Govt commits further €2bn to Anglo

dunsandin

oppenheimer1 wrote: »

http://www.boards.ie/vbulletin/showpost.php?p=66249123&postcount=96

How about responding to the arguments made in that post, rather than taking a swipe at me.

How about looking at My post, (81) and taking that bet with me, seeing as you are full sure the Icelanderski are worse off, long term. I am willing to bet you that in ten years, Iceland will have recovered and thrived once more. I am not so sure about us. The only saviour for us Irish that I can see is the r##e-fest of the last few years, that has led to a baby boom. That demographic lift will create extra retail and construction demand, but without jobs, itl be dole and sheltered housing if this bunch of g#bsh1tes dont start spending on real economic development and stop p155in# our (borrowed) money down black holes.

Liam Byrne

oppenheimer1 wrote: »

Do you have a private pension? Maybe your fund manager had put some money in there, (many had I understand).

No.

Any more airy-fairy questions to try and associate me with this ****hole of a bank, or will you just admit that you're wrong ?

And for the record, if a fund manager had put money in there, then the fund manager should be fired for incompetence.

Liam Byrne

CoalBucket wrote: »

To Bail out Anglo or not to bail out Anglo.

The Minister for Finance says it was essential to save our economy.

The Taoiseach says it would have cost €70bn to let it fail.

And I don't believe a word that comes out of either of their mouths at this stage.

They're the ones who voted confidence in enough corrupt scumbags to prove to any neutral observer that they're incompetent as hell and that they wouldn't know correctly-placed accountability for actions if it smacked them over the head.

CoalBucket wrote: »

The problem we are facing as a country is not only uncertainty over the states financial future but also uncertainty caused by an untrustwothy government.

+70,000,000,000

If FF were seen to get their own house in order and weren't propping up corrupt arseholes, as well as washing their hands every time a certain now state-owned bank came begging for more of our cash and signed cheques for its managers, then we might start believing them.

As it is, the "we can't keep living like this" only applies to average people like myself who have a bare window of about 2 months at a time in which they can say things are bearable.

ronan0

CoalBucket wrote: »

... but also uncertainty caused by an untrustwothy government.

It's the whole system not just government.

"A state which dwarfs its men, in order that they may be more docile instruments in its hands even for beneficial purposes--will find that with small men no great thing can really be accomplished."
— John Stuart Mill (On Liberty)

thebman

oppenheimer1 wrote: »

Why do you doubt it? Landisbanki failed and the chain of events leading from that bankrupted Iceland. There are striking similarities between the two banks, overexposure to falling property with loans secured on that property.

Emergency nationalisation happens when there is a mass withdrawal of funds from from a bank. The bank guarantee stopped the panic of that September day in its tracks (a run was in progress), even though everyone knew the government would never be able to honour it promise if the runs continued. It stopped before it gained self fulfilling momentum, which is a remarkable achievement. Markets aren't known to behave rationally.

The emergency nationalisation of Icelands banks came too late, and thus broke the country. Of course our situation means we've been saddled with debt for future generations, but going broke would have been a hell of a lot worse. The govenment wouldn't be able to borrow, therefore income would have to match expenditure immediately - think 30-40-50% reduction in PS wages, lay offs, increasing and widening of the tax bands, a sell of of state enterprises like Water/ESB/BnaM.

Recovery would be a long time coming... all because no one thought it worthwhile to honour Anglos bad debts. The shortsightedness and pettyness of some here is astounding.

As you say yourself Iceland's problem is they realised their problems too late. That doesn't mean we should have nationalised all our banks.

The two things aren't related. We could have left Anglo out and started investigations for dodgy practices and stated that it had irregular lending practices and that the government couldn't support a bank being investigated for these actions.

Then the markets would have understood that Ireland was saving the other banks because they were good banks not because it thought if any of its banks fell, its entire economy would collapse which is laughable TBH. One property lending bank cannot take down an economy. It can take down the property developers that have massive amounts borrowed from said property bank though.

Scarab80

thebman wrote: »

Then the markets would have understood that Ireland was saving the other banks because they were good banks not because it thought if any of its banks fell, its entire economy would collapse which is laughable TBH. One property lending bank cannot take down an economy. It can take down the property developers that have massive amounts borrowed from said property bank though.

How does a bank failing take down the people who owe money to it? Wouldn't it be more likely to take down the people who it owes money to?. In 2008 Anglo owed out 97bn, that's 70% of our annual GNP. Still don't think it would have had a negative affect on our economy?

By the way of the 97bn, 17bn was owed to bond holders - that seems to be the general response to this point - and there is nothing to say that these bonds couldn't be held by irish institutional investors.

thebman

Scarab80 wrote: »

How does a bank failing take down the people who owe money to it? Wouldn't it be more likely to take down the people who it owes money to?. In 2008 Anglo owed out 97bn, that's 70% of our annual GNP. Still don't think it would have had a negative affect on our economy?

By the way of the 97bn, 17bn was owed to bond holders - that seems to be the general response to this point - and there is nothing to say that these bonds couldn't be held by irish institutional investors.

Anyone unable to service their debt would lose their assets and when a bank is going down it will call in its loans as fast as it can under the terms of its lending agreement with the developer.

This would kill any struggling property developers and is exactly why NAMA was setup. NAMA allows longer repayment periods than any bank in trouble would offer.

Once the bank goes under, its assets (loans) will be sold off and the people Anglo owe money to will be repaid (not all of what they are owed) and then the company that bought the property developers loan would pursue that person for payment. This would most likely not be an Irish lender and so if unable to pay the property developer would be pursued fully by the new owner of the loan for their assets if unable to pay.

Bailing out Anglo was bailing out developers as it should have been let die as it doesn't have large deposits from Irish savers on its books.

Scarab80

thebman wrote: »

Once the bank goes under, its assets (loans) will be sold off and the people Anglo owe money to will be repaid (not all of what they are owed) and then the company that bought the property developers loan would pursue that person for payment. This would most likely not be an Irish lender and so if unable to pay the property developer would be pursued fully by the new owner of the loan for their assets if unable to pay.

Ok, now we are getting to it. Who do you think would have been in the market for a 70bn loan book of irish development assets in the middle of the biggest global credit crisis in a century. There would have been absolutely no interest due to the uncertainty attaching to the loan book and the complete lack of credit in the world market. If a buyer was found it would have been at firesale prices, which would have meant that all depositers (unsecured) would have lost their savings.

thebman wrote: »

Bailing out Anglo was bailing out developers as it should have been let die as it doesn't have large deposits from Irish savers on its books.

How do you know it doesn't have deposits from irish savers? It certainly doesn't have large amounts of individual irish savers, but it has deposits from irish businesses, pension funds, insurance companies etc.

The loss of 50bn of these savings would have meant these businesses going into liquidation with the loss of thousands of jobs and the knock on affect that this has on other irish companies trading with them or who are owed money by them.

thebman

Scarab80 wrote: »

Ok, now we are getting to it. Who do you think would have been in the market for a 70bn loan book of irish development assets in the middle of the biggest global credit crisis in a century. There would have been absolutely no interest due to the uncertainty attaching to the loan book and the complete lack of credit in the world market. If a buyer was found it would have been at firesale prices, which would have meant that all depositers (unsecured) would have lost their savings.

Debt Collectors would have bought them, the price is irrelevant. The people Anglo owe money to is irrelvant to BTW. We as the taxpayer should not give a crap if those lenders lent money to an Irish bank with irregular loan activity. That is bad lending by the bank that lent to Anglo and they deserver the consequences of that.

How do you know it doesn't have deposits from irish savers? It certainly doesn't have large amounts of individual irish savers, but it has deposits from irish businesses, pension funds, insurance companies etc.

The loss of 50bn of these savings would have meant these businesses going into liquidation with the loss of thousands of jobs and the knock on affect that this has on other irish companies trading with them or who are owed money by them.

Hang on, are you saying pensions are sitting in savings accounts in Anglo? Not likely, they maybe invested in Anglo but if so then that is a bad investment and they take the hit.

If the bank only has a few deposits on its books and is not a major savings or current account numbers for Irish people then it is irrelevant that one or two people might have deposits in this bank.

It is not of systematic importance and should have been let die. Hell you basically have agreed it was not of systematic importance. Since property was Anglo's main business, most of the companies that had accounts there were property businesses and guess where they are now? Most are either gone under or in serious difficulty with many only existing because NAMA is propping them up by giving them generous repayment schedules.

Anglo is a case of all the eggs in one basket (property), as such it could not of been of systematic importance. The only reason we can't verify this is absolutely the case is because the government and the bank refuse to give us this information.

You say thousands of jobs and business would have gone under. What businesses in what industries? Show me they aren't property related and I might reconsider my position but until such time, I'm going to assume Anglo is the all eggs in one basket, basketcase it appears to be.

Scarab80

thebman wrote: »

Debt Collectors would have bought them, the price is irrelevant. The people Anglo owe money to is irrelvant to BTW. We as the taxpayer should not give a crap if those lenders lent money to an Irish bank with irregular loan activity. That is bad lending by the bank that lent to Anglo and they deserver the consequences of that.

Debt collectors??? Hold on, this is a 70bn commercial loan book not someone's credit card bill. The only entities who would have been in the market would be other banks, who had their own problems at the time and buying up an uncertain loan book would have been the last thing on their minds. The price determines how much the depositers get paid, if any.

It's not lenders, lending money to Anglo, it's irish businesses who use Anglo for their business banking. They have their current account there and any savings that the companies might have. The only bank who was lending to Anglo was the European Central Bank, you know those guys who pumped 750bn into the markets recently so that we would be able to continue borrowing to fund our deficit. By the way the central bank lending is secured on the assets of Anglo and so would have been paid first in any sale.

thebman wrote: »

Hang on, are you saying pensions are sitting in savings accounts in Anglo? Not likely, they maybe invested in Anglo but if so then that is a bad investment and they take the hit.

Pensions keep certain amounts of their investments in cash, this would have been in Anglo. Of course there was 8bn there from IL&P which we all know about. If you want them to take the hit, fair enough that's the other side of the coin.

thebman wrote: »

If the bank only has a few deposits on its books and is not a major savings or current account numbers for Irish people then it is irrelevant that one or two people might have deposits in this bank.

The bank was funded 50% by deposits, where are you getting this idea one or two people might have had deposits. Do you think it is ok for businesses to lose their deposits but not individuals. What do you think the consequences of a business losing all of their money in Anlgo would have been?

thebman wrote: »

It is not of systematic importance and should have been let die. Hell you basically have agreed it was not of systematic importance. Since property was Anglo's main business, most of the companies that had accounts there were property businesses and guess where they are now? Most are either gone under or in serious difficulty with many only existing because NAMA is propping them up by giving them generous repayment schedules.

How can you state that it is not of systematic importance when it would have reneged on debts amounting to 70% of our GNP. Anglo was over reliant on property lending, transfers to NAMA will account for about 50% of it's loan book. So the other half are not development loans. The fact that Anglo was over reliant on property lending does not mean that it's depositers were property developers. If they were, there wouldn't be a problem and Anglo could use the deposits to pay off the loans and have a bit left over.

thebman wrote: »

Anglo is a case of all the eggs in one basket (property), as such it could not of been of systematic importance. The only reason we can't verify this is absolutely the case is because the government and the bank refuse to give us this information.

You say thousands of jobs and business would have gone under. What businesses in what industries? Show me they aren't property related and I might reconsider my position but until such time, I'm going to assume Anglo is the all eggs in one basket, basketcase it appears to be.

I have shown that 50% of it's lending is not development based based on transfers to NAMA and that the very fact that they are incurring such large impairment provisions shows that their depositers are not the same people that are defaulting on their loans.

In the end i think it comes down to the taxpayer taking a 25bn loss over 10 - 15 years or the economy taking a 50 - 60 bn hit in one go. I prefer the former as the best worst option.

thebman

Scarab80 wrote: »

I have shown that 50% of it's lending is not development based based on transfers to NAMA and that the very fact that they are incurring such large impairment provisions shows that their depositers are not the same people that are defaulting on their loans.

In the end i think it comes down to the taxpayer taking a 25bn loss over 10 - 15 years or the economy taking a 50 - 60 bn hit in one go. I prefer the former as the best worst option.

You haven't shown this, you have merely stated it. Showing me would involve giving statistics from the bank or the government that show what loans anglo has on its books in a transparent manner that will reveal whether those businesses are property based or the majority of their business comes from property such as suppliers to construction companies who are all doomed because of massive oversupply in the market much like when Dell pulled out, many of the small businesses that depended too heavily on it were doomed too but they weren't Dell or even necessarily in the IT industry.

That is what we can't get statistics on as the government and Anglo refuse to give information that would let us know this.

oppenheimer1

thebman wrote: »

As you say yourself Iceland's problem is they realised their problems too late. That doesn't mean we should have nationalised all our banks.

The two things aren't related. We could have left Anglo out and started investigations for dodgy practices and stated that it had irregular lending practices and that the government couldn't support a bank being investigated for these actions.

Then the markets would have understood that Ireland was saving the other banks because they were good banks not because it thought if any of its banks fell, its entire economy would collapse which is laughable TBH. One property lending bank cannot take down an economy. It can take down the property developers that have massive amounts borrowed from said property bank though.

Thanks for at least engaging me in the actual issues, which is more than what can be said than most posters. A short response to your post, I'll give a more considered one later, is that such an approach depends on three unknowns, the exposure of other Irish banks to Anglo, the rationality of the markets and the timing of such a decision. Get it wrong on any of those three fronts, then its "Goodnight Dublin" tbh.

One property lending bank can take down an economy though. Look at Landsbanki.

Liam Byrne

oppenheimer1 wrote: »

Thanks for at least engaging me in the actual issues, which is more than what can be said than most posters.

So questions about pension funds and fund managers that attempt to manufacture a relationship by normal people to Anglo are part of "the actual issues" ? :rolleyes:

oppenheimer1 wrote: »

A short response to your post, I'll give a more considered one later, is that such an approach depends on three unknowns, the exposure of other Irish banks to Anglo, the rationality of the markets and the timing of such a decision. Get it wrong on any of those three fronts, then its "Goodnight Dublin" tbh.

I would argue that it depends on at least four.

You have completely overlooked / ignored any cost/benefit analysis, or even the remotest evaluation any possible maximum cost so that it could be an informed decision, rather than the current open-ended panicked actions.

Unfortunately, Lenihan did likewise.

This cannot be disputed because no-one has any idea what Anglo and NAMA will cost in total.

And the hilarious aspect of all this is that people who are supporting the bailout choose to point the fingers at those members of the public who.....believe it or not.......didn't do a cost/benefit analysis when purchasing their own house, and were "panicked" into it by vested interests (like banks and auctioneers and Ahern's "team") because they needed to jump on that sickeningly-phrased work of fiction called the "property ladder".

Tell me this; if people are being castigated by yourself and others for not doing a proper cost/benefit analysis because of something the banks told them "they had no choice" about, then how come Lenihan escapes this criticism ?

oppenheimer1

Liam Byrne wrote: »

So questions about pension funds and fund managers that attempt to manufacture a relationship by normal people to Anglo are part of "the actual issues" ? :rolleyes:

I was just highlighting that many people may not realise that they may have an indirect relationship with Anglo, and other institutions they may not realise they have.

Not having a private pension, well thats a personal decision.

I would argue that it depends on at least four.

You have completely overlooked / ignored any cost/benefit analysis, or even the remotest evaluation any possible maximum cost so that it could be an informed decision, rather than the current open-ended panicked actions.

Unfortunately, Lenihan did likewise.

This cannot be disputed because no-one has any idea what Anglo and NAMA will cost in total.

And the hilarious aspect of all this is that people who are supporting the bailout choose to point the fingers at those members of the public who.....believe it or not.......didn't do a cost/benefit analysis when purchasing their own house, and were "panicked" into it by vested interests (like banks and auctioneers and Ahern's "team") because they needed to jump on that sickeningly-phrased work of fiction called the "property ladder".

Tell me this; if people are being castigated by yourself and others for not doing a proper cost/benefit analysis because of something the banks told them "they had no choice" about, then how come Lenihan escapes this criticism ?

Indeed, Cost/benefit is very important. As I said, my response was only short as I wanted to give a more considered one later. I'm certain it was considered that the Nationalisation of Anglo would work out to be the cheapest option in the long run.

Just for the moment, let us assume that all banks apart from Anglo were guaranteed. Now never mind what press release is issued, the market would see it that the Irish Government considers it too expensive to save Anglo. What would then happen is there would be a run on the other banks, actually increasing the likelihood of the guarantee being called in. The market would think, well if Anglo can be cast into the cold... then what is so special about the others? In that sense the guarantee had to be all or nothing.

It is the same argument put forward in relation to Greece. Even if it were possible to kick them out of monetary union, the effect of not showing solidarity would lead to increased speculation on the other eurozone countries. This would further weaken their position until they were forced out too.

In relation to your final point, I do believe people need to take personal responsibility for their own finances. They also need the ability to recognise what is good value and what is not. This of course applies to Lenihan. Faced with the choice of a very expensive bank failure or an expensive rescue, I would expect the prudent choice is the latter.

Liam Byrne

oppenheimer1 wrote: »

INot having a private pension, well thats a personal decision.

Again, ignoring the realities......I only wish it were a "personal decision" and that I was capable of affording one, but that is not the case.

oppenheimer1

Liam Byrne wrote: »

Again, ignoring the realities......I only wish it were a "personal decision" and that I was capable of affording one, but that is not the case.

I was wondering if you could respond to the rest of post 115. I would like to know what you think would have happened.

Btw I don't like the bailout or the fact that its costing billions we don't have, but I am pragmatic about it.

maninasia

thebman wrote: »

Anyone unable to service their debt would lose their assets and when a bank is going down it will call in its loans as fast as it can under the terms of its lending agreement with the developer.

This would kill any struggling property developers and is exactly why NAMA was setup. NAMA allows longer repayment periods than any bank in trouble would offer.

Once the bank goes under, its assets (loans) will be sold off and the people Anglo owe money to will be repaid (not all of what they are owed) and then the company that bought the property developers loan would pursue that person for payment. This would most likely not be an Irish lender and so if unable to pay the property developer would be pursued fully by the new owner of the loan for their assets if unable to pay.

Bailing out Anglo was bailing out developers as it should have been let die as it doesn't have large deposits from Irish savers on its books.

The bailouts from NAMA for these defaulting debtors wouldn't be so bad if they were helping to maintain companies and productive parts of the economy. But bricks and mortar ...crazy. Maybe the money would have been better directed at shoring up credit lines for companies and letting the property debtors and their rotten bank rot with them.

oppenheimer1

oppenheimer1 wrote: »

Indeed, Cost/benefit is very important. As I said, my response was only short as I wanted to give a more considered one later. I'm certain it was considered that the Nationalisation of Anglo would work out to be the cheapest option in the long run.

Just for the moment, let us assume that all banks apart from Anglo were guaranteed. Now never mind what press release is issued, the market would see it that the Irish Government considers it too expensive to save Anglo. What would then happen is there would be a run on the other banks, actually increasing the likelihood of the guarantee being called in. The market would think, well if Anglo can be cast into the cold... then what is so special about the others? In that sense the guarantee had to be all or nothing.

It is the same argument put forward in relation to Greece. Even if it were possible to kick them out of monetary union, the effect of not showing solidarity would lead to increased speculation on the other eurozone countries. This would further weaken their position until they were forced out too.

In relation to your final point, I do believe people need to take personal responsibility for their own finances. They also need the ability to recognise what is good value and what is not. This of course applies to Lenihan. Faced with the choice of a very expensive bank failure or an expensive rescue, I would expect the prudent choice is the latter.

So no one wants to take me up on this... interesting :rolleyes:

Liam Byrne

oppenheimer1 wrote: »

Just for the moment, let us assume that all banks apart from Anglo were guaranteed. Now never mind what press release is issued, the market would see it that the Irish Government considers it too expensive to save Anglo.

Firstly, that "would" should read "might".

Secondly, since the government knew about the corruption and dodgy deals, the market could also have seen that the Irish Government weren't going to allow banks to be cowboys and therefore their money would be safe in the remaining banks.

I mean, that's why we have a regulator after all.

oppenheimer1 wrote: »

What would then happen is there would be a run on the other banks, actually increasing the likelihood of the guarantee being called in. The market would think, well if Anglo can be cast into the cold... then what is so special about the others? In that sense the guarantee had to be all or nothing.

Again, a definite "would be", instead of a "might be", or even a "probably wouldn't be", because if the market knew that Anglo was cast into the cold due to its own corrupt actions then any bank that wasn't cast into the cold must be more honest.

In that sense the guarantee tainted BoI and AIB by association.

thebman

oppenheimer1 wrote: »

Just for the moment, let us assume that all banks apart from Anglo were guaranteed. Now never mind what press release is issued, the market would see it that the Irish Government considers it too expensive to save Anglo. What would then happen is there would be a run on the other banks, actually increasing the likelihood of the guarantee being called in. The market would think, well if Anglo can be cast into the cold... then what is so special about the others? In that sense the guarantee had to be all or nothing.

You see my main problem with this is we shouldn't be even saying anything like we can't afford to bail them out.

We know the government, financial regulator and department of finance all knew about the false deposit proping up Anglo (unless the former Chief Executive of Irish Life and Permanent was lying under a sworn affidavit).
http://news.eircom.net/breakingnews/18023047/?view=Standard

So they knew they had irregular lending practices and that is a very good reason not to include them in any guarantee's.

Simply start a garda investigation into their irregular lending and say they are being excluded from the guarantee due to being under investigation by the garda for irregular lending practices.

No market would claim we couldn't afford to bail them out, they'd simply see that we were not going to bail out banks not following good practice and it would most likely IMO get the markets to view the rest of the Irish banks in a better light.

They would look credible by comparison and the government would appear to be trying make wise choices and have analyzed the banks to see which ones to save. If you just put a blanket save all clause in, nobody knows what to think of the banks which is kind of scary to markets as we have found out the hard way IMO.

oppenheimer1

thebman wrote: »

You see my main problem with this is we shouldn't be even saying anything like we can't afford to bail them out.

We know the government, financial regulator and department of finance all knew about the false deposit proping up Anglo (unless the former Chief Executive of Irish Life and Permanent was lying under a sworn affidavit).
http://news.eircom.net/breakingnews/18023047/?view=Standard

So they knew they had irregular lending practices and that is a very good reason not to include them in any guarantee's.

Simply start a garda investigation into their irregular lending and say they are being excluded from the guarantee due to being under investigation by the garda for irregular lending practices.

No market would claim we couldn't afford to bail them out, they'd simply see that we were not going to bail out banks not following good practice and it would most likely IMO get the markets to view the rest of the Irish banks in a better light.

They would look credible by comparison and the government would appear to be trying make wise choices and have analyzed the banks to see which ones to save. If you just put a blanket save all clause in, nobody knows what to think of the banks which is kind of scary to markets as we have found out the hard way IMO.

That argument would only work if the only reason that Anglo fell from grace was due to dodgy accounting, rather than a more fundamental problem of overexposure to a falling property market. The other banks balance sheets are wounded in the same way, albeit to a lesser extent due to the same problem. A statement saying that not including Anglo due to corruption would be papering over the real reasons for excluding it. The market would see through it. That I have no doubt

Assuming there have been dodgy accounting practices, people here would still be against the bail-out if the bank had been forthright in its position. The directors loans did not break the bank. Saying otherwise is a red herring and distortion of the truth.

Anglo fell because its fundamentals were unsound.

Liam Byrne

oppenheimer1 wrote: »

Anglo fell because its fundamentals were unsound.

And since its "fundamentals" included an ethos that involved dodgy accounting, that's a damn good reason to leave them out.

Basically : "dodgy accounting" = "we don't trust them" = "we're not giving them a cent"

I know that - had I been considering dealing with them and found out that they were cooking books - I wouldn't have dealt with them.

So why can the same not apply to the government ?

I mean, TDs need tax clearance certs in order to prove they're within the law......oops!

oppenheimer1

Liam Byrne wrote: »

And since its "fundamentals" included an ethos that involved dodgy accounting, that's a damn good reason to leave them out.

Basically : "dodgy accounting" = "we don't trust them" = "we're not giving them a cent"

But you're missing my point. It wasn't dodgy accounting that caused the bank to fail. It was an over exposure to non performing development loans. Thats the truth.

The accounting tricks hid that truth from view, but thats the main problem with Anglo. Over-exposure to property is also what is affecting the other banks.

This is just looking into an alternate reality with my crystal ball. Perhaps what you suggest, a strong statement from the government would be able to contain the contagion. However I doubt it, as out government simply wouldn't have the resources to contain it, like Iceland.

Liam Byrne

oppenheimer1 wrote: »

But you're missing my point. It wasn't dodgy accounting that caused the bank to fail. It was an over exposure to non performing development loans. Thats the truth.

And you're missing my point. If the bank was dodgy enough to give out loans like that and to organise the dodgy transfer, then that was a reason to say no.

Basically, what I'm saying that the "accounting" didn't cause the bank to fail, but it did mean that they weren't trustworthy.

They gave the two-fingers to standard accounting practices, the regulator, and corporate guidelines.

What more would they need to do in order to have you admit that there was a case for treating them with contempt ?

thebman

oppenheimer1 wrote: »

That argument would only work if the only reason that Anglo fell from grace was due to dodgy accounting, rather than a more fundamental problem of overexposure to a falling property market. The other banks balance sheets are wounded in the same way, albeit to a lesser extent due to the same problem. A statement saying that not including Anglo due to corruption would be papering over the real reasons for excluding it. The market would see through it. That I have no doubt

Assuming there have been dodgy accounting practices, people here would still be against the bail-out if the bank had been forthright in its position. The directors loans did not break the bank. Saying otherwise is a red herring and distortion of the truth.

Anglo fell because its fundamentals were unsound.

Its actually the exact opposite IMO. My arguments works despite Ango being overexposed to property.

At the moment everyone thinks Irish banks are both negligent, corrupt and bankrupt as a result of saving all banks.

If we had let Anglo fail then I think markets would have believed the other banks were probably negligent and bankrupt but were being backed by the state.

Still not a good position but better than our current position. Also as everyone knows the state can't afford its guarantee, we would be in a better position to afford it if we left out Anglo.

oppenheimer1

thebman wrote: »

Its actually the exact opposite IMO. My arguments works despite Ango being overexposed to property.

At the moment everyone thinks Irish banks are both negligent, corrupt and bankrupt as a result of saving all banks.

If we had let Anglo fail then I think markets would have believed the other banks were probably negligent and bankrupt but were being backed by the state.

Still not a good position but better than our current position. Also as everyone knows the state can't afford its guarantee, we would be in a better position to afford it if we left out Anglo.

But saying you're not including Anglo because you feel it is too corrupt isn't true.Its not included because you think its too expensive. Following a bankrupt Anglo, the paper it has issued is almost worthless. How much this would have damaged the other banks, I can't say, but the government would have to pick up the tab, add this to our record deficit and we have a sovereign debt crisis on our hands.


I take your point, that in theory it could have worked, but at great expense and the possible loss of many companies (With all the cash that would be tied up in the frozen bank) and maybe even the country. However I don't think it would, as the Icelandic experience shows (although not entirely analogous granted, there are parallels).

As I've stated, its a parallel universe and crystal ball, no one will never know exactly how it would have panned out, that said the experience of Iceland lends some credibility to my theory.

Liam Byrne

oppenheimer1 wrote: »

But saying you're not including Anglo because you feel it is too corrupt isn't true.Its not included because you think its too expensive.

If the government (as claimed elsewhere) knew about the corruption, then they should never have bothered checking how expensive it would be to bail out. Actually, given events since, it still appears that they didn't.....

Therefore, in that scenario, it would have been excluded purely because it was a cesspit.

Scarab80

thebman wrote: »

It is not of systematic importance and should have been let die. Hell you basically have agreed it was not of systematic importance. Since property was Anglo's main business, most of the companies that had accounts there were property businesses and guess where they are now? Most are either gone under or in serious difficulty with many only existing because NAMA is propping them up by giving them generous repayment schedules.

http://www.rte.ie/news/2010/0609/honohan.pdf

Patrick Honohan wrote:

8.42 A question that has been the subject of considerable discussion following the guarantee decision is whether the authorities should have allowed a disorderly bankruptcy of Anglo Irish Bank or bailed it via the guarantee. As is confirmed in Box 8.4, which sets out current international thinking on what makes a bank systemically important, Anglo was clearly systemically important in the prevailing conditions at the end of September 2008

Patrick Honohan, Box 8.4 wrote:

...... Given what was happening in the US and European banking markets around that time, the survival of even long-established and relatively highly rated banks (such as RBS, HBOS, Lloyds, Bradford and Bingley, Washington Mutual, Fortis, Dexia and others) was clearly in question and rescue packages of one sort or another had to be put in place to protect their depositors. Under these circumstances a default by a €100 billion bank such as Anglo Irish Bank would undoubtedly have put funding pressure on the other main Irish banks via contagion, given the broad similarities in the type and geography of their property- related lending, their common implicit reliance on the backing of the Irish State, and even name confusion. In this sense, the systemic importance of Anglo Irish Bank at that time cannot seriously be disputed.

Patrick Honohan wrote:

8.43 There can be little doubt that a disorderly failure of Anglo would, in the absence of any other protective action, have had a devastating effect on the remainder of the Irish banks. Given the other banks‘ reliance from day-to-day and week-to-week on the willingness of depositors and other lenders not to withdraw their funds, and the certainty that those lenders would infer from the failure of Anglo that all the other Irish banks might be in a comparable situation, in all likelihood the main banks would have run out of cash within days. They did not have unused collateral eligible for borrowing at the ECB‘s facilities in sufficient amounts to meet a run on the scale which would have ensued. Absent Government support or ELA they would have to close their doors also, unable to pay out on cheques presented and other payments instructions. Closure of all, or a large part, of the banking system would have entailed a catastrophic immediate and sustained economy-wide disruption involving very significant, albeit
extremely difficult to quantify, social costs, reflecting in particular the fundamental function of the payments system in a modern economy. These costs would have been broad-based in terms of income, employment and destruction of the value of economic
assets and would have been on top of the recessionary downturn which has actually occurred. Considering the experience of other countries in such circumstances, the social and economic costs, if they could be quantified, would surely have run into tens of billions of euros. There would also have been spillover effects vis-a-vis other countries. So either Anglo‘s disorderly bankruptcy had to be avoided, or protective measures taken for the rest of the system, or – as was decided – both.

Liam Byrne

There can be little doubt that a disorderly failure of Anglo would, in the absence of any other protective action, have had a devastating effect on the remainder of the Irish banks

WTF is a "disorderly" failure ?

And is he suggesting that if there had been an "orderly" failure, then it wouldn't have had a devastating effect ?

Even with the slightly fudged phrasing, he is definitely saying that some protective action would have prevented the "devastating effect".

So basically, if certain things had been done, and done right, Anglo could have been let fail.

oppenheimer1

Liam Byrne wrote: »

WTF is a "disorderly" failure ?

And is he suggesting that if there had been an "orderly" failure, then it wouldn't have had a devastating effect ?

Even with the slightly fudged phrasing, he is definitely saying that some protective action would have prevented the "devastating effect".

So basically, if certain things had been done, and done right, Anglo could have been let fail.

Its important to note he doesn't outline an alternative reality. Probably beyond the scope of the investigation. He does at least partially vindicate my theory.

Scarab80

Liam Byrne wrote: »

WTF is a "disorderly" failure ?

A disorderly failure is giving Anglo no support and letting the liquidation take it's course, firesale loan book and pay the creditors with whatever is left.

Liam Byrne wrote: »

And is he suggesting that if there had been an "orderly" failure, then it wouldn't have had a devastating effect?

An example of an orderly failure would be to wind down Anglo over 10 or 20 years as has been discussed with Europe. The only reference he makes regarding the nationalisation is

Patrick Honohan wrote:

Given the true underlying situation of Anglo Irish Bank and INBS, namely that they were heading toward loan losses that would more than wipe out their capital, it could have turned out to have been quite risky to leave them under unchanged ownership. Furthermore, a better loss-sharing arrangement with providers of capital might have been more easily negotiated had one or two banks been dealt with separately from the system. Still, even given these considerations, it is hard to argue that the delay of five months in eventually nationalising Anglo Irish Bank had a major financial impact.

Liam Byrne wrote: »

Even with the slightly fudged phrasing, he is definitely saying that some protective action would have prevented the "devastating effect".

So basically, if certain things had been done, and done right, Anglo could have been let fail.

This is slightly outside the terms of reference and as such is only referred to in a note. He concludes that due to insufficient risk management in the banks and insufficient oversight and audit by the regulator, central bank and possibly auditors (auditors are also outside terms of reference) the decision makers were not aware that Anglo was insolvent, it was considered at the time that the only problem was a lack of liquidity.

Patrick Honohan wrote:

With the benefit of hindsight, a plausible case can be made for a more complicated policy as perhaps offering a lower net cost in the end. Thus, the whole system except Anglo could have been guaranteed, allowing the latter to close, without that implying destruction of the rest of the system. Given what we now know about the extent to which most of the final fiscal costs of the guarantee come from Anglo, on the face of it such a course would have offered savings. It would not, however, have been trouble-free. It would have earned harsh criticism from other EU countries as being a ―second Lehmans‖ imposing a destabilising spill-over effect on them, would have caused a jump in government borrowing costs and would have entailed large and arbitrary costs to Anglo creditors, including other banks, resulting in economic disruption and job losses. Since the decision makers had no inkling of the scale of the looming net deficiency in Anglo, this option – with its sizeable risks in an already volatile environment – did not seem worth considering. As such, it is of academic interest only.

No cost / benefit analysis has been done in respect of this option, i assume we will have to wait for the publication of the EU restruturing plans for this. Though obviously they will not include an analysis of disorderly failure.

ei.sdraob

a certain @oppenheimer1 has been proven wrong in his unfounded support of government lies (read earlier pages of this thread), and the Anglo hole is much deeper than feared

Hours after it scraped by on a Dail vote and got a modest boost in the latest opinion poll, the Government revealed that it now estimates the final bill for Anglo will range between €29bn and €34bn.

This is the "worst-case scenario", to be outlined by Central Bank governor Patrick Honohan and the Financial Regulator Matthew Elderfield this morning.

To date, the Government has committed €25bn to the bank. It will now have to inject another €4bn to €9bn.

http://www.independent.ie/national-news/final-bill-for-toxic-anglo-could-now-reach-euro34bn-2359006.html

its quite sad reading over this thread now from few months ago

as to how naive some people are and how much they blindly trust and pathetically try to defend the actions of this failed government

there must be a name for that in psychology

xavidub

After this morning;s news it is surely now time for us to approach the ECB and ask to borrow our requirements from them at a reasonable 3% rather than the extortionate 7% we are currently paying.

ei.sdraob

Lenihan on RTE news now trying to make it out as if its not a big deal and there be a soft landing, nearly threw remote at tv at the ****ing liar!


7300 euro per every man woman and child in this state

paid thru' direct taxes and/or less services (more hospital ****e)

yeh