Anglo Tapes

tayto lover

Mr.Micro wrote: »

Anglo apparently convinced the Central Bank, DoF and the rest that it was systemic. The powers to be were completely shocked by the state of things and pure incompetence and were panicked into obliging hence the bailout of Anglo. It should have been cut adrift but there we go.

The powers that be chose to disregard all the reports telling them that it was a basket case.

I wonder why?

Lbeard

john.han wrote: »

Really? I've always been frustrated that Anglo wasn't simply let go, with the other banks protected purely for the reason that most ordinary citizens had deposits in the other banks.

No. If one was let go, the assumption on international markets would be they were all screwed (which they were)

I don't know anyone that had money in Anglo, they weren't a day to day bank for ordinary people, they only had a small number of branches. I don't see what the problem with applying the normal rules of insolvency to them would have been.

It wasn't really about the depositors. It was about the whole global financial system. This why all the other European banks that needed bailing out, were bailed out. None were let go down, because it could have triggered a domino effect that would have screwed every bank in the world.

john.han

Lbeard wrote: »

No. If one was let go, the assumption on international markets would be they were all screwed (which they were)

Why? Surely the better rationale would be that in order to correct the system the worst would need to go to clear the mess as efficiently as possible, and the markets could be reassured that the government would be better equipped to manage the other banks if they cut Anglo away thus reducing the exposure to the state.

Lbeard wrote: »

It wasn't really about the depositors. It was about the whole global financial system. This why all the other European banks that needed bailing out, were bailed out. None were let go down, because it could have triggered a domino effect that would have screwed every bank in the world.

That's simply not true.

Good loser

The fact that Anglo was the size it was - €100 bn in loans, about half the size of the economy - made it systemic. Many bank loans are syndicated and Anglo was closely linked to AIB in particular (I believe) in that regard.

Too big to fail.

SpaceTime

To put it into a US context, it would be like as if Lehman Bros had about US$ 7 trillion at risk!

Relative to GDP, Anglo is off the scale entirely.

GCU Flexible Demeanour

Good loser wrote: »

The fact that Anglo was the size it was - €100 bn in loans, about half the size of the economy - made it systemic. Many bank loans are syndicated and Anglo was closely linked to AIB in particular (I believe) in that regard.

Too big to fail.

I'd strongly query this view.

Firstly, any exposure by AIB could just be covered by guaranteeing AIB. No need to go further.

Secondly, our economy has a peculiar structure. The payments system is systemic, but to protect it you'd only need to cover the clearing banks - which don't/didn't include Anglo (or INBS). But the bulk of our exports are from FDI companies, which don't rely at all on Irish banks to finance them.

What specifically do you see as the systemic problem that Anglo would have created, if it had simply been wound up without any Government support for its losses?

Good loser

Not sure I know exactly. The fact that Govt guaranteed Anglo indicates they felt it was systemic.

If Anglo failed with debts of €100 bn wouldn't their borrowers take the attitude 'We need not pay back now as they're gone broke'.

Rightwing

Good loser wrote: »

Not sure I know exactly. The fact that Govt guaranteed Anglo indicates they felt it was systemic.

If Anglo failed with debts of €100 bn wouldn't their borrowers take the attitude 'We need not pay back now as they're gone broke'.

They were out of their depth & didn't know what they were doing, (I'm being generous to them) it's obvious Anglo wasn't systemic,,,,it should have been clear even to the merest of pawns that this bank should have been let go.

Good loser

Rightwing wrote: »

They were out of their depth & didn't know what they were doing, (I'm being generous to them) it's obvious Anglo wasn't systemic,,,,it should have been clear even to the merest of pawns that this bank should have been let go.

How can you say that a bank with loans out equal to 50% of GDP/GNP wasn't systemic? That fact alone makes it systemic imo.

All the big British banks were rescued.

Rightwing

Good loser wrote: »

How can you say that a bank with loans out equal to 50% of GDP/GNP wasn't systemic? That fact alone makes it systemic imo.

All the big British banks were rescued.

Not systemic to the Irish economy. €2bln to this developer, another 2 here and there, who gives a damn about that? That bank had nothing to do with the real economy, forget about the size of the loan book.

AlekSmart

Rightwing wrote: »

They were out of their depth & didn't know what they were doing, (I'm being generous to them) it's obvious Anglo wasn't systemic,,,,it should have been clear even to the merest of pawns that this bank should have been let go.

It's certainly becoming clearer that our Governmental,Administrative and Regulatory agencies were essentially staffed at the highest levels by incompetents.

Not surprisingly,mind you,as the varying levels of downright ignorance had for some years been flagged in many different areas.

What made the Anglo case different was the simultaneous nature of so many catastrophic events,including the Anglo Loan Book stuff.

It is however,or at least,It should be very good reason for a total reappraisal of what we require of a potential Political Representative BEFORE we vote for them.....Membership of the Licenced Vintners Association,ASTI or MIAVI can no longer,of itself,render a candidate worthy of a first-preference vote.

If all the current tragi-comedic stuff has any positive effect,it will be worth it IF it causes even a few good citizens to pause before allocating their 1,2 or 3 on future ballot papers !! :eek:

shedweller

I've kind of given up on this subject. My reason is: Whats the point?
Theres lots of very well read people on here (cody, wibbs et al.) that put forward lots of good points regularly. But what does that achieve at the end of the day? We can talk all we want but the big boys will more or less keep going and doing what they were doing.

I suppose my point is what are we going to do that will actually make a difference? As i said, there is any amount of very intelligent discussion going on here and elsewhere on this subject. I'd like to see some of it actually making a difference and i havent seen it actually working yet.

Scofflaw

shedweller wrote: »

I've kind of given up on this subject. My reason is: Whats the point?
Theres lots of very well read people on here (cody, wibbs et al.) that put forward lots of good points regularly. But what does that achieve at the end of the day? We can talk all we want but the big boys will more or less keep going and doing what they were doing.

I suppose my point is what are we going to do that will actually make a difference? As i said, there is any amount of very intelligent discussion going on here and elsewhere on this subject. I'd like to see some of it actually making a difference and i havent seen it actually working yet.

In the short term, it's hard to think of anything that produces immediate "silver bullet" results - protests and marches and media coverage haven't produced any more results than "just talking".

I don't think that "just talking" makes no difference, when that talking is done in public. It's not going to produce any immediate and noticeable effect in the short term, but it's part of what feeds into political attitudes in the longer term.

Talking is part - an important part - of public pressure. After all, what does the media do but talk? The key aim of talking is not so much to come up with clever solutions, but to indicate how strongly people feel about the issue - in particular, whether it's just a nine days' wonder or whether it's a lasting issue.

Social media such as discussion forums offers a way of keeping an issue in public if the media doesn't, or of showing that media coverage reflects public interest. Sure, it's not the same as the front page of the national papers, or coverage on prime time, but that's not the same as nothing.

cordially,
Scofflaw

Scofflaw

Meanwhile:

Central Bank governor Patrick Honohan has said his institution is considering legal action and a permanent career ban for the former bank executives heard on the Anglo tapes.

Possible sanctions, the governor said, included fines and prohibitions on working in the financial sector.

He conceded that the tapes were proof of the poor quality of financial regulation in pre-crisis Ireland.

“It should not have been possible to fool [the regulator] in such a simple and gross way,” he said, but he insisted Ireland had introduced radical regulatory reform since then.

http://www.irishtimes.com/news/former-bank-executives-may-face-ban-from-central-bank-1.1448509

cordially,
Scofflaw

golfwallah

Scofflaw wrote: »

Meanwhile:



http://www.irishtimes.com/news/former-bank-executives-may-face-ban-from-central-bank-1.1448509

cordially,
Scofflaw

So, after 28 months in power and possession of the tapes by the Gardai, the best that they can come up with, in terms of consequences for bankers who conspire to massively screw Irish taxpayers, is "considering legal action" and "possible sanctions".

Some consequences - some strong leadership from a government with a huge mandate to sort out this mess and make sure it doesn't happen again!

antoobrien

golfwallah wrote: »

So, after 28 months in power and possession of the tapes by the Gardai, the best that they can come up with, in terms of consequences for bankers who conspire to massively screw Irish taxpayers, is "considering legal action" and "possible sanctions".

Some consequences - some strong leadership from a government with a huge mandate to sort out this mess and make sure it doesn't happen again!

Oh it gets better, the indo have made sure that nobody from Anglo will ever see jail because there's no way they can get a fair trial now.

Tea drinker

antoobrien wrote: »

Oh it gets better, the indo have made sure that nobody from Anglo will ever see jail because there's no way they can get a fair trial now.

We are just discussing that in work now, I wonder if the special nature of the tapes (regulatory) gives us a chance to "ignore" what has happened in the media? I'd love to know more about the regulatory failure, and this could be done without impacting trials. (?)

Like other posters said, 5 years on and the Gardai have done nothing. I think the Gardai are not impartial and independent enough to manage these things, we should perhaps have a Garda inquiry, as to how they failed to assert themselves. I'm fairly sure we will hear that they are incapable due to staff/skills shortages. IMHO Garda Cmmr should no longer be a political appointee...

antoobrien

Rightwing wrote: »

Not systemic to the Irish economy. €2bln to this developer, another 2 here and there, who gives a damn about that? That bank had nothing to do with the real economy, forget about the size of the loan book.

It's not the individual loans that made it systemic, it's the total amount of the loans that's important, that's what took Lehmans down. They had a loan book of approx €400bn, the problem - just like Anglo - was that nobody knew what the assets backing them up were worth, so further credit was denied.

It's all well and good to say that Anglo wasn't systemic, that may not have even been relevant. The question is what effect would letting Anglo go have on AIB, BOI & PTSB - which were (still are) systemic?

In order to get a view on what the government may have been thinking, we have to look at what happened in the few weeks around the guarantee.

On the weekend of September 14th 2008, 3 of the worlds biggest financial institutions - Merrill Lynch, Lehmans & AIG - were in serious trouble. The problem was balance sheets that nobody trusted with big refinancing requirements getting closer and not enough cash on had to cover them, if this sounds similar it's the same problem Anglo had.

Two weeks before the guarantee Merril Lynch folded (it was bought by BOA for the equivalent of a pack of prawn cocktail crisps) and Lehmans was allowed go bust. The problem with Lehmans is that it was a rush job and the players did not fully consider what needed to be done, e.g. deposit protection. It caused a panic which shut down the credit markets in a heartbeat because people switched from pro risk to risk averse instantaneously.

This was felt not just by financial companies but industry in general. Legend has it that the CEO of GE (one of the 5 biggest companies in the world) rang Hank Paulson (US Treasury Secretary) to tell him that they couldn't get finance to keep their manufacturing operations going (this is covered in the film version of Andrew Ross Sorkin's book, Too Big to Fail).

The effect in fins was a snap review of many firms credit ratings, including AIG, which was cut to a point where investors were either too nervous, and in some cases not not allowed, to hold the bonds. AIG was of systemic importance to the US as it underwrote the vast majority of the CDS contracts, if they went then it took the entire US baking system with it.

Over the next 2 weeks about a dozen other financial institutions across Europe & the US either went under or were rescued, and soon Anglo was next up. By the end of September it was in a position where it could fail overnight the government had to do something. They looked at the US option of allowing it to fail, and it appears that they decided that it was no good. Lehmans had shaken loose up to €400bn of bad debt (the size of their loan book) and that screwed up the world markets, what would Anglo's €100bn loan book do to Ireland?

Floppybits

john.han wrote: »

Really? I've always been frustrated that Anglo wasn't simply let go, with the other banks protected purely for the reason that most ordinary citizens had deposits in the other banks. I don't know anyone that had money in Anglo, they weren't a day to day bank for ordinary people, they only had a small number of branches. I don't see what the problem with applying the normal rules of insolvency to them would have been.

This is the thing that bothers me about an oireachtas investigating the banks is that we dont know what interests the politcians had in these banking institutions. It is all well and good that the Indo are releasing the Anglo tapes giving us an insight into the attitude of the bankers but what we dont have is what interests the politicians and political parties had in this institutions and based on these interests where decisions made to just protect them at the cost of the Irish taxpayer?

It is time for the ploiticians and political parties to come clean over their interests in the banks, if they do this then we might be able to have an oireachtas enquiry but if we dont have that then how can we trust the politicians not to hide the evidence of where they took decisions to protect themselves at our cost.

antoobrien

Tea drinker wrote: »

We are just discussing that in work now, I wonder if the special nature of the tapes (regulatory) gives us a chance to "ignore" what has happened in the media? I'd love to know more about the regulatory failure, and this could be done without impacting trials. (?)

Not really, the only way of bypassing this is to put the trail in front of the special criminal court as no jury in the country can possibly say that their opinion won't be coloured by this.

Last night I had to read the full quote about "punching" Lenihan to maker it clear to my family that it was not a physical assault (though to me what was planned was much worse) that was being discussed. There's nobody I know that could be put on a jury after the last week.

GSF

antoobrien wrote: »

There's nobody I know that could be put on a jury after the last week.

What about the 22% still willing to vote for FF? :eek: They are a forgiving segment of the population.

Scofflaw

golfwallah wrote: »

So, after 28 months in power and possession of the tapes by the Gardai, the best that they can come up with, in terms of consequences for bankers who conspire to massively screw Irish taxpayers, is "considering legal action" and "possible sanctions".

Some consequences - some strong leadership from a government with a huge mandate to sort out this mess and make sure it doesn't happen again!

To be fair, what the government can do is political - they cannot make criminal prosecutions happen, thank God, and nobody should wish for them to be able to do any such thing.

They should have no involvement in Garda investigations beyond the kind of thing Shatter offered to do 2 years ago, which was to give the fraud squad more manpower.

cordially,
Scofflaw

Scofflaw

Heh:

Allied Irish Bank was viewed by its main competitor as lending money to "every cowboy in town", senior bankers reveal in the Anglo Tapes.

AIB and Anglo have now cost the taxpayer €50bn to rescue – with the bill still rising. But both were viewed by competitors as having a careless approach to loans. On the tapes, Anglo executive John Bowe tells former CEO David Drumm: "They (Bank of Ireland) think that Allied have played fast and loose with lending money to every cowboy in town – apart from ourselves also lending money to every cowboy in town."

Five years on, the opinion within Bank of Ireland would appear to be well founded, because:

* Anglo has now been liquidated at a cost of more than €30bn.

* Allied is 99.9pc owned by the State and has already had €20.7bn put into it – and its bailout will possibly top that of Anglo.

* Bank of Ireland is 15pc owned by the State after having €4.7bn put into it.

http://www.independent.ie/business/irish/anglo/aib-and-anglo-lending-to-every-cowboy-in-town-29384944.html

cordially,
Scofflaw

antoobrien

GSF wrote: »

What about the 22% still willing to vote for FF? :eek: They are a forgiving segment of the population.

Don't forget that a lot of people can't or won't take a lot of the opposition seriously, so it's not so much forgiveness as an utter lack of options.

Given the perceived "failure" of the current government (I happen to think they're doing all right and they haven't done much I didn't think they'd have to do), it's as popular to be anti-government now as it was in 2010, so who do you say you'll back, somebody that want's to further crucify the only productive sectors of society? Thanks but no thanks.

No matter how we try to re-write history, FF didn't intend to f**k us up, unlike most of the rest of the current opposition that's forming the "alternative".

GSF

Most hilarious bit so far has been Anglo's management team promising to bring "good governance" to Irish Nationwide. True comedy gold.

Cody Pomeray

antoobrien wrote: »

Oh it gets better, the indo have made sure that nobody from Anglo will ever see jail because there's no way they can get a fair trial now.

I don't know where people get this idea. The courts in this country don't have a record of staying criminal trials because of adverse publicity. Public outrage simply doesn't stop criminal trials from proceeding.

There is some evidence that courts are more sensitive to political intervention prejudicing a trial, in which case the courts might adjourn a trial to allow the 'fade factor'. But the fear about publicity ruining everything seems to have come from absolutely nowhere.

antoobrien

Cody Pomeray wrote: »

I don't know where people get this idea. The courts in this country don't have a record of staying criminal trials because of adverse publicity. Public outrage simply doesn't stop criminal trials from proceeding.

There is some evidence that courts are more sensitive to political intervention prejudicing a trial, in which case the courts might adjourn a trial to allow the 'fade factor'. But the fear about publicity ruining everything seems to have come from absolutely nowhere.

Just wait and see what'll happen if anyone in the tapes ever gets brought to court.

Cody Pomeray

No because that doesn't prove anything.

A more obvious reason why there may be no prosecution relating to these tapes may be because the DPP disagrees that there is a likelihood of conviction because of absence of a formal complaint, a lack evidence, lack of co-operation, or lack of adequate legislation. I would disagree on the latter point, but the DPP may make that decision.

One of the last reasons on the list for the DPP prosecuting would be the publicity factor. In fact, I don't personally believe that would be on her list at all.

Godge

GSF wrote: »

Most hilarious bit so far has been Anglo's management team promising to bring "good governance" to Irish Nationwide. True comedy gold.

The really horrifying thing is that Anglo's management team would have brought "less disastorously bad governance" to Irish Nationwide.

antoobrien

Cody Pomeray wrote: »

No because that doesn't prove anything.

A more obvious reason why there may be no prosecution relating to these tapes may be because the DPP disagrees that there is a likelihood of conviction because of absence of a formal complaint, a lack evidence, lack of co-operation, or lack of adequate legislation. I would disagree on the latter point, but the DPP may make that decision.

One of the last reasons on the list for the DPP prosecuting would be the publicity factor. In fact, I don't personally believe that would be on her list at all.

More likely a lack of the tapes showing any actual criminal acts.