No state obligation in law for bank bailout

bekker

Joint Public Accounts Committee on Finance has heard testimony to-day that banks were legally insolvent, not just subject to 'cash flow problems' as they claimed, when Lenihan issued guarantee against future losses of banks.

That is because there was no legal basis for the banks omitting losses sustained from the balance sheet. The key point being that the accountancy guidelines on deferring (hiding) losses never had legal effect in Ireland and the EU, and, in fact, are contrary to Irish Company Law.

If so, the state was not liable for the unrecognised losses and had no legal obligation to bail out the banks.

In addition since the banks are using these same invalid accounting practices to distort their loan books the legality of the basis for sales to to vulture-funds is open to question.

Donald Trump

There never was any legal obligation claimed so I don't get your point

is_that_so

bekker wrote: »

Joint Public Accounts Committee on Finance has heard testimony to-day that banks were legally insolvent, not just subject to 'cash flow problems' as they claimed, when Lenihan issued guarantee against future losses of banks.

That is because there was no legal basis for the banks omitting losses sustained from the balance sheet. The key point being that the accountancy guidelines on deferring (hiding) losses never had legal effect in Ireland and the EU, and, in fact, are contrary to Irish Company Law.

If so, the state was not liable for the unrecognised losses and had no legal obligation to bail out the banks.

In addition since the banks are using these same invalid accounting practices to distort their loan books the legality of the basis for sales to to vulture-funds is open to question.

There was a guarantee of deposits which had to be supported and the public good requirement of maintaining an actual banking system. On top of that there was the EU/ECB position of not allowing banks to fail. Company law does not really figure in this type of emergency.

Be well and win

it happened, get over it.

FreudianSlippers

is_that_so wrote: »

There was a guarantee of deposits which had to be supported and the public good requirement of maintaining an actual banking system. On top of that there was the EU/ECB position of not allowing banks to fail. Company law does not really figure in this type of emergency.

At the time the EU/ECB were ok with letting "non-pillar" banks fail.

micosoft

Seems to be a collection of conspiracy theories and misplaced ideas.

The reality is that banks are not the same as ordinary businesses. We knew they were insolvent. That's why we intervened because insolvency of a business or even potentially a sector does not normally permanently crash the entire economy. We nationalized due to a national emergency and intervened because we needed to save the economy. As it turns out it was the right choice.

Whether they are run well or run badly is a different matter. But equilibrium in terms of regulation and economy stability is very difficult.

But I note the people critiquing the approach since 2008 have been found wanting...
- Our economy has returned. Ironically so well that we have gone from a collapsed housing market to an overheating one.
- Socially run Banking such as Credit Unions
- Simplistic slogans that make the situation worse. While your last sentence is a non-sequitur the reality while "Vulture funds" sounds like a snappy slogan to denigrate it does not reflect reality. It's perfectly legal to sell bundles of mortgages which is very useful if it increases the health of a lending institution and reduces risk for deposit holders in the institution. I take issue with the idea that "Vultures" are bad. The perform an essential role in ecosystems in removing disease.

is_that_so

FreudianSlippers wrote: »

At the time the EU/ECB were ok with letting "non-pillar" banks fail.

The only non-pillar bank was Anglo and it was so wrapped up in pillar banks it had to be kept alive.

Kermit.de.frog

bekker wrote: »

Joint Public Accounts Committee on Finance has heard testimony to-day that banks were legally insolvent, not just subject to 'cash flow problems' as they claimed, when Lenihan issued guarantee against future losses of banks.

If this country let a single bank collapse the financial system here would have been destroyed. Investors and creditors would have taken their money out of every single other bank the following morning and the system would have collapsed.

It's not about what is legal - it is about what is reality and what has to be done to protect the Irish people from the consequences.

No cash, closed atms, social anarchy and back to bartering was clearly not the preferable path.

There is a fiction that certain people peddle in the country that there was some sort of choice. There was not.

It was too late. The right choices should have been made 10 years earlier.

This country bankrupted itself through stupid incompetent governance, no one did it to us.

Jim2007

bekker wrote: »

Joint Public Accounts Committee on Finance has heard testimony to-day that banks were legally insolvent, not just subject to 'cash flow problems' as they claimed, when Lenihan issued guarantee against future losses of banks.

That is because there was no legal basis for the banks omitting losses sustained from the balance sheet. The key point being that the accountancy guidelines on deferring (hiding) losses never had legal effect in Ireland and the EU, and, in fact, are contrary to Irish Company Law.

If so, the state was not liable for the unrecognised losses and had no legal obligation to bail out the banks.

In addition since the banks are using these same invalid accounting practices to distort their loan books the legality of the basis for sales to to vulture-funds is open to question.

When you don't bother getting the facts right, you are either not interested in dealing with reality or just have your own agenda. No point in commenting on this kind of nonsense.

FreudianSlippers

is_that_so wrote: »

The only non-pillar bank was Anglo and it was so wrapped up in pillar banks it had to be kept alive.

...which turned out to be a lie.

Sajid Javid

I think those concerned on the government side at the time were made aware of the situation within the banks and bailed them out in what they perceived to be a doomsday scenario.
Of course nobody actually seen any of the bankers books at the time and never ever will.
Legality is a minefield in relation to commercial banking at the best of times, at the worst of times governments become involved and do everything that governments do except govern.
As nobody knows the exact cost of the intervention by the government past and present and never will all we can rely on is the presumption of innocence however it would be safe to assume that inside knowledge (which I have none) is the only game in town.

is_that_so

FreudianSlippers wrote: »

...which turned out to be a lie.

But a well-hidden one.