"Seismic shift" in EU policy following latest summit, & a better deal for Ireland

smcgiff

Geuze wrote: »

Since Anglo/INBS cost us 35bn approx of the 64bn approx, I don't see how the net cost could ever be 15.3bn..................

We got the assets that went into NAMA, for example the Dundrum Shopping Centre loan is due to be sold for a Billion, up from 750m at the time the last estimate for the monies due to be recouped were released.

There's also ongoing loan repayments for some loans.

opiniated

According to an article in todays Irish Times, Professor Patrick Honohan estimates that the Bank Guarantee will cost €40 Billion.

I would imagine that he has the figures available to make that estimation.

Surely, at the end of the day, the ultimate cost is what counts, not political spin?

Rezident

Fair play to Honohan. He said the Anglo bailout was a mistake and that Anglo should have been allowed to fail, as many of us knew in 2008. He added that the decision by the Fianna Fáil-Green Party government to guarantee subordinated debt linked to the banks in 2008 was a massive mistake and he is telling the truth. In public! How can we make this man Taoiseach?

antoobrien

Rezident wrote: »

Fair play to Honohan. He said the Anglo bailout was a mistake and that Anglo should have been allowed to fail, as many of us knew in 2008. He added that the decision by the Fianna Fáil-Green Party government to guarantee subordinated debt linked to the banks in 2008 was a massive mistake and he is telling the truth. In public! How can we make this man Taoiseach?

He's telling the truth, but he's also stating that he's telling it with hindsight.

http://www.independent.ie/business/irish/banking-inquiry/banking-inquiry-brian-lenihan-overruled-on-night-of-bank-guarantee-patrick-honohan-30909836.html

Prof Honohan added that with the benefit of hindsight, had authorities known that heavy losses could have been involved, he said liquidating Anglo Irish Bank on the night of September 29 2008 should have been considered.

But he did add that there was no guarantee that the European Central Bank would have stood by and allowed a wind down of Anglo.

He was asked by Fine Gael TD Kieran O'Donnell whether he felt Anglo was of systemic importance in 2008.

Prof Honohan said Anglo Irish Bank was a bank Ireland could have done without but said at the time of the guarantee it was of systemic importance.

There are a number of statements in there that appear to be contradictory. I'll wait for a transcript of what he said rather than believing what the papers print.

DeJa VooDoo

Isn't it great to see enda's mate, the one granted immunity regarding his dodgy time as chief financial officer in Anglo, getting a handy little number with PwC.

PwC the great auditors of Anglo Banglo!

http://www.independent.ie/business/irish/exanglo-finance-boss-moran-lands-job-with-pwc-in-luxembourg-30876771.html

Sand

I thought Honohan's comments were interesting on a number of levels. Firstly, he's acknowledging that leaving the failed banks to burn was the correct course of action. This is important, because you'll still have the Green Jersey Brigade try to defend the overall strategy and just give ground on its scale or scope. If you start from the principle that failed banks ought to be left to burn, then you approach the problem from the correct angle: what are the interests of the Irish citizen?

All through the past few years the angle has been, what are the interests of the Irish banks, their staff, their management, their shareholders, their creditors and their investors.

Secondly, he made a very clear and important point - leaving Anglo-Irish to burn would have annoyed and enraged our European "partners", but that did not make it the incorrect course of action. Again, that's a critically important point for the Green Jersey brigade to absorb. Many times over the past few years, the strategy has been justified on the grounds of Ireland needing to ingratiate itself with our European "friends", needing to be a team player, of deserving a bad deal as punishment for past sins, and most bizarrely on grounds of morality.

Its important that its recognised that the correct strategy is usually not the one which irritates the fewest people. Again, its the one that serves the interests of the Irish citizens best.

coolshannagh28

Honohan sounds good with the benefit of hindsight but it is important to remember he at all times has operated with his ECB hat on, in most instances to our detriment and IMO continues to do so

FreudianSlippers

Sand wrote: »

I thought Honohan's comments were interesting on a number of levels. Firstly, he's acknowledging that leaving the failed banks to burn was the correct course of action. This is important, because you'll still have the Green Jersey Brigade try to defend the overall strategy and just give ground on its scale or scope. If you start from the principle that failed banks ought to be left to burn, then you approach the problem from the correct angle: what are the interests of the Irish citizen?

All through the past few years the angle has been, what are the interests of the Irish banks, their staff, their management, their shareholders, their creditors and their investors.

Secondly, he made a very clear and important point - leaving Anglo-Irish to burn would have annoyed and enraged our European "partners", but that did not make it the incorrect course of action. Again, that's a critically important point for the Green Jersey brigade to absorb. Many times over the past few years, the strategy has been justified on the grounds of Ireland needing to ingratiate itself with our European "friends", needing to be a team player, of deserving a bad deal as punishment for past sins, and most bizarrely on grounds of morality.

Its important that its recognised that the correct strategy is usually not the one which irritates the fewest people. Again, its the one that serves the interests of the Irish citizens best.

It sounds as though he still agreed in hindsight to give a guarantee to banks like AIB and BoI in order to mitigate the "contagion" argument. I just wonder how the Irish people would have reacted to letting Anglo burn vis-a-vis the potential damage to other "healthier" banks like AIB/BoI.

K-9

Interesting he agrees that Anglo was systemic, something that many couldn't grasp at the time. It wasn't important to the ordinary man on the street, but the trickle down effect on other banks was systemic.

antoobrien

K-9 wrote: »

Interesting he agrees that Anglo was systemic, something that many couldn't grasp at the time. It wasn't important to the ordinary man on the street, but the trickle down effect on other banks was systemic.

It was but they didn't realise it. The Irish League of Credit unions had a total exposure of ~€28m, which was written down by 75%-80%.

Sand

FreudianSlippers wrote: »

It sounds as though he still agreed in hindsight to give a guarantee to banks like AIB and BoI in order to mitigate the "contagion" argument. I just wonder how the Irish people would have reacted to letting Anglo burn vis-a-vis the potential damage to other "healthier" banks like AIB/BoI.

"Contagion" is ultimately the ECBs problem if it is anyone's. Certainly Ireland has little or no interest in what happens to a German bank or a French bank as a result of decisions made in Ireland. That has been the message clear and loud from Germany in particular and France as well - bank problems are purely the problem of the national government.

The only odd point about Honohan's testimony was that letting Anglo fail would have caused Eurozone wide anger with Ireland - I believe he equated it with Lehman's collapse. Given many people will tell you the rest of the Eurozone had practically no exposure to Irish banks in general, let alone a specific Irish bank, that's an odd statement to make. My understanding given the above is that the rest of the Eurozone would not have even noticed the failure of Anglo Irish.

I actually don't disagree with the state going into AIB or BoI but it should only have been on terms of actually preserving banking systems and functions. Not a "no bondholder left behind" strategy for creditors ( long term credit - pointless if it really is just a liquidity issue, self defeating otherwise, short term credit - irrelevant if ELA is available, which it was and heavily used as Honohan pointed out). The starting point for any sensible strategy was the much sneered at "Burn the bondholders" view.

My complaint is that the strategy that was followed started from far stupider mantras about soft landing, there is no alternative, shure we all partied, etc, etc. I still remember an otherwise intelligent poster telling me 2 or 3 years ago that Irish people would never default on a mortgage - just didn't happen in Ireland apparently.

Sand

K-9 wrote: »

Interesting he agrees that Anglo was systemic, something that many couldn't grasp at the time. It wasn't important to the ordinary man on the street, but the trickle down effect on other banks was systemic.

People will still tell you today that Anglo Irish was not and is not systemic.

coolshannagh28

Honohan very much represents the interests of the ECB his 20% rule is indicative of this ,its very apparent in the last few days that we are subservient to Europe and good Europeans through and through . does this apply to Germany or France would they put European interest before their own and does the German representative at the ECB dictate ECB policy to Germany or vice versa.
What is happening in Ireland is a microcosm of Europe ,the centre Dublin is favoured and protected the rest, the regions are neglected ,as with Europe, Germany, France and the Benelux countries are prioritised, the rest beg.