Why did we not just let BOI/Anglo/AIB sink?

ei.sdraob

woodseb wrote: »

when you let a bank fail - it becomes a bumfight for the bondholders for the assets - it is likely the deposits would be sold - but it is not certain the full amount would be recovered and it would take an amount of time......in the meantime people would have no access to their savings and would be calling on the government to stump up

what was the the deposit protection limit back then? 20,000?? before it was raised to 100,000 and then shortly everything

heres what would have happened

people realizing that their money is lost, overthrow the government (who failed to monitor and regulate the banks)

and demand nationalization of the banks from the new government (and jailing of anyone responsible)

over the course of few years the balance sheets are repaired (which is whats happening now anyways) and eventually the banks are re-privatized

a message is send to the banks that ****ing up by taking crazy risks again in the future would mean their bank being taken away from them

during all this time the ECB also would have to step and provide help to ensure the euro doesn't get damaged (as is happening in Greece) too much

and there we have alternative history of Ireland that could have been, no its not a perfect solution and there would be loosers, but at least it would be the people who gambled most who loose most

gandalf

woodseb wrote: »

before the anglo nationalisation the guarantee actually was only 20k so the total figure would have been lower - though it doesn't take into account the economic chaos of the majority of the country's savings in the 3 banks being under threat/in limbo for a time when you are trying to set a template for economic recovery

Yes but I am presuming that Anglo only be let fail as the other two banks were tied into the economy closer and effected a lot more of the citizens every day life here. I would not have let AIB or BoI fail.

(apologies only did a quick google on the guarantee scheme so thats where I got the 100k figure, 20k makes it better and I would assume a lot of the developers would have had deposit accounts with Anglo as well)

woodseb

BrownianMotion wrote: »

You stated original guarantee, that was 90% of deposit to a max of 20k. So that 93bn figure is irrelevant
Have you any figures on numbers of accounts rather than the sum of the amounts held in the accounts as this is more relevant?.

woodseb wrote: »

before the anglo nationalisation the guarantee actually was only 20k so the total figure would have been lower

i realised the figure wouldn't be that full amount - though that was the amount at risk at being lost to the economy. I don't have the figure the the government would have been on the hook for - i suppose it was likely in the tens of billions

if anybody has it, it would aide the debate alright

woodseb

ei.sdraob wrote: »

and there we have alternative history of Ireland that could have been, no its not a perfect solution and there would be loosers, but at least it would be the people who gambled most who loose most

....and the depositors under your scenario

BrownianMotion

ei.sdraob wrote: »

and there we have alternative history of Ireland that could have been, no its not a perfect solution and there would be loosers, but at least it would be the people who gambled most who loose most

Hardly. The people who would lose most would be those who had their life savings on deposit in AIB/BOI, and there are a lot of those people around the country.

There is no way of prosecuting or even judging who is responsible for it, so they would most definitely not be the losers.

P.S. I didn't/don't have a large sum of money on deposit in either bank as I'm far too paranoid, so it's not out of self-interest.

faceman

I realise Im coming into the firing line for saying this and it pains me to say it, we were right to bail out Anglo at the time

In fact, I would go as far as to say, we had no choice. Ireland's economy is far too sensitive to foreign volatility. We dont have any indigenous sector to fall back on during a recession.

It was important that the government was seen to take action to try stabilise the banking sector. otherwise we risked being the first country in the EU to hit rock bottom (a position which has now, thankfully for ireland, been taken by Greece)

If Anglo failed at the time, the knock on effect for other banks and investor confidence in Ireland would have shattered even further than it is at.

The second piece of the pie, being NAMA, is a brave move to provide confidence to the investor community and international markets. However personally i believe that the government should have stepped in temporarily nationalised AIB and BOI. They would never have the cohones to do it though, because much of their shareholders are regular Joe Soaps and with FF/Greens already taking a hit on the polls, they wouldnt risk taking further hits for wiping out the investments of the common man.

It was good to see AIB annouce the loss last week, it seems that they have taken the hit and made the balance sheet adjustments necessary to start afresh. I would expect that this will start to instill confidence in AIB as a banking institution.

But anyway, getting back to the OP's point. The banking system is the back bone of any economy, whether we like it or not. Markets and investors can handle booms and busts, but its the lack of predicatabilty that drives them away. Hopefully the government will introduce far tougher and tighter legislation to avoid scenarios like this again and we return to the days of when banks were run by finance people as opposed to sales people.

jimmycrackcorm

MaceFace is correct in stating that the collapse of Anglo would have resulted in the subsequent collapse of BOI / AIB. The reason is that anyone who lent to AIB / BOI would have looked for their funds back by assuming, quite correctly, that they were in just a precarious position as Anglo was at the time. So the oft-quoted "Systemic importance" is simply investor / bond holder confidence and not the fact that Anglo was the developers bank per-se.

In any event a collapse would have left us in the same position as we are now but the money being paid out in deposit guarantees. A collapse of BOI/ AIB would have disastrous effects for the economy in every facet and so it could not be risked.

ei.sdraob

woodseb wrote: »

....and the depositors under your scenario

what happened to depositors in Iceland?

woodseb

ei.sdraob wrote: »

what happened to depositors in Iceland?

retail deposits in domestic iceland branches were guaranteed in full....

Now back to your original point and stop being evasive

Moral hazard enters when you talk about saving banks to save depositors.
Example: You end up taxing Mr A with say 0 euro of savings so that Mr B with 70,000 euro of savings can access his funds.

There are arguments for and against this based on confidence in the banking system and putting money under mattresses but either way there is no question that forcing someone with less money to pay for someone elses money is morally wrong.

Your simply preserving the status quo and having capitalism for the rich in the good times and socialism for the poor in the bad times.

Lets hoard the wealth and share the debts....F** Off will ya:mad:
The next generation havent a chance

BrownianMotion

jimmycrackcorm wrote: »

MaceFace is correct in stating that the collapse of Anglo would have resulted in the subsequent collapse of BOI / AIB. The reason is that anyone who lent to AIB / BOI would have looked for their funds back by assuming, quite correctly, that they were in just a precarious position as Anglo was at the time. So the oft-quoted "Systemic importance" is simply investor / bond holder confidence and not the fact that Anglo was the developers bank per-se.

In any event a collapse would have left us in the same position as we are now but the money being paid out in deposit guarantees. A collapse of BOI/ AIB would have disastrous effects for the economy in every facet and so it could not be risked.

Where did you get that definition of systemic importance? Sounds like you made it up.

Of course the fact that it was a developers bank is important. Are you trying to tell me that if it was a clearing bank it would be in the same category, as only confidence matters? Confidence can easily be bought, and for a much lower fee than nationalisation of Anglo.

meditraitor

BrownianMotion wrote: »

Where did you get that definition of systemic importance? Sounds like you made it up.

Of course the fact that it was a developers bank is important. Are you trying to tell me that if it was a clearing bank it would be in the same category, as only confidence matters? Confidence can easily be bought, and for a much lower fee than nationalisation of Anglo.[/

A very valid point, if for example when the crisis came to light if the governemnt had trown all the money into AIB and BOI and left anglo to die then I doubt there would have been a big enough rush on the big 2 to cause collapse.

Its all maybes I suppose but we can still drop anglo and save a few dollars of our hard earned money

woodseb

Deleted User wrote: »

Moral hazard enters when you talk about saving banks to save depositors.
Example: You end up taxing Mr A with say 0 euro of savings so that Mr B with 70,000 euro of savings can access his funds.

There are arguments for and against this based on confidence in the banking system and putting money under mattresses but either way there is no question that forcing someone with less money to pay for someone elses money is morally wrong.

Your simply preserving the status quo and having capitalism for the rich in the good times and socialism for the poor in the bad times.

Lets hoard the wealth and share the debts....F** Off will ya:mad:
The next generation havent a chance

that depends on a kind of skewed definition of 'rich' and 'poor' - a pensioner who has their savings lost with a failed bank is not a rich person, nor is someone who is saving for a car, house deposit etc. At the same time someone who has no savings, but goes on lots of holidays, has a high credit card bill etc, is not 'poor'

MaceFace

There is an awful lot of talk about how much we (as taxpayers) would have had to pay back deposit holders.
This is a moot point considering deposit holders are not particularly important people.

The most important thing at that time, and indeed now, is confidence.
If Anglo failed, the message we are telling the international community is that any bank in the country can fail.
Inter bank lending involving Irish banks would cease, thus leading to their collapse.

The only way to reinstall the confidence in BOI and AIB would have been to Nationalise them.
And, IMHO, Nationalisation of the banks in Ireland should be seen as the worse case scenario as it results in political interference in the free market.

Can people stop with the whole "well that is your opinion and your wrong" type of post and maybe stick to debating the actual points with some reason.

Back for a moment to letting Anglo fail alone. What would happen then?
As it was "the developers" bank, it would have resulted in the loan book being sold off to a foreign company who cares only about one thing - maximising profit, as opposed to what is happening now - ordered mayhem. We could very well have seen many of the property developers collapse and their property flood the market. If that happened, property prices would plummet putting many more people into negative equity.
Would the touted fire sale really be good for the country?

woodseb

woodseb wrote: »

that depends on a kind of skewed definition of 'rich' and 'poor' - a pensioner who has their savings lost with a failed bank is not a rich person, nor is someone who is saving for a car, house deposit etc. At the same time someone who has no savings, but goes on lots of holidays, has a high credit card bill etc, is not 'poor'

not skewed at all, pensioners lose out in the event of nationalisation anyway
There would be a direct correlation between richer and poorer people having different amounts in the bank as a general rule
A person on minimum wage is never going to have 60 or 70 thousand in the bank yet they will pay for the mess the person on 100,000 a year pays too but gains alot more

MaceFace

MaceFace wrote: »

The most important thing at that time, and indeed now, is confidence.

You want confident investors? Start a new bank, investing in a bank exposed to our property market does nothing for future confidence, bailing out failed banks bails out the people who mismanaged the money - that does not restore confidence that line is just Govt spin

BrownianMotion

MaceFace wrote: »

There is an awful lot of talk about how much we (as taxpayers) would have had to pay back deposit holders.
This is a moot point considering deposit holders are not particularly important people.

The most important thing at that time, and indeed now, is confidence.
If Anglo failed, the message we are telling the international community is that any bank in the country can fail.
Inter bank lending involving Irish banks would cease, thus leading to their collapse.

The only way to reinstall the confidence in BOI and AIB would have been to Nationalise them.
And, IMHO, Nationalisation of the banks in Ireland should be seen as the worse case scenario as it results in political interference in the free market.

Can people stop with the whole "well that is your opinion and your wrong" type of post and maybe stick to debating the actual points with some reason.

Back for a moment to letting Anglo fail alone. What would happen then?
As it was "the developers" bank, it would have resulted in the loan book being sold off to a foreign company who cares only about one thing - maximising profit, as opposed to what is happening now - ordered mayhem. We could very well have seen many of the property developers collapse and their property flood the market. If that happened, property prices would plummet putting many more people into negative equity.
Would the touted fire sale really be good for the country?

Make up your mind - Nationalisation for AIB/BOI is bad because it interferes with free-market policies, yet it is good for Anglo since it can temporarily prop up the housing market?

kmick

MaceFace wrote: »

There is an awful lot of talk about how much we (as taxpayers) would have had to pay back deposit holders.
This is a moot point considering deposit holders are not particularly important people.

It matters not whether they were important or not the government guaranteed their deposits knowing they could never afford to actually pay them if called upon.

All the rest regarding chains of failure, international confidence etc is all pure crystal ball gazing and is unimportant.

MaceFace

Deleted User wrote: »

You want confident investors? Start a new bank, investing in a bank exposed to our property market does nothing for future confidence, bailing out failed banks bails out the people who mismanaged the money - that does not restore confidence that line is just Govt spin

Actually, I have thought about starting a new bank. Aparently all I need is another €5m to go with my €0.
Seriously, there was some bloke explaining how he is doing this in the UK.

Regarding confidence - I think the improved confidence is actually real. We have not had a run on our banks, and all new bond issues have been oversubscribed. That is not government spin, just plain facts:
linky1
linky2

BrownianMotion wrote: »

Make up your mind - Nationalisation for AIB/BOI is bad because it interferes with free-market policies, yet it is good for Anglo since it can temporarily prop up the housing market?

Nationalisation is bad, and as I said is the worst case scenario. Letting a major bank fail is just not an option.
Look at the calls for the government to step in and make the banks keep mortgage rates low, or force the banks to loan to SMEs.
That is fundamentally poor management in every single way.

kmick wrote: »

It matters not whether they were important or not the government guaranteed their deposits knowing they could never afford to actually pay them if called upon.

All the rest regarding chains of failure, international confidence etc is all pure crystal ball gazing and is unimportant.

You think confidence in a countries banking sector is unimportant ?
Sorry, maybe I didn't get your point, but I assume it was not how I just phrased it. Please clarify.
Here is a hint: Inter bank lending (for the third time today I had to say this).
Here ya go: http://tinyurl.com/y8wlgey

MaceFace

MaceFace wrote: »

Actually, I have thought about starting a new bank. Aparently all I need is another €5m to go with my €0.
Seriously, there was some bloke explaining how he is doing this in the UK.

Regarding confidence - I think the improved confidence is actually real. We have not had a run on our banks, and all new bond issues have been oversubscribed. That is not government spin, just plain facts:
linky1
linky2

oh dear jaysus a new bank would be oversubscribed too, all you`ve done is illustrate how the bondholders are making a goddamn mint off the backs of taxpayers! Banks relying on a guarantee its not confidence! this depends on the confidence in the Irish taxpayers ability to pay back Govt debt.

New bank, fresh start, none of this NAMA/Banking Guarantee crap then we can have confidence in banks without the taxpayer carrying the can :mad:

MaceFace

MaceFace wrote: »

Nationalisation is bad, and as I said is the worst case scenario. Letting a major bank fail is just not an option.
Look at the calls for the government to step in and make the banks keep mortgage rates low, or force the banks to loan to SMEs.
That is fundamentally poor management in every single way.

any Govt intervention to prop up a failed business, be it a bank or otherwise is bad. Banks are particularly costly to prop up and asset management agencies like NAMA and recapitalisations are terrible at this:
[URL="Systemic Banking Crises: A New
Database - IMF PAPER"]http://www.imf.org/external/pubs/ft/wp/2008/wp08224.pdf[/URL]

Have a look at the concluding remarks......

liquidity support may need to be complemented with depositor protection (including through
a blanket government guarantee) to restore depositor confidence, although such
accommodative policies tend to be very costly and need not necessarily speed up economic
recovery.

Liquidity Support = Recapitalisations....yeah that what they used our pension reserve fund for the bastards
Blanket Guarantee = self explanatory

Its damning the country was clearly sold out to preserve the status quo of scum at the top

kmick

MaceFace wrote: »

You think confidence in a countries banking sector is unimportant ?
Sorry, maybe I didn't get your point, but I assume it was not how I just phrased it. Please clarify.
Here is a hint: Inter bank lending (for the third time today I had to say this).
Here ya go: http://tinyurl.com/y8wlgey

Im not saying its unimportant Im just saying you are predicting what would have happened and that is not possible to do unless you have an alternate universe time machine.

Inter bank lending is red herring as the question was why did the government not let the banks fail. My assertion is they could not afford to as they had guaranteed the deposits.

MaceFace

kmick wrote: »

Im not saying its unimportant Im just saying you are predicting what would have happened and that is not possible to do unless you have an alternate universe time machine.

Inter bank lending is red herring as the question was why did the government not let the banks fail. My assertion is they could not afford to as they had guaranteed the deposits.

This has already been discussed at length - the deposits are not important.

As for an alternate universe time machine - you would need one for your claims as well pal, but thats why we are here - to discuss and debate what would have happened.

Liam Byrne

woodseb wrote: »

.....but it is not certain the full amount would be recovered and it would take an amount of time

Interesting objection........an exact parallel of the objection that most of us have about NAMA.

But you're ok with it in that scenario ?

woodseb

Liam Byrne wrote: »

Interesting objection........an exact parallel of the objection that most of us have about NAMA.

But you're ok with it in that scenario ?

I don't recall ever saying it was certain we would recover everything in time within NAMA.

My point in relation to customer deposits was of the damage it would do to the economy in terms of consumer confidence/spending, not to mention the immediate strain in government spending to let the banks fail along with billions of citizens' money.

At least in NAMA we have borrowed for the long term to allow the assets to be valued/realised over the long term which cannot be done with deposits.....but lets not let this thread head into another debate about NAMA

Flamed Diving

Liam Byrne wrote: »

I told a bank that I could afford a certain amount, and they said they would give me nearly double it.

Who's fault is that if I can't pay it back?

Both you and the bank, clearly.

Liam Byrne

Flamed Diving wrote: »

Both you and the bank, clearly.

Yup, it would be.

Now ironically - as I said - I had more cop-on than the bank.

But if I had decided to take it - with BOTH of us at fault - how come only one of the two of us would be getting bailed out ?

Flamed Diving

Liam Byrne wrote: »

Yup, it would be.

Now ironically - as I said - I had more cop-on than the bank.

But if I had decided to take it - with BOTH of us at fault - how come only one of the two of us would be getting bailed out ?

You know why. Because the system is not working.

deadtiger

deadtiger wrote: »

Yes but I am presuming that Anglo only be let fail as the other two banks were tied into the economy closer and effected a lot more of the citizens every day life here. I would not have let AIB or BoI fail.

http://www.davidmcwilliams.ie/2009/02/08/bank-recapitalisation-destined-to-be-a-failure-from-the-start

Given that the Irish loan book is more than €400 billion, a similar write down would reveal a black hole in the Irish banks of about €33 billion. As Bank of Ireland and Allied Irish Bank account for the lion’s share of the market, we can guarantee that their bad loans will be considerably greater than the €8 billion recapitalisation expected to be announced for the two big banks this week

BOI and AIB are nobody to be saving, if you want to save a bank you pick the one with the least problems

We could learn from Japans mistakes .......
http://www.rieti.go.jp/jp/publications/dp/03e007.pdf

Our findings imply that Japan's protracted recession and deflation problem may have been caused by an inappropriate policy response to bank insolvency

Instead we are following in their footsteps

View

pog it wrote: »

I have a simple question and I'd really appreciate real facts (I don't believe Nama was the only option).

Why did we not cut off the Irish banks completely and give some of the billions we gave those three banks to the depositors in the banks so that deposits were safe and then help new banks, foreign or Irish, to operate here instead and have that money available for lending. Old employees to be employed in new banks as a condition.
Shareholders would lose out (they have anyway).

It might be something to do with the need of the Government to borrow 500 million a week to keep its budget ticking over. Presumably, they might have had a bit of difficulty borrowing more money if they'd just let the banks go.

Also, remember our banks trade with banks abroad. I'd imagine their governments would have been extremely unhappy if an uncontrolled collapse of our banks took out some of their banks and/or damaged them. That is what Iceland basically did and it didn't benefit them all that much.

View

View wrote: »

It might be something to do with the need of the Government to borrow 500 million a week to keep its budget ticking over. Presumably, they might have had a bit of difficulty borrowing more money if they'd just let the banks go.

Also, remember our banks trade with banks abroad. I'd imagine their governments would have been extremely unhappy if an uncontrolled collapse of our banks took out some of their banks and/or damaged them. That is what Iceland basically did and it didn't benefit them all that much.

:rolleyes: no it didnt benefit them at all at all, just dont mention that they have lower unemployment than us, growth and not contraction from Q4 2009

View

Deleted User wrote: »

:rolleyes: no it didnt benefit them at all at all, just dont mention that they have lower unemployment than us, growth and not contraction from Q4 2009

You forgot the plummeting lifestyle they are all "enjoying".

As for unemployment, Iceland has gone from 1.3% unemployment in Sept. 08 to 9% in Feb 10 - almost a seven fold increase. Inflation on the other is relatively good at 7.3% - good relative to the 18%+ rate in hit last year.

97i9y3941

good topic as i often asked meself about it all,personally i think nama was a win win situation for the builders,let them off scoff free,whilst the usual taxpayers pick up the tab,and ironic part is i used to know people that would get threatening phonecalls and letters from the banks for owing a mere €100 on their credit cards,they should had left the banks sink..

MaceFace

Fred83 wrote: »

good topic as i often asked meself about it all,personally i think nama was a win win situation for the builders,let them off scoff free,whilst the usual taxpayers pick up the tab,and ironic part is i used to know people that would get threatening phonecalls and letters from the banks for owing a mere €100 on their credit cards,they should had left the banks sink..

How the hell is NAMA a bail out for the builders?
Their loans are currently with the banks. They will be moved into NAMA, and still be payable in full. If they do not service the loans, they will be chased for the money owed to the full extent of the law.

Fred83: Please answer some very basic questions that none of the other "let the banks fail" brigade couldn't or wouldn't answer:

Q1. If the banks all closed their door at 4.30 today and said they were now insolvant and would cease trading, how would you survive with your savings locked in the bank for at least a month?

Q2. How does your employer pay you now that your bank account is frozen?

Q3. Considering many of the bills you would pay are paid by direct debit, do you not think that this would have a major impact on the likes of Bord Gais, ESB, Phone, Internet, and how big a risk would you consider that these companies would not be able to pay their employees due to no access to cash (let alone their employees & suppliers having no bank accounts).

Q4. How would SMEs get credit to operate as usual (pay suppliers, wages, rent)?

Q5. Given the evidence of banks pulling out of Ireland (Postbank, Halifax), what evidence is there to suggest that the failed Irish banks would be replaced by foreign banks?

Q5. Assuming foreign banks did come into Ireland, how long would it take?


I really could go on for another hour with questions, but I chose a small selection that should apply to most people reading here.

FlutterinBantam

pog it wrote: »

I have a simple question and I'd really appreciate real facts (I don't believe Nama was the only option).

Why did we not cut off the Irish banks completely and give some of the billions we gave those three banks to the depositors in the banks so that deposits were safe and then help new banks, foreign or Irish, to operate here instead and have that money available for lending. Old employees to be employed in new banks as a condition.
Shareholders would lose out (they have anyway).

Simple answer.

If your house was built on stilts over a swamp and you noticed a sudden attack of severe dry rot,would you fix the stilts, or say to yourself, the house is perfect I'm not spending money on those fcukers!!



Uuhmmm go figure:cool:

SkepticOne

MaceFace wrote: »

How the hell is NAMA a bail out for the builders?
Their loans are currently with the banks. They will be moved into NAMA, and still be payable in full. If they do not service the loans, they will be chased for the money owed to the full extent of the law.

Those who think that the builders will end up partially being bailed out don't think it will happen during the transfer process (which is when the banks get bailed out) but afterwards during the process of managing the assets. There is an element of conjecture involved but it does seem likely that efforts will be made to continue credit to builders on better terms than the market would otherwise provide. There have been other threads on this so I won't repeat the argument here.

Flamed Diving

Fred83 wrote: »

good topic as i often asked meself about it all,personally i think nama was a win win situation for the builders,let them off scoff free,whilst the usual taxpayers pick up the tab,and ironic part is i used to know people that would get threatening phonecalls and letters from the banks for owing a mere €100 on their credit cards,they should had left the banks sink..

Why do you have such a strong opinion on something you clearly know nothing about? Serious question.

Liam Byrne

FlutterinBantam wrote: »

If your house was built on stilts over a swamp and you noticed a sudden attack of severe dry rot,would you fix the stilts

I'd drain the swamp.

Well, actually, I wouldn't have built anything on such crap foundations.

BrownianMotion

FlutterinBantam wrote: »

Simple answer.

If your house was built on stilts over a swamp and you noticed a sudden attack of severe dry rot,would you fix the stilts, or say to yourself, the house is perfect I'm not spending money on those fcukers!!



Uuhmmm go figure:cool:

Uuhmmm it's slightly more complex than that.

How about if the house is worth 100k but it would take 1 million to fix the stilts?:cool:

VoidStarNull

Returning to the original question, Why not let all the banks fail?, the problem is that as well as controlling the credit system, the banks also control the payment system, i.e. the method by which most bills are paid. A collapse of the payment system would mean that essential services could not be provided (unless under emergency provisions).

The UK supposedly drew up contingency plans to impose something similar to martial law, as they contemplated the approaching collapse of their major banks. Of couse that may be propaganda to justify the bail out post facto.

Dr_Phil

Liam Byrne wrote: »

The banks had a crazy business model, which involved giving money to people who couldn't pay it back.

But isn't it that if you owe money you have borrowed, you have to pay them back?

I see it this way: I would not borrow money from mafia, as I could easily end up dead with a hair dryer stuck up my arse. Now, if I set a company and borrow from banks - who are legally obliged to lend money to the public - I do not have to pay it back, legally show them a finger and close down my company. In case of further problems I could head off to Oz.

There is a difference allright, but BOTH dedbts have to be paid off if the money was borrowed. The fact itself that the bankers will not kill you a kid to make you pay off does not mean that the borrowers can laugh. It is morally unacceptable, but some still prefer to blame banks - which seems to be a total absurd to me.

Liam Byrne

Dr_Phil wrote: »

.......does not mean that the borrowers can laugh. It is morally unacceptable, but some still prefer to blame banks - which seems to be a total absurd to me.

I'm not saying to laugh, or to be morally unacceptable.

I'm just saying that if you told a bank that no, you couldn't afford that much, then they should have more culpability than you, because they gave money to someone who was honest and told them the facts, and they still chose to push it.

Some culpability to the borrower (as I said before, I avoided this temptation) but the fault is with the bank - they should have been A LOT more careful.

In addition, it's "morally unacceptable" that we're paying levies to bail out the banks, etc, and now the banks have decided that - because of their ****e decisions and incompetence - we'll have to pay more interest on EXISTING loans.

We're paying money to the banks in 2 or 3 different ways at this stage, and where are those massive profits that we previously contributed to ?

Dr_Phil

Liam Byrne wrote: »

I'm not saying to laugh, or to be morally unacceptable.

I know you're not. But some do.

Liam Byrne wrote: »

I'm just saying that if you told a bank that no, you couldn't afford that much, then they should have more culpability than you, because they gave money to someone who was honest and told them the facts, and they still chose to push it.

Well, but the borrowers never used to say they cannot afford that much. They were all 100% certain that they will be able to pay it off and borrowed in a good faith. Otherwise it's a crime and as such those "borrowers" should be prosecuted for hustling money from the insitution of a public trust.

Liam Byrne wrote: »

Some culpability to the borrower (as I said before, I avoided this temptation) but the fault is with the bank - they should have been A LOT more careful.

I carefully relocate resposibilities to 60% customer and 40% banks.

Liam Byrne wrote: »

In addition, it's "morally unacceptable" that we're paying levies to bail out the banks, etc, and now the banks have decided that - because of their ****e decisions and incompetence - we'll have to pay more interest on EXISTING loans.

I'm paying all this as well as is my wife... 21 century - the age of screwing the taxpayer

Liam Byrne

Dr_Phil wrote: »

Well, but the borrowers never used to say they cannot afford that much.

I know I can't speak for everyone, but that's precisely what I did (even though, with a temp weekend job at the time, I probably could have if I pushed it, but that job wasn't guaranteed to be there over the length of the loan, so it would have been a risky move).

And this is where I get caught in these discussions, because I'm no saint or genius, so I find it very hard to believe that I was unique in turning down a larger loan than I'd asked for or had calculated that I could afford.

Maybe I am - I dunno - but I doubt it, because I'd view myself as an average person with an OK level of cop-on.

Dr_Phil

Liam Byrne wrote: »

And this is where I get caught in these discussions, because I'm no saint or genius, so I find it very hard to believe that I was unique in turning down a larger loan than I'd asked for or had calculated that I could afford.

Maybe I am - I dunno - but I doubt it, because I'd view myself as an average person with an OK level of cop-on.

Absolutely not. I am just trying to present my point of view, as I simply don't understand the world in which people can take money from the bank, don't pay it back and the banks will be the ones to blame. I just can't and probably will not as it fails on the basics of my logic. As long as no one forced people to take loans it's up for them to pay off what they have borrowed.

Liam Byrne

Dr_Phil wrote: »

Absolutely not. I am just trying to present my point of view, as I simply don't understand the world in which people can take money from the bank, don't pay it back and the banks will be the ones to blame. I just can't and probably will not as it fails on the basics of my logic. As long as no one forced people to take loans it's up for them to pay off what they have borrowed.

I've no problem accepting that whatsoever.

But likewise, I cannot understand the world in which banks offer people more than they ask for, need and can afford.....in that scenario they are definitely more at fault.

And that's the scenario that I have first-hand experience of, which is why I would suggest that there are cases where the bank is about 75% at fault.

Dr_Phil

Liam Byrne wrote: »

I've no problem accepting that whatsoever.

But likewise, I cannot understand the world in which banks offer people more than they ask for, need and can afford.....in that scenario they are definitely more at fault.

It's not a fault of a wh0re that she can be shagged 10 times in 20 minutes... Banks offer what they want, it's their offer and people have to use it responsibly/mind whats possible for them. The fact that I buy 2 litre bottle of coke doesnt mean that I have to drink it straight at 1 go. I can drink it all and puke all over the place though, but no one forces me to do it. If anyway I decide to do so, it won't be fault of a man in my local Spar who I bought the coke from, but my own, irresponsible and stupid act. That's how I see it.

Liam Byrne

Dr_Phil wrote: »

The fact that I buy 2 litre bottle of coke doesnt mean that I have to drink it straight at 1 go.

it won't be fault of a man in my local Spar who I bought the coke from, but my own, irresponsible and stupid act. That's how I see it.

Extend that scenario a little, though.....

If you take the 2 litre bottle up to the counter and tell the cashier that you can't afford it........

Dr_Phil

Liam Byrne wrote: »

Extend that scenario a little, though.....

If you take the 2 litre bottle up to the counter and tell the cashier that you can't afford it........

I'm feeling a bit thirsty... Just enough to have 330cl can of a nice, chilled coke for 1e. However I see Special Offer on a 2l bottle - only 1.20e I am thirsty alright, but I also don't forget that I am smart, I calculate, I wanna make a good deal. I decide to go for a 2l bottle instead of a can. The only problem is - I forgot my wallet, but fortunately it's my local Spar, so the guy tells me "no bother Dr. you give me the money tomorrow" - grand, I say.

The lad gives me the 2l bottle I don't need and for which I will eventually have to pay tomorrow.

I catch the bottle and drink it all at one go in the shop. I've heard that my cousin did so.. and his mate, any all my mates at work.. so did my sis - so it must be good??

I got sick and covered the floor with my puke. I also puked on the shelves with bread. Now I know that I should not have drank it all and all this was wrong and I should have gone for 33cl coke in a can for 1e and if I did all would be just fine. But it's too late, the damage is done, I got sick and I still have to pay 1.20e for the bottle of coke... and the bread that the shop can just dump now..

Hang on... do I? Do I really? Well, what if I blame your man who sold me the 2l bottle of coke for 1.2e? Didn't he know thatI won't be able to drink it all? It's all his fault!!! I'm not gonna pay him back 1.2e and I am too proud to admit that I have got in trouble because of my own stupidity, lack of basic responsibility and pressure from others.

Analogy is obvious here.

Liam Byrne

Your analogy is flawed because you're equating not being able to drink it (which in monetary terms would be the same as not being able to spend it).

The issue is paying for it.

Your analogy also indicates that you "could" afford it, because you said you'd come back tomorrow.....it wasn't that you couldn't actually afford it, it was that you'd simply left your wallet behind.

If you told someone that you absolutely couldn't afford the 2-litre bottle, and they gave it to you, and you didn't return to pay it, the owner of the shop would ask the cashier if you'd stolen it; when it was proven that you hadn't, and that you'd said that you couldn't afford it, then the guy behind the counter would be 100% at fault.

Should you have taken it ? No.
Were you straight up and chanced your arm while being honest ? Yes.
Is the fault with the guy behind the counter who knew you couldn't afford it ?

Absolutely.