What would happen if we were to let..

Purple Gorilla

Anglo Irish Bank collapse?

I did search to see if this had already been answered but search turned up nothing relevant. The Independent says that the taxpayer would have to foot a €60 billion bill. Is this because of the Bank Guarantee Scheme?

Could we not just withdraw the scheme from Anglo Irish Bank so it just covers AIB, BOI, EBS, Irish Life & Permanent etc. etc. ??
It's fairly clear that they have lost the trust from their customers and it would be a while before people start depositing with them again, but in the meantime we will constantly have to recapitalise it, just digging a bigger hole for ourselves so would it be better for us all if it was allowed to collapse?

pigeonbutler

Purple Gorilla wrote: »

Anglo Irish Bank collapse?

I did search to see if this had already been answered but search turned up nothing relevant. The Independent says that the taxpayer would have to foot a €60 billion bill. Is this because of the Bank Guarantee Scheme?

This is because the State owns it and has taken responsibility for all of its liabilities. I.e. every depositor the bank owes money too is effectively owed money by the Irish government. I would imagine (but I'm open to correction) that default on debts owed by a State owned bank would have much the same effect on international confidence that a default by the actual government would (i.e. a catastrophic effect!)

alan4cult

pigeonbutler wrote: »

This is because the State owns it and has taken responsibility for all of its liabilities. I.e. every depositor the bank owes money too is effectively owed money by the Irish government. I would imagine (but I'm open to correction) that default on debts owed by a State owned bank would have much the same effect on international confidence that a default by the actual government would (i.e. a catastrophic effect!)

Yes the State's confidence would be diminished and we would be seen as very risky. I think nationalising it was stupid. The guarantee will run out next year but it will still be in State Ownership (open to correction).

meathstevie

The chance to let that bunch of chancers go to the wall was before the state garantee scheme started. As I said here before in the forum : what the hell was wrong with letting the wretched thing go to the wall, then let the state buy it up and run it as an ongoing concern with a load of the liabilities AND dodgy management fallen by the wayside ?

The current "solution" only seems to generate more and more public debt anyway while those responsible for it have gone to ground on the golfcourse.

pwwillia

So if they didn't give the blanket guarantee could we have just let anglo fall with no liability to the public? Just seems like they rushed to guarantee all the banks without thinking of the consequences down the line. This is whats confusing me as cowen and co are coming out with how much we'd be paying if we did let it fall.

old boy

it shols have been let fall from the start and the other banks ringfenced, the goverment could have said it was not bailing out speculators, they could have used the dodgy loans etc as an excused, but connections to f.f. and cabinet ministers scubbered that.

Liam Byrne

Surely business contracts are based on full disclosure ?

Therefore, I have a suspicion that

a) Cowen & Co rushed in to guarantee things for their own reason / agenda
b) Legally, they could pull out because of the dodgy deals and lies on the books, but they won't

God knows why, or if the above suspicions are true, but it's increasingly obvious that FF don't give a bollox about the average hardworking just-getting-by person and prefer to line their own pockets and those of their buddies.

If only we had a country in which scum were jailed and incompetents were fired (not including payoffs, pensions and perks)......

Hasschu

If AI was left go to the wall things would have unfolded as follows. The share price would drop to zero immediately, the bonds would also drop to zero assuming that the net worth of the company is less than zero. The Board of Directors and most of upper mangement would be out on their derrieres without a penny compensation. The creditors would appoint a board of directors and hire new upper management. The new management would fire without compensation as it is now in receivership and hire as they deemed necessary. The company would be sold off in bits and pieces over three years or so. The gov't would subsidise as required to keep some debtors alive if it was in the public interest.The depositors would be compensated by the gov't otherwise there would be a run on all Irish banks immediately. It would be costly for gov't/taxpayers but much less than what it is costing now. You all know of course that there are many well connected people who are shareholders and bondholders of AI and the cute hoors felt obligated to rescue them. Life in Ireland hasn't changed much since Dev died. Someday someone will write "the" book that will shed light on how we got this way.

kevteljeur

It does increasingly seem like the Anglo Irish bail-out was just to protect a select group of high-rollers, doesn't it? But personally I think probably more to keep sitting Ministers' involvement in it from the public eye, rather than to directly protect those investors or debtors themselves.

What disturbs me is that there are definitely a few people out there who do know exactly what is happening, who are not directly involved, who could answer these questions, but it's not really accommodated within Irish culture (or legally, for that matter) to speak up about it to the public. Which is a shame, because it's definitely a serious national issue.


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