a new system easier, so when he does eventually go the system is in place. Of course, he should be backed up by penalties enforced by the courts etc, should a bank not follow the regulations.

Somebody is definitely telling porkies. And I think the title should be changed to "Anglo chose to believe back to back loans had approval".