The Legacy of Brian Lenihan

DexyDrain · 13-06-2011 05:11PM

The guarantee is not used to solely protect systemic banks, it is to prevent contagion. Many investors around the globe may not even be able to name one Irish bank, but they will all hear 'Ireland' and 'Bank has collapsed' in the same headline, and that would be enough to put capital flight into overdrive in the weeks after Lehmans.

The cost of a disorderly INBS or Anglo collapse would be far higher once accounts and investments in other banks start closing and the lost capital then having to be made up with 'bailouts'. The other remaining banks would also have to pay far higher interest rates on their funding while the markets wait to see which bank is next, which investors are going to end up getting burned.

Jigga · 13-06-2011 05:15PM

margio wrote: »

yee are all ****ed up. a pack of sickos is all yee are. i'm just going to say that to yee. Don't even bother replying cuz I Have more respect for a deceased man than to argue with a pack of feeling sorry for themselves bitter psychos. some sick and selfish comments made here. what he did in the last year and a half is his own business, he probably would have died sooner if he was at home watching TV. Atlest he didn't pis his life away feeling sorry for himself like yee wasters. whether some of yee are disabled are not, it is no excuse to be posting crap like that. Political opinions are irrelevant at the moment. The biggest obstacle to this country achieving economic stability is whingers like yee. GROW UP SADOS

I see we have an intellectual in our midst.

jmayo · 13-06-2011 05:27PM

K-9 wrote: »

You asked me that on a separate thread and I've the same answer as then, I don't know.

By answering my question you accept Anglo was different to INBS?

Yes I have asked you and many other people, usually the ones pro bailout, pro NAMA, etc, etc and guess what not one person has ever answered.
They usually jump over to Anglo as you just did.
Blowing 10 billion plus to wind down INBS is a crime in itself.

I think Anglo was not truly systemic to ordinary Irish people as very few had any direct or even indirect dealings with it.

The only reason it might be in any way termed systemic was the fact the other moronically run banks had invested with it through deposits (sorry I mean inter bank loans) or bond purchases.

Everytime it's systemic importance was questioned, members of the last government always trotted out the Credit Unions, who AFAIK claimed they only had 100 million tied up in it.

Of course the other thing was the fact Quinn group was up to it's tits in it and we couldn't let an insurance company go to wall. :rolleyes:

To me letting Anglo go would be like amputating a severly beyond repair infected leg.
It would hurt a lot, we would have a difficult time coping and the rest of the body would feel the affect, but it would be better for the entire body.

Instead the surgeons (government, regulatory authorities) decided that they would try and save it, but that has resulted in the entire body becoming infected with it's toxicity and the body is not in a state of terminal decline.
It is is now only a quesiton of when and not if the body finally packs it in.

I think Anglo and INBS should have been left fry and the government immediately move to pour funds into AIB and BOI to guarantee them, at the same time as taking staek in them ala Northern Rock or RBS.

Instead the government, it's arrogant ill prepared minister of finance and taoisaeach thought they were smart guaranteeing everything.
They have wasted anything up to 70 or 80 billion to wind down two cesspits.
And it isn't just being clever in hindsight.

Look at how the markets were viewing Anglo's exposure to property from early 2008.
You didn't need to be even an economist to notice that having 70 or 80% of your loan book tied to property development was a bad situation.

If the ever so feared and well thought of markets had this view of Anglo why the fook did our government want to believe otherwise ?

Note I am including NAMA and the recapitalisation becuase one can't claim NAMA will break even as some sort of achievement on one hand when we had to recapitalise the losses with the other hand.
Either way we the taxpayers and citizens pay.

jmayo · 13-06-2011 05:36PM

DexyDrain wrote: »

The guarantee is not used to solely protect systemic banks, it is to prevent contagion. Many investors around the globe may not even be able to name one Irish bank, but they will all hear 'Ireland' and 'Bank has collapsed' in the same headline, and that would be enough to put capital flight into overdrive in the weeks after Lehmans.

The cost of a disorderly INBS or Anglo collapse would be far higher once accounts and investments in other banks start closing and the lost capital then having to be made up with 'bailouts'. The other remaining banks would also have to pay far higher interest rates on their funding while the markets wait to see which bank is next, which investors are going to end up getting burned.

Ah yes the "They must be save, they all must be saved" argument.

It worked out so well that all people now hear in the same headline is "Ireland", "nationalised broke banks", "IMF bailout" and "Default".

BTW ever hear the old mantra "cut your losses" ?

Can you please tell me how you could ever envisage the Irish state guaranteeing 4 or 5 hundred billion ?

end a eknny · 13-06-2011 05:46PM

anybody recieving welfare in this country is not sufffering poverty we have the highest welfare rates in europe dry your eyes

hannah88 · 13-06-2011 05:55PM

mcjagger wrote: »

i welcome the death of brian lenihan. for me its part of the healing process for the pain and suffering him and his people inflicted on me. i welcome his death as though it were the death of any lowlife gangland figure

I find it deeply distressing that people are expressing crude statements like this. The person who wrote this has obviously never experienced the loss of a loved one. Regardless of Brian Lenihan's occupation he was still a man with a family. Each person is entitled to express their opinion on politicians however, I think a line must be drawn when it comes to belittling a person's death.

later12 · 13-06-2011 05:57PM

jmayo wrote: »

I think Anglo was not truly systemic to ordinary Irish people as very few had any direct or even indirect dealings with it.

That is not simply what systemic means! A banking crisis can be systemic in its nature if the failure of one bank propagates as a contagion.

In that context, i.e. in terms of wholesale funding, what systemic risk means is the risk of a failure of fellow domestic banks (derived from an equivalent hunger for a return on similar (or equivalent) assets) from accessing capital on the market.

Basically - if one bank, Anglo Irish Bank, cannot access capital then the risk that its colleague (who is operating in the same economy and accessing the same markets and is going after the same assets, and may even have many of the same customers, and may even have the same acronym) will not be able to access these markets itself increases, and access may be shut off.

The question of a bank having a systemic relationship to the domestic banking system is not a measure of the prevalence of its ATMs nor its popular predominance as a local commercial unit nor a household name. Yes, there can be an issue surrounding deposit bases, but that is not the only means of evaluating the risk to the banking sector.

DexyDrain · 13-06-2011 06:44PM

jmayo wrote: »

Ah yes the "They must be save, they all must be saved" argument.

It worked out so well that all people now hear in the same headline is "Ireland", "nationalised broke banks", "IMF bailout" and "Default".

BTW ever hear the old mantra "cut your losses" ?

Can you please tell me how you could ever envisage the Irish state guaranteeing 4 or 5 hundred billion ?

That is the point or a very broad, blanket guarantee, the broader it is the less the chances that any of the institutions within it will fail because of their own perceived exposure, or contagion from institutions outside it.

Can you explain what insurance companies would do if all our cars were crashed and houses burned down tonight? The nature of insurance is to have a very broad risk base so that the average number of claims is easily covered by a large number of relatively small premiums. Bank guarantees are intended to be similar, they reduce the chance of a collapse in confidence in the whole system and the individual institutions by accepting the risk of the smaller costs of the weakest links.

If you are interested in a modern history lesson, you only have to look to the Asian banking crisis in the 90's. Very, very similar underlying causes, similar enormous collapses but with a varying level of success among the countries due to the lack of a common policy on banking crises. What stands out from this episode is that the countries that did best were the ones who introduced blanket guarantees very quickly.

Indonesians, like many Irish it seems, were not willing to stomach a blanket guarantee, guaranteeing deposits only. Their banks were experiencing a run on deposits, so it apparently made sense. But it backfired spectacularly with the bank runs intensifying after the limited guarantee. They ended up imitating the other countries who had introduced wide ranging blanket guarantees while their banks had almost bled to death.

The consequences of no guarantee were stark, collapse within days, the risks of a limited guarantee can result in the collapse proceeding in any case with the economy wiped out with no money to fund public services or pay out the guaranteed funds, the blanket guarantee has greater apparent exposure while at the same time offering the greatest chance that it will never even have to be called upon.

thebman · 13-06-2011 06:49PM

You can isolate a bank if it threatens the systematic important banks covering the dealings between the systematic to that bank.

Anglo could have been excluded and let die and cover the domestic dealings it had with other Irish banks by putting money into those banks and leaving Anglo to die.

No reason to keep it going if it wasn't of systematic importance on its own. If other nations see a guarantee covering every bank but Anglo, it is way easier to state that it is different and not of systematic importance.

If you cover all banks in Ireland, you inevitability risk contagion of problem affecting one being associated with all.

I think this is a large part of the Irish banking problem IMO.

K-9 · 13-06-2011 07:52PM

jmayo wrote: »

Yes I have asked you and many other people, usually the ones pro bailout, pro NAMA, etc, etc and guess what not one person has ever answered.
They usually jump over to Anglo as you just did.
Blowing 10 billion plus to wind down INBS is a crime in itself.

I think Anglo was not truly systemic to ordinary Irish people as very few had any direct or even indirect dealings with it.

The only reason it might be in any way termed systemic was the fact the other moronically run banks had invested with it through deposits (sorry I mean inter bank loans) or bond purchases.

Everytime it's systemic importance was questioned, members of the last government always trotted out the Credit Unions, who AFAIK claimed they only had 100 million tied up in it.

Of course the other thing was the fact Quinn group was up to it's tits in it and we couldn't let an insurance company go to wall. :rolleyes:

To me letting Anglo go would be like amputating a severly beyond repair infected leg.
It would hurt a lot, we would have a difficult time coping and the rest of the body would feel the affect, but it would be better for the entire body.

Instead the surgeons (government, regulatory authorities) decided that they would try and save it, but that has resulted in the entire body becoming infected with it's toxicity and the body is not in a state of terminal decline.
It is is now only a quesiton of when and not if the body finally packs it in.

I think Anglo and INBS should have been left fry and the government immediately move to pour funds into AIB and BOI to guarantee them, at the same time as taking staek in them ala Northern Rock or RBS.

Instead the government, it's arrogant ill prepared minister of finance and taoisaeach thought they were smart guaranteeing everything.
They have wasted anything up to 70 or 80 billion to wind down two cesspits.
And it isn't just being clever in hindsight.

Look at how the markets were viewing Anglo's exposure to property from early 2008.
You didn't need to be even an economist to notice that having 70 or 80% of your loan book tied to property development was a bad situation.

If the ever so feared and well thought of markets had this view of Anglo why the fook did our government want to believe otherwise ?

Note I am including NAMA and the recapitalisation becuase one can't claim NAMA will break even as some sort of achievement on one hand when we had to recapitalise the losses with the other hand.
Either way we the taxpayers and citizens pay.

AIB and BoI were also heavily exposed, both over 50%, AIB more so again.

With the benefit of hindsight the Iceland approach would have been the best option, the markets would have seen through AIB and BoI as they did anyway.

Galway K9 · 13-06-2011 09:50PM

Mr.Micro · 13-06-2011 10:32PM

Going back to the original post and the legacy of Brian Lenihan and I think he will be remembered more for the disaster of a finance policy that he presided over than his early demise from cancer. I do feel it was extreme arrogance of FF to allow him to be Finance Minister when he was diagnosed, with I will say a very low prognosis of recovery. His judgment would have been impaired at the very least and the country is in a right mess, albeit not solely down to him. I just cannot understand why he stood for re election and even to lead the FF party.....he would have known he would not survive and the enormous pressure he took upon himself to possibly hasten his demise.

flutered · 13-06-2011 10:42PM

Mr.Micro wrote: »

Going back to the original post and the legacy of Brian Lenihan and I think he will be remembered more for the disaster of a finance policy that he presided over than his early demise from cancer. I do feel it was extreme arrogance of FF to allow him to be Finance Minister when he was diagnosed, with I will say a very low prognosis of recovery. His judgment would have been impaired at the very least and the country is in a right mess, albeit not solely down to him. I just cannot understand why he stood for re election and even to lead the FF party.....he would have known he would not survive and the enormous pressure he took upon himself to possibly hasten his demise.

i have cancer, with some of the schit that at times i take, i recon that i could prop for munster, i guess that your question is answered.

Mr.Micro · 13-06-2011 10:47PM

flutered wrote: »

i have cancer, with some of the schit that at times i take, i recon that i could prop for munster, i guess that your question is answered.

Not really.....morphine based drugs affect the mind and judgment as we all know.

flutered · 13-06-2011 10:51PM

end a eknny wrote: »

anybody recieving welfare in this country is not sufffering poverty we have the highest welfare rates in europe dry your eyes

ah sure the likes of me are dragging this country over the cliff, i bet that he never had to sit in a hospital corridor on a hard chair for a couple of hours, with a tumour in his innards, waiting to be seen, i have, it is not nice, it hurts like fcuk even for days afterwards, i have never had to wipe my eyes, the oncologists never had to try and cheer me up, because i dont give a fcuk as to whether i go or stay, just the same as he and his cronies did not give a fcuk about my country, so op and any one else that expect sympthy from me will not recieve it.

end a eknny · 13-06-2011 11:18PM

flutered wrote: »

ah sure the likes of me are dragging this country over the cliff, i bet that he never had to sit in a hospital corridor on a hard chair for a couple of hours, with a tumour in his innards, waiting to be seen, i have, it is not nice, it hurts like fcuk even for days afterwards, i have never had to wipe my eyes, the oncologists never had to try and cheer me up, because i dont give a fcuk as to whether i go or stay, just the same as he and his cronies did not give a fcuk about my country, so op and any one else that expect sympthy from me will not recieve it.

ditto

swordofislam · 14-06-2011 12:09AM

The thing is that psychopathy has a genetic element it is heritable.

When Lenihan Sr said that we couldn't all live in Ireland he knew that it didn't apply to him and his. It was funny to Lenihan senior he chuckled at the thought of teenage Irish girls prostituting themselves in London and Irish families split apart at Christmas.

His son was the same, he loved cutting the minimum wage and loading the pain on the poor. He relished it Brian Lenihan Junior wanted poor people to kill themselves. He loved the idea of grannies dying on trolleys covered in ****.

Why would the Brian Lenihan's have felt this way? They felt nothing they were psychopaths. But central to their identity was the sense of themselves as predators. They loved being above the law. They loved laughing at us. The joke is too bleak for most people but for a psychopath it is just right.

nesf · 14-06-2011 12:15AM

Galway K9 wrote: »

As apt as that video is here, please add a comment in future not just a video in a reply.

nesf · 14-06-2011 12:19AM

jmayo wrote: »

I think Anglo was not truly systemic to ordinary Irish people as very few had any direct or even indirect dealings with it.

That means nothing really. What matters is whether it was systemic to the other banks. Doesn't matter that it had no ATMs if it's fall would seriously affect the other banks that did have ATMs.

margio · 14-06-2011 12:20AM

did you access his medical records?, who says he was on morphine during his tenure as finance minister

thebman · 14-06-2011 01:13AM

nesf wrote: »

That means nothing really. What matters is whether it was systemic to the other banks. Doesn't matter that it had no ATMs if it's fall would seriously affect the other banks that did have ATMs.

You could protect the other banks through their own balance sheets and let Anglo die alone.

Would have been cheaper than propping it up and ensuring its existence in the future albeit under a different name.

Truth of the matter is (IMO) that many politicians in government and well connected people had loans in Anglo and the government feared letting Anglo go because it would most likely be aggressive in pursuing those loans if the government excluded it from any guarantees.

nesf · 14-06-2011 02:03AM

thebman wrote: »

You could protect the other banks through their own balance sheets and let Anglo die alone.

You'd be propping up an awful lot of credit unions and insurance companies too I'm afraid.

thebman · 14-06-2011 02:14AM

nesf wrote: »

You'd be propping up an awful lot of credit unions and insurance companies too I'm afraid.

Maybe who knows what is in Anglo since they won't let us see.

You would however not be propping up Anglo or the foreign investments/loans in Anglo or its shareholders.

I think propping up the from the credit union and Irish banking side would have worked out at about the same price but left the Irish people feeling less like they were taking for a ride.

It would also have taken some of the heat off the Anglo investigations going on where they can't even get access to encrypted files which is funny given most of our banks have been found with laptops stolen with unencrypted customer information.

nesf · 14-06-2011 05:44AM

thebman wrote: »

I think propping up the from the credit union and Irish banking side would have worked out at about the same price but left the Irish people feeling less like they were taking for a ride.

It's an unknown so eh, how can you know that? Also many of the bondholders in Anglo are credit unions, insurance companies and the like. That's part of the whole problem with our banking sector; it's all really intertwined and if you knock over one domino you knock over a whole bunch of them.

donaghs · 14-06-2011 10:20AM

He seemed like a nice man, but if you want to look at his legacy, only one thing that sticks out like a sore thumb. The bank guarantee. People will be still be paying for that after we are all dead.

jmayo · 14-06-2011 11:08AM

DexyDrain wrote: »

That is the point or a very broad, blanket guarantee, the broader it is the less the chances that any of the institutions within it will fail because of their own perceived exposure, or contagion from institutions outside it.

Yes but if the guarantee is ever called in you are fooked.
You are in affect asking people to gamble that everything is alright because the government backed it.

DexyDrain wrote: »

Can you explain what insurance companies would do if all our cars were crashed and houses burned down tonight? The nature of insurance is to have a very broad risk base so that the average number of claims is easily covered by a large number of relatively small premiums. Bank guarantees are intended to be similar, they reduce the chance of a collapse in confidence in the whole system and the individual institutions by accepting the risk of the smaller costs of the weakest links.

Ehh confidence in one of the banks had collapsed, at least in the markets anyway and tying the whole kit and caboodle to it only threw the rest into it's situation.

DexyDrain wrote: »

The consequences of no guarantee were stark, collapse within days, the risks of a limited guarantee can result in the collapse proceeding in any case with the economy wiped out with no money to fund public services or pay out the guaranteed funds, the blanket guarantee has greater apparent exposure while at the same time offering the greatest chance that it will never even have to be called upon.

My point is that Anglo was a dead duck, the international markets that you appear to be worrying about already knew this.
People knew how exposed to property it was and the game was up.
Follow it's share price form late 2007 or early 2008.

Tying Anglo into the guarantee was akin to tying the sinking titanic to a lifeboat.

BTW do you work in banking ?

nesf wrote: »

That means nothing really. What matters is whether it was systemic to the other banks. Doesn't matter that it had no ATMs if it's fall would seriously affect the other banks that did have ATMs.

Yes I know that was simplistic way of looking at it, but I did hint at it's wider exposure by saying people were not even indirectly linked to it.
It was really an investment bank and even then it was a specialist investment bank.
And I know other institutions had exposure to it.

As I said it should have been obvious that it was too exposed and together with INBS it should have been cast adrift and all resources should have been used to save the others.

So do you still think it was right to guarantee Anglo and INBS ?

nesf wrote: »

You'd be propping up an awful lot of credit unions and insurance companies too I'm afraid.

Ahh yes the whole chestnut of the credit unions.
Are you reading from the ff hymm book here ?
By insurance companies, do you mean the one run by a family who thought they would buy a bank or the one that lent it a deposit ?

And once again I ask why was INBS saved ?
Was it as systemic as Anglo ?
Just wondering since I always question why we the taxpayers contributed to paying off Mr chelseas investments.

Is/was there any bank small enough and non systemic enough not to bother saving ?

This whole guaranteeing financial institutions is not just an Irish problem.
There are major international banks are now seen as too big to fail but they are also too big to save.
And this is where the whole issue of ensuring adequate capital reserves needs to be resolved by the central banking establishments.
AFAIK the last limits they set are still lower than that held by Lehmans at the time of it's collapse.

DexyDrain · 14-06-2011 11:53AM

jmayo wrote: »

Yes but if the guarantee is ever called in you are fooked.
You are in affect asking people to gamble that everything is alright because the government backed it.

Have you read any of the Commission of Investigation reports on the crisis?
http://www.bankinginquiry.gov.ie/Documents/Misjuding%20Risk%20-%20Causes%20of%20the%20Systemic%20Banking%20Crisis%20in%20Ireland.pdf
4.7.9:

Without doubt, attempting to buy time would also have had its own very serious risks,
including that market confidence would not have returned sufficiently quickly or might even
have further declined. Anything but a maximum State commitment could expose the
Government to the risk of having to announce additional financial undertakings within a short
space of time. A possible sequence of government decisions deemed to be inadequate could
easily have reduced market confidence even further.

On whether other measures could have been implemented before the blanket guarantee was considered:
4.7.12

given the uncertain and unstable environment prevailing at the time, the
emphasis on the need to avoid bank closures as well as the increasing amount of property
losses, it is difficult to conclude with any certainty that this would have appreciably reduced
the ultimate burden to the State of saving the Irish banking system. An assessment of this
would require a discussion on, for instance, whether the Government could have designed a
strategy to raise economic growth sufficiently in order, inter alia, to help cushion weakening
property prices and/or to mobilise private sector capital for the banks.

If you read sections 4.7 through to section 4.8 for example, it states clearly that the Financial Regulator at all times maintained that the banks were solvent and only had liquidity problems, two reports by none other than PWC and Merril Lynch supported that view. Merril Lynch were involved quite intimately in the crisis both before and after the guarantee.

Brian Lenihan was probably the smartest guy in the room on the Government's side but he can hardly be expected to better the combined analysis of world experts such as PWC, Merril Lynch or even our own Financial Regulator. IMF and OECD reports in the couple of years before the crisis also backed the idea that the Irish banking system was rock solid.

Ehh confidence in one of the banks had collapsed, at least in the markets anyway and tying the whole kit and caboodle to it only threw the rest into it's situation.

My point is that Anglo was a dead duck, the international markets that you appear to be worrying about already knew this.
People knew how exposed to property it was and the game was up.
Follow it's share price form late 2007 or early 2008.

Again, you need to read the reports, Honohan addressed the issue of excluding Anglo from the guarantee in footnote 162:

It would not, however, have been trouble-free.
It would have earned harsh criticism from other EU countries as being a ―second Lehmans, imposing a
destabilising spill-over effect on them, would have caused a jump in government borrowing costs and
would have entailed large and arbitrary costs to Anglo creditors, including other banks, resulting in
economic disruption and job losses. Since the decision makers had no inkling of the scale of the looming
net deficiency in Anglo, this option – with its sizeable risks in an already volatile environment – did not
seem worth considering. As such, it is of academic interest only.

BTW do you work in banking ?

No.

Amirani · 14-06-2011 02:40PM

"He had said in recent weeks that he was not afraid, only concerned for the pain his family would suffer."

steelcityblues · 14-06-2011 03:18PM

How many on estimate turned up for the funeral?

Cookie_Monster · 14-06-2011 03:44PM

steelcityblues wrote: »

How many on estimate turned up for the funeral?

1000+
http://www.irishtimes.com/newspaper/breaking/2011/0614/breaking5.html

In a moving eulogy, former attorney general Paul Gallagher spoke to mourners for almost 30 minutes about his late friend. “He was a master of all the talents, he was an inspiration to us all, and he was a great patriot,” he said.

ah yes, an inspiration, if I ever want to figure out to rob an entire country from it's people I'll take my inspiration from there, and how is it patriotic to dump billions of private foreign debt on our citizens :rolleyes:

The Legacy of Brian Lenihan

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