Promissory Notes deal with ECB will require "special financial legislation"

poeticseraphim

stackerman wrote: »

I actually feel sick !!

:eek: Feel better Dude!!

Chips Lovell

poeticseraphim wrote: »

They have been supposedly brokering a deal for months?? They did not foresee this emergency need???

If you're to believe Ursula Halligan, they did. Apparently they've had this plan on standby for months. She said it came close to being triggered two weeks ago.

edanto

What is the most risky thing that anyone has spotted in the legislation so far?

What is the worst possible outcome from it?

Scortho

Scofflaw wrote: »

Then they say rude things about it, then the government TDs vote it through. The the opposition spends tomorrow telling us all how awful this is, while the government tells us how necessary it was without ever quite spelling out the reasons.

cynically,
Scofflaw

Welcome to Ireland!:)

poeticseraphim

A good point was just made....the markets have probably factored a lot of this in anyway

Scortho

edanto wrote: »

What is the most risky thing that anyone has spotted in the legislation so far?

What is the worst possible outcome from it?

Section 17 and the powers it grants to the finance minister. Unconstitutional according to Stephen Donnelly.
However liquidation could be a necessary evil to ensure others don't try liquidate ibrc in the morning.

Scofflaw

Scortho wrote: »

Section 17 and the powers it grants to the finance minister. Unconstitutional according to Stephen Donnelly.
However liquidation could be a necessary evil to ensure others don't try liquidate ibrc in the morning.

I think the bit Donnelly (Article 17.2 Bunreacht) is referring to is being dealt with by a small bit of legislation giving the Minister the power to use public moneys as required in the liquidation.

cordially,
Scofflaw

Scortho

Majority of staff to be rehired to help in liquidation

December2012

Scofflaw wrote: »

Hmm. This is more likely this as the cause of the rush, although this too is guesswork:



Once someone has leaked any plan that might involve winding up IBRC, or indeed any form of resolution, it's necessary to immediately move to forestall any creditor of IBRC who thinks they might get a better deal by applying for its liquidation immediately. If you like, IBRC is being taken into protective custody, so that only the government can determine the speed and manner of its liquidation.

That makes sense if there's a deal on the cards, because any deal that involves something in particular happening to IBRC could easily be blown apart by a private creditor applying for its windup. The financial powers (aka blank cheque) provided for in the emergency legislation being "debated" tonight are presumably necessary to prevent the liquidation itself being stymied by the need to go back to the Dáil for each step of money movement - because if the liquidation order contains money movements that are (by accounting standards) charges on the public purse, the liquidation order could be ruled illegal without Dáil permission to move the money.

cordially,
Scofflaw

Does that mean that whenever this Bill was going to be introduced it would always have to be voted on and rushed through immediately before the next trading day?

poeticseraphim

Scortho wrote: »

Section 17 and the powers it grants to the finance minister. Unconstitutional according to Stephen Donnelly.
However liquidation could be a necessary evil to ensure others don't try liquidate ibrc in the morning.

Unconstitutional???

You mean it would require a referendum?????Lols

coolshannagh28

Is this an attempt by the government to force the ECBs hand on a deal ,they could have to default on the promissory notes if the ECB does not agree to their deal.

ArtSmart

Scortho wrote: »

Section 17 and the powers it grants to the finance minister. Unconstitutional according to Stephen Donnelly.
However liquidation could be a necessary evil to ensure others don't try liquidate ibrc in the morning.

Scofflaw wrote: »

I think the bit Donnelly (Article 17.2 Bunreacht) is referring to is being dealt with by a small bit of legislation giving the Minister the power to use public moneys as required in the liquidation.

cordially,
Scofflaw

exactly.

Donnelly's talking nonsense. (much as i respect him.)

Scortho

Scofflaw wrote: »

I think the bit Donnelly (Article 17.2 Bunreacht) is referring to is being dealt with by a small bit of legislation giving the Minister the power to use public moneys as required in the liquidation.

cordially,
Scofflaw

Can this occur as it involves a change in the constitution?
I'd expect to see a legal challenge, but it still wouldn't result in the liquidation being overturned, possibly just the minister being allowed to issue securities being overturned.

Sand

This is nuts. Extremely bad decisions - probably unconstitutional - being made in a rush with no debate or discussion. We're doing something extremely stupid to accomplish a very short sighted political goal dreamt up by the preening arrogance of Gilmore, Kenny and Noonan.

The only interesting aspect is that it does demonstrate that the Dail can pass retroactive legislation against creditors of state owned institutions. Gilmore, Kenny and Noonan will hopefully receive a shock when their pensions are targeted in a similar manner.

Regarding the source of the leaks - Id presume it was the ECB that leaked our strategy because they knew it would panic the clowns in the DoF into making a huge mistake.

@Scortho

Can this occur as it involves a change in the constitution?
I'd expect to see a legal challenge, but it still wouldn't result in the liquidation being overturned, possibly just the minister being allowed to issue securities being overturned.

You cant change the constitution by a legislative act - the Dail would never allow us a referendum on Europe otherwise.

Scofflaw

Scortho wrote: »

Can this occur as it involves a change in the constitution?
I'd expect to see a legal challenge, but it still wouldn't result in the liquidation being overturned, possibly just the minister being allowed to issue securities being overturned.

No, it doesn't require a change in the constitution - it just requires the Dáil to vote to allow the Minister the use of the public purse within the confines of the Act. As long as the Dáil vote to allow that, it's constitutional as long as the Minister sticks within the policies outlines in the Act in question.

cordially,
Scofflaw

Scortho

Scofflaw wrote: »

No, it doesn't require a change in the constitution - it just requires the Dáil to vote to allow the Minister the use of the public purse within the confines of the Act. As long as the Dáil vote to allow that, it's constitutional as long as the Minister sticks within the policies outlines in the Act in question.

cordially,
Scofflaw

Oh right. I know this is off topic but what constitutes something as requiring a referendum and what doesn't?

A_Sober_Paddy

So in lay mans terms...

The government are introducing a bill at the last minute, and even if its voted threw, it would still need to go to a vote by the people as the proposed bill requires a change in the constitution?

Is that the jest of whats going down tonight?

RandolphEsq

The section on injunctions; does it not seem to encroach on the separation of powers?

Bullseye1

What are the references to property rights referred to in the bill?

Chips Lovell

Michael McGrath now asking Noonan for more details on the risks of it not going through quickly.

Scortho

A_Sober_Paddy wrote: »

So in lay mans terms...

The government are introducing a bill at the last minute, and even if its voted threw, it would still need to go to a vote by the people as the proposed bill requires a change in the constitution?

Is that the jest of whats going down tonight?

I'd listen to scofflaw on this one and not me.

A_Sober_Paddy

Scortho wrote: »

I'd listen to scofflaw on this one and not me.

I'm just looking for someone to explain it in lay man's terms, is what i posted the basic jist?

Sand

No - the government is rushing through a bill that it considers to be constitutional. Others consider that it might not be constitutional and will probably challenge it in the courts.

Win or lose, their wont be any referendum because the people wont support the government on it.

poeticseraphim

Sand wrote: »

This is nuts. Extremely bad decisions - probably unconstitutional - being made in a rush with no debate or discussion. We're doing something extremely stupid to accomplish a very short sighted political goal dreamt up by the preening arrogance of Gilmore, Kenny and Noonan.

The only interesting aspect is that it does demonstrate that the Dail can pass retroactive legislation against creditors of state owned institutions. Gilmore, Kenny and Noonan will hopefully receive a shock when their pensions are targeted in a similar manner.

Regarding the source of the leaks - Id presume it was the ECB that leaked our strategy because they knew it would panic the clowns in the DoF into making a huge mistake.

@Scortho


You cant change the constitution by a legislative act - the Dail would never allow us a referendum on Europe otherwise.

What is it the Govt is trying to achieve through this?
What outcome do they want???

Is it all just poker??
And can anyone give me a basic run down of possible outcome or consequences???

Link to the bill ?? Is it anywhere in the thread??



Sorry to ask.:o

Scofflaw

A_Sober_Paddy wrote: »

So in lay mans terms...

The government are introducing a bill at the last minute, and even if its voted threw, it would still need to go to a vote by the people as the proposed bill requires a change in the constitution?

Is that the jest of whats going down tonight?

No:

Scortho wrote:

Scofflaw wrote: »

No, it doesn't require a change in the constitution - it just requires the Dáil to vote to allow the Minister the use of the public purse within the confines of the Act. As long as the Dáil vote to allow that, it's constitutional as long as the Minister sticks within the policies outlines in the Act in question.

cordially,
Scofflaw

Oh right. I know this is off topic but what constitutes something as requiring a referendum and what doesn't?

A change to the constitution to allow the government access to the public purse without a Dáil vote would require a referendum. A vote of the Dáil to allow the government access to the public purse in respect of specified legislation is, on the other hand, entirely constitutional and obviously necessary for any public spending to occur.

cordially,
Scofflaw

Scortho

A_Sober_Paddy wrote: »

I'm just looking for someone to explain it in lay man's terms, is what i posted the basic jist?

Government will pass bill alright due to risk of the government being exposed to a creditor liquidating ibrc in the morning.

Stephen Donnelly brought a point up that a part of section 17 is unconstitutional. However as scofflaw has highlighted they have made a provision for this in the act.

I'd still expect a challenge on it being unconstitutional but only that part of section 17. Liquidation will still go ahead.

ressem

A discussion on RTE radio suggests that the promissory notes will be purchased using NAMA bonds, where NAMA, not the government would be responsible for paying interest?

A_Sober_Paddy

Scortho wrote: »

Government will pass bill alright at risk of exposing government being exposed to a creditor liquidating them in the morning.

Stephen Donnelly brought a point up that a part of section 17 is unconstitutional. However as scofflaw has highlighted they have made a provision for this in the act.

I'd still expect a challenge on it being unconstitutional but only that part of section 17. Liquidation will still go ahead.

When the liquidation goes ahead, does it leave Ireland with just more sovereign debt???

Chips Lovell

Total debt is not their priority, but what the annual payments will be.

Scortho

A_Sober_Paddy wrote: »

When the liquidation goes ahead, does it leave Ireland with just more sovereign debt???

See vladamirs post

Scofflaw

poeticseraphim wrote: »

What is it the Govt is trying to achieve through this?
What outcome do they want???

Is it all just poker??
And can anyone give me a basic run down of possible outcome or consequences???

Link to the bill ?? Is it anywhere in the thread??

Sorry to ask.:o

Link to the Bill: http://namawinelake.files.wordpress.com/2013/02/ibrc-bill-2013-final.pdf

The basic purpose of all this seems to be that the government are using IBRC as a bargaining chip in their negotiations with the ECB over the promissory notes. That's reasonable enough, since IBRC and the promissory notes go hand in hand. In other words, the government needs IBRC completely in its hands.

In order to have IBRC completely in their power to do whatever is needed in their deal with the ECB, the government have created a special liquidation arrangement specifically for IBRC, which supersedes all other legal arrangements, such as the Companies Act, and prevents any other creditors calling for the liquidation of IBRC, or even getting an injunction or appeal against the process. In other words, nobody can mess with the government's control of IBRC, delay or disrupt it in any way. To do this, they have abrogated a variety of other acts in respect of their application to IBRC, citing the common good.

The legislation to do all the above has obviously been in preparation for some time, but a leak of the details has prompted emergency enactment of the legislation. The legislation itself isn't emergency legislation, but the process of voting on it is.

cordially,
Scofflaw

edanto

Murder on the Dail floor.... Labour and FG getting very loud and angry at Pearse Doherty saying that most of them haven't even read it and few of them that read it understand it... or the implications of it.

Scofflaw

A_Sober_Paddy wrote: »

When the liquidation goes ahead, does it leave Ireland with just more sovereign debt???

Yes and no, I think, depending on what you mean by "sovereign debt". That is, the promissory notes have been booked on the general government debt, but not, I think, on the "national debt". That's kind of irrelevant, though, because nobody now uses the "national debt" as an indicator of government debt, which I think pretty much everybody judges based on "general government debt" as per Maastricht.

As such, while there will be a fair bit of whining about how this has somehow changed the legal status of the debt, it hasn't, nor has it changed the total amount of government debt - and as far as I'm aware, there is no legal difference between "general government debt" and "national debt" - both are sovereign debt.

cordially,
Scofflaw

oppenheimer1

Is that the worst Ceann Comhairle we've ever had?

Scortho

oppenheimer1 wrote: »

Is that the worst Ceann Comhairle we've ever had?

No John o donoghue was much worse.
His only problem is that his voice keeps breaking but he is better than O donoghue

Scofflaw

Text of Noonan's speech: http://static.rasset.ie/documents/news/ibrc-resolution-bill.pdf

As I have consistently informed this House, the Government has been in ongoing discussions with the European Central Bank to reach an agreed position on resolving the Promissory Note satisfactorily for all sides; the Irish State, the European Central Bank and the Eurozone.

As many Deputies will have noted from this evening's media commentary, the ECB is considering a proposal from the Government as part of these ongoing discussions. In the discussions with the ECB it was envisaged that the first step would be the liquidation of IBRC and the sale of its remaining assets to NAMA or other market purchasers.

As soon as the information relating to the proposal to liquidate IBRC was made public, there was an immediate risk to the bank. Given this position, I as Minister for Finance, took immediate action to secure the stability of the Bank and the value of its assets, valued at €12 billion, on behalf of the State. To this end, I vested the powers of the Board temporarily in an employee of KPMG and a KPMG team is now in control of the Bank on my behalf.

Gurdgiev more likely to be right on the official reason for the rush than me, or "more right", perhaps, since the creditor risk is clearly envisaged in the Bill, while the asset risk is clearly mentioned here as the reason for the rush. We both may be right, since there's a section on customer impact as well:

Customer Impact
The decision to liquidate IBRC is unique to IBRC and does not affect other banks. In the case of IBRC, the vast majority of IBRC's deposit accounts moved to AIB and Permanent TSB last year and they are unaffected by today's announcement.

Deposit accounts that were retained in IBRC are generally associated with a wider ongoing relationship with the bank. It is important to state that all eligible deposits up to €100,000 for an individual and €200,000 for two individuals holding a joint account in IBRC are protected by the Deposit Guarantee Scheme in operation in the State and eligible deposits beyond this limit are guaranteed under the Eligible Liabilities Guarantee Scheme.

It is critically important that deposit account holders, mortgage account holders, and those indebted to IBRC understand that their situation following the liquidation should generally remain unchanged. If deposit account holders have any concerns they should make contact with the operators of the relevant schemes. Contact numbers are available on the Department of Finance website.

To be honest, I'm not sure how the assets of the bank are protected by any of the proposal.

cordially,
Scofflaw

poeticseraphim

Scofflaw wrote: »

Link to the Bill: http://namawinelake.files.wordpress.com/2013/02/ibrc-bill-2013-final.pdf

The basic purpose of all this seems to be that the government are using IBRC as a bargaining chip in their negotiations with the ECB over the promissory notes. That's reasonable enough, since IBRC and the promissory notes go hand in hand. In other words, the government needs IBRC completely in its hands.

In order to have IBRC completely in their power to do whatever is needed in their deal with the ECB, the government have created a special liquidation arrangement specifically for IBRC, which supersedes all other legal arrangements, such as the Companies Act, and prevents any other creditors calling for the liquidation of IBRC, or even getting an injunction or appeal against the process. In other words, nobody can mess with the government's control of IBRC, delay or disrupt it in any way. To do this, they have abrogated a variety of other acts in respect of their application to IBRC, citing the common good.

The legislation to do all the above has obviously been in preparation for some time, but a leak of the details has prompted emergency enactment of the legislation. The legislation itself isn't emergency legislation, but the process of voting on it is.

cordially,
Scofflaw

Thanks so much Scofflaw. It is all a lot to take in.

Bullseye1

Have to say its depressing watching these people in the Dail. Rabbit and Howlin heckling is all that is wrong with these people. They have no real respect for the electorate.

Chips Lovell

What do we think of the leak? From the ECB? Or some over-eager person on the Irish side of the table who thought it was a done deal?

poeticseraphim

A Tweet "My guess is this House and this Country will be humiliated by midnight "- Ross

ArtSmart

Bullseye1 wrote: »

Have to say its depressing watching these people in the Dail. Rabbit and Howlin heckling is all that is wrong with these people. They have no real respect for the electorate.

Missed that. Thankfully I they cut out Boyd Barrett. I wonder does he have 6 of exactly the same working man shirt, or does he wash it every night? sigh.

he had some cred, but lost it a while ago.

ArtSmart

poeticseraphim wrote: »

A Tweet "My guess is this House and this Country will be humiliated by midnight "- Ross

Aye, The ex-business editor of the Sunday Independent himself and boom cheer-leader extraordinaire.

May he drown hysterically in champers

Sand

Vladimir Kurtains wrote: »

What do we think of the leak? From the ECB? Or some over-eager person on the Irish side of the table who thought it was a done deal?

ECB almost certainly. No one on the Irish side benefits whereas the ECB gains an exceptional advantage over the government. And the ECB has form - they leaked against Ireland back in 2010 to force us into that god awful "bailout".

PopeBuckfastXVI

Sand wrote: »

ECB almost certainly. No one on the Irish side benefits whereas the ECB gains an exceptional advantage over the government. And the ECB has form - they leaked against Ireland back in 2010 to force us into that god awful "bailout".

Would you mind linking me to that original leak in 2010 please?

Sand

Honohan's radio interview for starters, but in fairness to that member of the ECB board he was responding to weeks of Irish politicians being interrogated by reporters asking them about a supposedly imminent bailout deal.

Technoprisoner

please everyone remember this night the next time a thread is started about why sinn feins popularity has gained.... after tonight the labour party will be destroyed come the next election and a large chunk of fine gael too

Scofflaw

Sand wrote: »

ECB almost certainly. No one on the Irish side benefits whereas the ECB gains an exceptional advantage over the government. And the ECB has form - they leaked against Ireland back in 2010 to force us into that god awful "bailout".

What leverage does the ECB gain? As far as I can see they don't gain anything - the legislation for this has been in preparation for a while, the liquidation is evidently something that's been on the table for a while too, and the ECB leaking it wouldn't change any of the powers the government gains. Plus the ECB are supposed to be making a decision tomorrow in any case - there's no value there to a leak tonight.

As for who else might have leaked it, for the same reasons I wouldn't have said the field is in any sense limited to the two sides in the ECB negotiations.

As for the bailout leak, that was Honohan, no?

cordially,
Scofflaw

edanto

Deputy Donnelly's contribution. Emphasis mine.

This is a highly technical piece of legislation, with implications for the Irish people for decades to come.

We on this side of the house have not had time to go through it. Fine Gael and Labour TDs have not had time to go through it. The Finance committee has been bypassed, as happened in 2008 … and again in 2010 with the promissory notes.

I would be happy to support a bill that protects state interests in IBRC and this bill may do that, but it does much more.

Critically, it passes the €28bn promissory note from IBRC to the European Central Bank. If and when you vote yes to this legislation, you will be moving €28bn as a debt to 2 dead banks, under criminal investigation, from that, to the European Central Bank. The ECB is legally not allowed write any of that debt down.

That’s what this bill does tonight.

The other thing it does, Minister, is it gives you power to issue securities. What that means is that you’re going to be able to sit down with Patrick Honahan and Mario Draghi and say “Let’s all agree to turn this 28 yr promissory note into a 40 year bond.” And we in this house will have no say, we will have no vote because we will be giving you that authority in this bill.

That issuing of a security is an appropriation of public money. Appropriation of public money is the gift of this house, not the Minister, not the cabinet. This house and this house alone. It’s entirely possible that section 17 could be ruled unconstitutional.

Minister I would like you to withdraw this bill, and come back to the House, before the courts open for business in the morning, with the minimal legislation needed to protect state assets.

And then come back with wider legislation and allow this house do what it was elected to do. Allow your own TDs do what they were elected to do. Allow the Finance committee to do its role. And let’s talk on it, let’s debate it, and then let’s vote on it.

This act, brought in this way, this evening, is very, very dangerous and it is a fundamental erosion of parliamentary democracy.

I would ask all deputies to think very, very hard about how they vote on this, this evening.

Chips Lovell

But a debt writedown was never on the cards, so I'm not sure what Donnelly is complaining about.

RandolphEsq

Technoprisoner wrote: »

please everyone remember this night the next time a thread is started about why sinn feins popularity has gained.... after tonight the labour party will be destroyed come the next election and a large chunk of fine gael too

It seems as though the plan for the past while has been to wind down IBRC but the leak has forced the issue abrubtly. Due to the leak there is a danger of assets being removed from the bank, costing the state plenty of money.

Besides, if in doubt do the opposite of what Sinn Fein call for when it comes to the economy.