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

Technoprisoner

RandolphEsq wrote: »

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.

they had this planned for a long time....this was happening either way....they are only rushing this through because of a leak.....i wonder if this leak was deliberate to make sure this bill was rushed through

smndly

If the deal passes what way will the markets most likely move in the morning?

Red Crow

Vladimir Kurtains wrote: »

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

Our gravestone is being chiseled with this debt but eventually Europe would have to come up with some solution to improve the state of the economy. I don't see the next 5 years being much of an improvement on the last 5. I think eventually this can kicking would be brought to a halt by The Troika and some sort of debt write down would have to occur.

Scofflaw

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.

What? How does it move it to the ECB? How could it move it to the ECB? It moves it to the CBI, which is an arm of the State, from the government, which is an arm of the State. And the whole point of the ECB negotiations was that even though the debt was technically to the CBI all along, and remains so, the ECB wouldn't accept it being written off!

Of what relevance is the "under criminal investigation" supposed to be? No criminal investigation was going to disappear the promissory notes, for crying out loud!

Well, it seems that the game of "this has really turned bank debt into sovereign debt" is already on foot. What a pile of bull.

irritated,
Scofflaw

RandolphEsq

smndly wrote: »

If the deal passes what way will the markets most likely move in the morning?

I wonder what the bigger picture will be when this goes through and the world awakens to this.

Bullseye1

Not only have we to pay the €3 billion in March but it also looks like we have to pay tr €3 billion we didn't pay last year to BOI.

edanto

Vladimir Kurtains wrote: »

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

Who said that it wasn't on the cards? The only people that insist it's not on the card are the Irish civil service.

The Irish opposition TDs (FG/Lab pre 2011) have maintained that debt can be written off and FF/rest have been of the same opinion since they moved to the brighter side of the Dail.

The troika have never ruled out a debt write off.

The Greeks got one.

So, why is it not on the table? Donnelly's point is that this rushed through legislation makes it harder to write the debt off.

PopeBuckfastXVI

edanto wrote: »

The Irish opposition TDs (FG/Lab pre 2011) have maintained that debt can be written off and FF/rest have been of the same opinion since they moved to the brighter side of the Dail.

The troika have never ruled out a debt write off.

The answer's in the question... the only people who think it's possible always seem to be the ones who aren't in a position to do it.

Strange that.

The one and only opportunity to keep us off the Anglo hook was squandered by FF in 2008.

Scofflaw

Vladimir Kurtains wrote: »

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

The way the logic works is that you assume that a debt writedown is on the cards because you believe it should be, you criticise the government for not getting the debt writedown you believe should be on the cards, and now you claim the government has finally put such a writedown off the cards.

All of that is based on the idea that the promissory notes are bank debt. But the thing is, they're not. They're government money, exactly the same as the money that goes into welfare payments is government money. Which indicates either a complete failure to understand what's happening in the first place, or a willingness to ignore it.

cordially,
Scofflaw

Chips Lovell

Every single bit of coverage on this for the past year or more stated that a deal on the prom notes would involve restructuring it to push it out over a longer term. IIRC, it's even in the programme for government.

Scofflaw

edanto wrote: »

Who said that it wasn't on the cards? The only people that insist it's not on the card are the Irish civil service.

The Irish opposition TDs (FG/Lab pre 2011) have maintained that debt can be written off and FF/rest have been of the same opinion since they moved to the brighter side of the Dail.

The troika have never ruled out a debt write off.

The Greeks got one.

So, why is it not on the table? Donnelly's point is that this rushed through legislation makes it harder to write the debt off.

Not even on that basis - the Greeks got a writedown of sovereign debt held by European banks, and they got that because they needed it to reduce their debt to a generally agreed manageable limit of 120% of GDP. Therefore, if we need such a writedown, we get such a writedown - the form of the sovereign debt that gets written down, whether promissory notes or sovereign bonds, makes no difference at all.

cordially,
Scofflaw

Chips Lovell

And in order to get a Greek style writedown, we'd need to be vastly more screwed than we are currently.

Scofflaw

Vladimir Kurtains wrote: »

And in order to get a Greek style writedown, we'd need to be vastly more screwed than we are currently.

Exactly. I know I shouldn't be annoyed by this sort of populist pandering to complete fantasies based on misinterpretation of the facts, but I am - and, thinking about it, I'm not even sure I shouldn't be annoyed. Why does public debate need more misinformation just so that people can keep their position as TDs? And if it's honest ignorance and stupidity, why does Ireland need that either?

cordially,
Scofflaw

Sierra Oscar

Not long out of LH, opposition don't know what the hell is going on - and the same can be said for the majority of government deputies!

Bill will pass tonight, but consequences wont become clear until tomorrow evening. It is a very difficult position for TD's - they are being asked to back a bill based on a deal which they have no insight into as of yet.

Sierra Oscar

Sierra Oscar wrote: »

Not long out of LH, opposition don't know what the hell is going on - and the same can be said for the majority of government deputies!

Bill will pass tonight, but consequences wont become clear until tomorrow evening. It is a very difficult position for TD's - they are being asked to back a bill based on a deal which they have no insight into as of yet.

Regardless on how you would side, how can you vote on something you haven't read???

Sierra Oscar

Deleted User wrote: »

Regardless on how you would side, how can you vote on something you haven't read???

Exactly. The government is demanding that this legislation be backed based upon a deal which deputies have not been informed of as of yet.

Also, the way that the opposition were consulted on this was nothing short of a national disgrace. The respective finance spokespeople of the opposition were given less than thirty minutes to go through a very comprehensive document, and were also expected to brief their respective parliamentary parties within that time frame. To make matters worse the civil servants briefing them couldn't even answer their queries because they were not prepared.

This is quite simply not the way to govern. I would have thought that the government would have learned from the mistakes made by the last administration regarding the rushing through of economic legislation.

Scofflaw

Deleted User wrote: »

Regardless on how you would side, how can you vote on something you haven't read???

You can take it on faith. The cynical view that all TDs are TDs, and therefore at some deeper level agree with each other has a flip side, which is that all TDs are TDs, and the raison d'etre of TDs is to do what they think is right for the country - in the final analysis it's perfectly possible for them to accept that what a government consisting of TDs like them is trying to do is something that has to be done for the good of the country - while, naturally, attempting to deflect any criticism by using exactly that argument.

Hard to tell whether that's cynical or not, really.

jesuitically,
Scofflaw

Scofflaw

Sierra Oscar wrote: »

Exactly. The government is demanding that this legislation be backed based upon a deal which deputies have not been informed of as of yet.

Also, the way that the opposition were consulted on this was nothing short of a national disgrace. The respective finance spokespeople of the opposition were given less than thirty minutes to go through a very comprehensive document, and were also expected to brief their respective parliamentary parties within that time frame. To make matters worse the civil servants briefing them couldn't even answer their queries because they were not prepared.

This is quite simply not the way to govern. I would have thought that the government would have learned from the mistakes made by the last administration regarding the rushing through of economic legislation.

This isn't identical, though - the legislation has obviously been in preparation for quite some time (indeed, that's been stated), and the need to pass it is what has arisen suddenly, rather than the legislation being drafted hurriedly - that has also been stated. As such, this is no more than quickly passing legislation because it needs to be passed quickly.

cordially,
Scofflaw

nesf

The Dail has voted by 113 votes to 36 to approve the Bill at Second Stage.

Edit: and a list of who voted and what way they voted, not that the above number doesn't tell you already: http://www.thejournal.ie/voting-chart-second-stage-ibrc-resolution-bill-785888-Feb2013/

PopeBuckfastXVI

Donnelly and RBB claiming this will 'turn debt owed to 2 dead banks into debt owed to ECB'.

I may be wrong, but my understanding is that IBRC owe the money to the ICB/ECB as is, because that is where they got it, using the PN's as collateral, and we own IBRC anyway, so don't we owe the money to the ICB/ECB either way? Are SD and RBB just playing semantics or am I missing something?

If we had the power to make IBRC magic away the need to destroy the money we (otherwise) illegally printed, wouldn't we have already done so?

Wider Road

Vincent Browne said tonight that Labour voted against the bank guarantee because it gave too much power to the Minister of Finance.
Does this bill give more or less power to the Minister of Finance?

PopeBuckfastXVI

Wider Road wrote: »

Vincent Browne said tonight that Labour voted against the bank guarantee because it gave too much power to the Minister of Finance.
Does this bill give more or less power to the Minister of Finance?

FYI: 'more' can live in between 'less' and 'too much' on a spectrum of quantities.

Wider Road

PopeBuckfastXVI wrote: »

FYI: 'more' can live in between 'less' and 'too much' on a spectrum of quantities.

Not trying to be smart, but is that a yes or a no?

poeticseraphim

Scofflaw wrote: »

You can take it on faith. The cynical view that all TDs are TDs, and therefore at some deeper level agree with each other has a flip side, which is that all TDs are TDs, and the raison d'etre of TDs is to do what they think is right for the country - in the final analysis it's perfectly possible for them to accept that what a government consisting of TDs like them is trying to do is something that has to be done for the good of the country - while, naturally, attempting to deflect any criticism by using exactly that argument.

Hard to tell whether that's cynical or not, really.

jesuitically,
Scofflaw

I hope you are being funny.:P

If you argue this then why have an opposition at all?? Or a vote?

If you become a TD you must think that the process and structures used to make legislation are there for a purpose to provide a necessary separation of powers etc .When events occur that weaken that process or make it less effective you would think those who support these values would object.


To be asked to accept something on faith when you are there in the first place to make sure that faith is not misplaced makes no sense.

The role of the opposition is to hold the Govt responsible and to question it not to support it, even if the govt is right you still want that paradigm there.

Actions like this weaken the democratic process. It might not be that the Govt is trying to force something through by manipulating the process, it might be that their hand is forced, but it just as easily could have been. That's why we have an opposition. And it is good for an opposition to assume that they need to read and understand legislation and why a govt is implementing it rather than assume that they don't need to bother.

As I said ..I hope you are being funny:P:P:P

PopeBuckfastXVI

Wider Road wrote: »

Not trying to be smart, but is that a yes or a no?

You didn't ask a yes or no question.

If you meant to ask does Eamonn Gilmore think this gives more or less power to the minister for finance? I would guess probably he thinks more.

If you mean to ask does he think it gives too much power, I would say evidently not.

It's not an inconsistent position.

jimd2

poeticseraphim wrote: »

I hope you are being funny.:P

If you argue this then why have an opposition at all?? Or a vote?

If you become a TD you must think that the process and structures used to make legislation are there for a purpose to provide a necessary separation of powers etc .When events occur that weaken that process or make it less effective you would think those who support these values would object.


To be asked to accept something on faith when you are there in the first place to make sure that faith is not misplaced makes no sense.

The role of the opposition is to hold the Govt responsible and to question it not to support it, even if the govt is right you still want that paradigm there.

Actions like this weaken the democratic process. It might not be that the Govt is trying to force something through by manipulating the process, it might be that their hand is forced, but it just as easily could have been. That's why we have an opposition. And it is good for an opposition to assume that they need to read and understand legislation and why a govt is implementing it rather than assume that they don't need to bother.

As I said ..I hope you are being funny:P:P:P

I don't think he was being funny, just explaining the situation. I think the issue with the government is a failure to communicate but in my opinion Scoflaw explains the dilemma they were in well. The legislation was being worked on and there is a possibility that this was anticipated and considered beforehand.

I am actually more happy that they preempt end this issue rather than having a run on the bonds this morning costing several billion which we,as a country, just cannot afford.

rumour

Bullrush wrote: »

So this looks good, right? Article says "the promissory note ... would be replaced with a long-term government bond".

Mr Noonan said that he would have preferred have preferred to be introducing this Bill in tandem with a finalised agreement with the European Central Bank, details of which are expected later today.

He asked TDs to not concentrate so much on the detail but to "look at the purpose" of the legislation. He added that the Attorney General had "constitutionally proofed" the legislation.

Legislation passed in a rush in the dark of night, sounds ominously familiar. Another cute whore move. We get the government we deserve.

Sponge Bob

Hang on a sec. The legislation was obviously prepared in secret some time back and at least 10 people were involved, possibly as many as 20. The 'on the shelf' liquidation package did not leak.

So what leaked in Frankfurt yesterday ( and who leaked whatever it is) to cause it to be dusted off and presented to an emergency session of the Dáil I'd like to know. And is it anything to do with the Hall case at home??

Chips Lovell

Sponge Bob wrote: »

So what leaked in Frankfurt yesterday ( and who leaked whatever it is) to cause it to be dusted off and presented to an emergency session of the Dáil I'd like to know. And is it anything to do with the Hall case at home??

What leaked was the existence of the plan to liquidate Anglo. It doesn't seem the Hall case had anything to do with it and it really makes not difference to it.

Sponge Bob

This is the reuters leak, they would have had the story a few hours earlier and would have rung around checking about it.

http://uk.reuters.com/article/2013/02/06/uk-ireland-bank-ecb-idUKBRE9150XS20130206

Ireland plans to liquidate failed Anglo Irish Bank as part of a deal it seeks with the European Central Bank (ECB) to ease its bank debt burden, a source familiar with the discussions said on Wednesday.
The ECB rejected Ireland's preferred solution to reschedule part of its bank bailout bill when its board discussed the plan for the first time last month, EU sources familiar with the talks told Reuters.
Irish central bank governor Patrick Honohan, the country's representative on the ECB's Governing Council, will put a revised plan to his fellow policymakers on Wednesday evening in Frankfurt, two sources said.
Under the plan Honohan will present, Anglo Irish Bank, now known as IBRC, will be liquidated so that the Irish government no longer has to make 3.1 billion euro annual payments on a 28 billion euro (24 billion pounds) promissory note used to bail it out. ( no source(s) attributed)

The rest of the article may have been updates over the afternoon.

A spokesman for Nama declined to comment.
The ECB declined to comment, beyond saying that talks are "ongoing". The Department of Finance also declined to comment. IBRC chief executive Mike Aynsley was travelling and unavailable for comment.
Ireland is desperate to avoid having to pay a politically incendiary 3.1 billion euros a year until 2023 to service the notes issued to underwrite Anglo and has been in talks for some 18 months.
(Editing by Ruth Pitchford)

Scortho

Vladimir Kurtains wrote: »

What leaked was the existence of the plan to liquidate Anglo. It doesn't seem the Hall case had anything to do with it and it really makes not difference to it.

Exactly. I said earlier that my thinking was on the hall case being today, but when it was mentioned that a creditor could liquidate them this morning (on the basis of the rumours) and the potential liabilities that this opened the state up to, it made more sense as to why they needed to rush the legislation through

antoobrien

michael999999 wrote: »

Where the hell are our public broascaster tonight?

Once again on what could be another monumental night in Irelands history, RTE can't even be bothered to bring us live coverage from the Dail!

It was on RTE news now - which you'd have access to if you had soarview.

Sand

Scofflaw wrote: »

What? How does it move it to the ECB? How could it move it to the ECB? It moves it to the CBI, which is an arm of the State, from the government, which is an arm of the State. And the whole point of the ECB negotiations was that even though the debt was technically to the CBI all along, and remains so, the ECB wouldn't accept it being written off!

The CBI might be an arm of the state, but it is no more an arm of the government than the judiciary is. The CBI is an independent, component part of the ECB.

The situation that has changed is that the Irish state owed the promissory note funds to the IRBC. Now the middle man of the IRBC has been removed and the money is owed directly to the ECB. What was yesterday politically and legally difficult (Ireland defaulting on the IRBC, referring the ECB to take up the matter with the IRBC and introducing some legislation regarding the IRBC to burn creditors) is now politically and legally impossible which massively strengthens the ECBs hand because it now has the Irish government directly by the collar, rather than a dead bank called the IRBC.

The ECB played its hand very well - one little leak to Reuters (not the Irish Times or Independant or RTE etc...) and the Irish government were bounced into a disastrous move.

andrew

Here's a summary of all the new about this (not written by me).

The Irish Times reports emergency legislation to allow for the immediate liquidation of IBRC passed all stages of the Oireachtas and was signed into law early this morning by President Michael D Higgins [Full article (i)]. The paper reports liquidators will be appointed to IBRC, following the introduction of emergency legislation in the Dáil shortly after midnight by Minister for Finance Michael Noonan. The legislation was drafted as part of a deal with the ECB that will result in a major improvement in the terms of Ireland's bank debt. The ECB's governing council will discuss the deal today at its monthly meeting in Frankfurt [Full article (ii)]. Separately, the paper writes: ‘The surprise announcement of the Government's decision to liquidate State-owned Irish Bank Resolution Corporation, the undertaker bank burying the corpses of Anglo and Irish Nationwide over time, was made to reduce the annual cost of the country's most diseased lenders. It is estimated that the move could shave about €1 billion off the yearly bill.’ [Full article (iii) ]

The Irish Times reports key details and the reasons behind the Irish Bank Resolution Corporation Bill 2013 were published late last night. The Bill is designed to ‘help address the continuing serious disturbance in the economy of the State’ as well as to ‘protect the interests of taxpayers’. [Full article iv)]

The Irish Times reports that Noonan said he took immediate action to secure the stability of the former Anglo Irish Bank and its assets of almost €14bn on behalf of the State, once information about its proposed liquidation became public. Noonan said all employee contracts would be terminated on the winding up of the bank. He said however the majority of the staff would be rehired for the orderly liquidation ‘on such terms and for such duration as may be determined by the special liquidators’ [Full article (v)]. The paper adds that Ireland's long campaign for bank debt relief took an unexpected turn last evening as word emerged in Leinster House that the Government was preparing emergency legislation to liquidate IBRC. [Full article (vi)]

The Irish Times reports Michael Noonan disclosed in the Seanad that the legislation had been prepared some months ago and that KPMG had been on standby for months to step in at short notice in the event of a leak such as the one that happened yesterday. He said there had been several ‘scares’ in recent months with concerns about ‘substantial leaks’ that might have had an adverse impact on the assets of IBRC. [Full article (vii)]

The Irish Times reports the main opposition parties have said the success or otherwise of the Government's deal with the ECB over the €31bn promissory notes would depend on a significant reduction of the burden of the debt on the taxpayer. [Full article (viii)]

The Irish Times describes the steps involved in a liquidation, including the order in which creditors are paid [Full article (ix)]. The paper also carries a Q&A on the promissory notes. [Full article (x)]

The Irish Times reports the general secretary of the IBOA expressed fears that more than 1,000 employees at IBRC would become ‘collateral damage’ as the Government seeks to secure a deal on the country's bank debt [Full article (xi)]. The Irish Times separately reports Noonan has expressed confidence the majority of employees at IBRC will be re-employed by the liquidator or NAMA. [Full article (xii)]

The Irish Independent reports that the crucial deal to ease our crippling bank debt by billions of euro hangs in the balance as the Government scrambles to salvage an agreement with the ECB. The paper says that the Coalition was left red-faced when yet another promised deal on Anglo bank debt dramatically stalled at the eleventh hour. However, after a day of high drama, the Finance Minister last night brought emergency legislation to the Dáil to liquidate the former Anglo Irish Bank [Full article (xiii)]. An article in the Irish Independent online suggests that preparations to liquidate the former Anglo-Irish Bank had been under way months ago, Finance Minister Michael Noonan insisted in the early hours of this morning, admitting the Government nearly had to make the dramatic move to wind it up on several occasions in the last few months, as word of the top-secret plans almost leaked out. [Full report (xiv)]

The Irish Examiner reports the Government is hoping the winding up of IBRC will be ‘very advantageous’ but a lot of questions still have to be answered after the shock move was announced during a frantic day yesterday. The Governor of the Central Bank of Ireland, Patrick Honohan, held talks in Frankfurt with his counterparts and ECB banking chiefs over plans to dispose of the toxic lender [Full article (xv)]. In a separate piece, the Irish Examiner reports opposition parties and bank workers reacted with frustration and concern last night, complaining of being left in the dark after the Government was forced to move quickly to liquidate IBRC. Members of the Oireachtas were told only to be available for a late debate relating to the bust bank. Others were learning of developments through social media. [Full article (xvi)]

In an opinion piece in the Irish Examiner, John Walsh writes that, in what looks increasingly like a game of high-stakes poker, the Government has finally liquidated Ireland's toxic bank in a bid to secure agreement from the ECB on a restructuring deal on the €3.lbn in promissory notes. But so far, Frankfurt has not said either yea or nay. Both Coalition parties had publicly committed to not paying the €3.1bn promissory note at the end of March. It now looks as if they have kept their promise to the electorate. [Full article (xvii)]

The FT reports that an attempt by Ireland to ease its debt burden was in disarray on Thursday after the Government was forced to pass emergency legislation to liquidate Anglo Irish Bank, without having secured a key debt swap deal with the ECB. [Full article (xviii)]

The FT website reports Noonan said he ‘would have preferred to be introducing this bill in tandem with a finalised agreement with the ECB… but we had to move’. Noonan also said the ECB would consider Ireland’s proposal at its monthly meeting later today. [Full article (xix)]

The WSJ online reports that Ireland's lawmakers have voted to dissolve one of the country's ‘bad banks’ in an emergency measure designed to pave the way for a new debt-repayment deal with the European Central Bank. Lawmakers in both chambers of Ireland's parliament overwhelmingly voted to liquidate the Irish Bank Resolution Corp. [Full report (xx)]

RTE online reports that Noonan said the leaking of the plan to liquidate IBRC forced the Government to legislate for its winding up. [Full report (xxi)] It also reports that the the Governing Council of the ECB will resume its discussions on the Government's plan for IBRC at a meeting in Frankfurt this morning. It is expected that ECB President Mario Draghi will give a statement on the matter this afternoon at his monthly news conference [Full report (xxii)]. RTE is also providing rolling updates (xxiii) .

---

i) http://www.irishtimes.com/newspaper/breaking/2013/0207/breaking1.html

ii) http://www.irishtimes.com/newspaper/frontpage/2013/0207/1224329746687.html

iii) http://www.irishtimes.com/newspaper/ireland/2013/0207/1224329744736.html

iv) http://www.irishtimes.com/newspaper/ireland/2013/0207/1224329746535.html

v) http://www.irishtimes.com/newspaper/ireland/2013/0207/1224329746563.html?via=rel

vi) http://www.irishtimes.com/newspaper/ireland/2013/0207/1224329745751.html

vii) http://www.irishtimes.com/newspaper/breaking/2013/0207/breaking1.html

viii) http://www.irishtimes.com/newspaper/ireland/2013/0207/1224329745767.html

ix) http://www.irishtimes.com/newspaper/ireland/2013/0207/1224329746547.html

x) http://www.irishtimes.com/newspaper/ireland/2013/0207/1224329744676.html

xi) http://www.irishtimes.com/newspaper/ireland/2013/0207/1224329746559.html

xii) http://www.irishtimes.com/newspaper/breaking/2013/0207/breaking8.html

xiii) http://www.independent.ie/business/irish/night-of-drama-as-2bn-ecb-debt-deal-unravels-29053699.html

xiv) http://www.independent.ie/business/irish/anglo-liquidation-planned-for-months-says-noonan-29054078.html


xv) http://www.irishexaminer.com/business/commission-will-help-euro-survive-221910.html

xvi) http://www.irishexaminer.com/ireland/opposition-bank-staff-left-in-dark-about-ibrc-plan-221888.html

xvii) http://www.irishexaminer.com/ireland/playing-a-high-stakes-game-of-poker-221887.html

xviii) http://www.ft.com/intl/cms/s/0/926f3354-7081-11e2-a2cf-00144feab49a.html#axzz2KCSXFt7n

xix) http://ftalphaville.ft.com/2013/02/07/1375412/the-6am-cut-london-217/

xx) http://online.wsj.com/article/SB10001424127887324590904578289231582746880.html?mod=WSJEurope_hpp_LEFTTopStories

xi) http://www.rte.ie/news/2013/0207/366563-action-taken-to-secure-ibrc-assets-noonan/

xii) http://www.rte.ie/news/2013/0207/366574-ibrc-ecb-promissory-note/

xiii) http://www.rte.ie/news/2013/0207/366575-live-ibrc-bank-ecb/

antoobrien

Sand wrote: »

The CBI might be an arm of the state, but it is no more an arm of the government than the judiciary is. The CBI is an independent, component part of the ECB.

Yesterday morning: IBRC owe CBI €32bn paid for via promissory notes.
Last night: IBRC liquidated, asset management to be done by NAMA
This morning: NAMA owe CBI value of PNs to be paid via bonds.

Change: none - one government vehicle (NAMA) still owes another government vehicle (CBI, which is a member of the ECB) €32bn.

antoobrien

Eligible deposit holders will be paid up to the €100,000 limit.

The Central Bank has moved to reassure remaining IBRC deposit-holders they will be paid under the liquidation programme arranged last night and into the early hours of today.

"The Central Bank will arrange the repayment of duly verified and eligible deposits, up to a limit of €100,000 per person, to eligible depositors at IBRC," it said.

"Depositors do not need to take any action; the Central Bank will make payments directly by cheque where applicable."

Money is expected to be paid out over the coming weeks.

Emergency legislation to liquidate the former Anglo Irish Bank was rushed through the Dáil overnight, ahead of an expected announcement on bank debt deal for Ireland today.

Sponge Bob

Draghi was to deal with other issues at this ECB meeting, notably the rise in the € vs the $ and other currencies.

Despite the rather disorderly looking ructions in the Dáil today the € rose again this morning.

antoobrien

Sponge Bob wrote: »

Draghi was to deal with other issues at this ECB meeting, notably the rise in the € vs the $ and other currencies.

Despite the rather disorderly looking ructions in the Dáil today the € rose again this morning.

Sounds about right, €/$ has been generally going up since the new year. Any moves that are perceived to make European debt more stable (whether or not it happens remains to be seen) will increase the strength of the € vs US$.

View

Just to clarify one issue, the CBI is NOT "part of the ECB" as some posters have said, hence monies owed to it (via the promissory notes) are not "money owed to the ECB". The shareholder of the CBI is the Government (i.e. ultimately the Irish tax-payer).

The CBI IS part of the ESCB which is the ECB + the central banks of ALL the member states (However, just to confuse matters, the relevant part of the ESCB is the "Eurosystem" - the Eurozone part of it - as the non-Euro central banks don't participate in the ESCB on anything important).

Obviously, the ECB is going to be really concerned at anyone proposing to leave part of the ESCB with a serious financial problem. But, let's face it, the notion we were going to leave the CBI facing financial disaster was never a runner.

Morrisseeee

Alert, possible stupid Q, but if the vote hadn't went through, who would have done the asset-stripping ? who owned the assets yesterday, who owns them today & what's the difference ?
/confused.com

Scofflaw

Sand wrote: »

The CBI might be an arm of the state, but it is no more an arm of the government than the judiciary is. The CBI is an independent, component part of the ECB.

The situation that has changed is that the Irish state owed the promissory note funds to the IRBC. Now the middle man of the IRBC has been removed and the money is owed directly to the ECB. What was yesterday politically and legally difficult (Ireland defaulting on the IRBC, referring the ECB to take up the matter with the IRBC and introducing some legislation regarding the IRBC to burn creditors) is now politically and legally impossible which massively strengthens the ECBs hand because it now has the Irish government directly by the collar, rather than a dead bank called the IRBC.

The ECB played its hand very well - one little leak to Reuters (not the Irish Times or Independant or RTE etc...) and the Irish government were bounced into a disastrous move.

No, I don't see that any of that makes the slightest bit of difference. Defaulting on the promissory notes and telling the ECB to "go sue IBRC" isn't even slightly a serious proposition, since IBRC was 100% state-owned - not only that, but a default on the promissory notes would in any case have collapsed IBRC, leaving the CBI holding the notes.

People have made a lot about IBRC being in the middle, making out that this makes the promissory notes something other than government debt, but that's always been rubbish. The notes are government debt, nothing else - that's why they appear on the general government debt.

So nothing has been made impossible here that was previously possible - what was previously not really possible is still not really possible, while what was not previously possible may have become possible.

cordially,
Scofflaw

Scofflaw

Morrisseeee wrote: »

Alert, possible stupid Q, but if the vote hadn't went through, who would have done the asset-stripping ? who owned the assets yesterday, who owns them today & what's the difference ?
/confused.com

That I admit I don't know. I don't see how last night's actions protected IBRC's assets at all - I'm not sure who could have done what to them this morning, or how what was done last night prevented them doing it.

cordially,
Scofflaw

antoobrien

Scofflaw wrote: »

That I admit I don't know. I don't see how last night's actions protected IBRC's assets at all - I'm not sure who could have done what to them this morning, or how what was done last night prevented them doing it.

cordially,
Scofflaw

IBRC has been placed into liquidation hasn't it? That prevents a food fight for creditors trying to get all their assets out and gives the government a chance to make it orderly.

Sponge Bob

Namawinelake. What actually happened last night???

http://namawinelake.wordpress.com/2013/02/07/the-ibrc-scheme/

Bits_n_Bobs

Scofflaw wrote: »

So nothing has been made impossible here that was previously possible - what was previously not really possible is still not really possible, while what was not previously possible may have become possible.

cordially,
Scofflaw

Seriously - you DID write Humphreys dialogue in Yes Minister, didn't you?

Scofflaw

Bits_n_Bobs wrote: »

Seriously - you DID write Humphreys dialogue in Yes Minister, didn't you?

I can neither confirm nor deny the question you're asking.

cordially,
Scofflaw

Scofflaw

antoobrien wrote: »

IBRC has been placed into liquidation hasn't it? That prevents a food fight for creditors trying to get all their assets out and gives the government a chance to make it orderly.

I can understand that one, but that's protection of IBRC's liabilities (the creditors' assets). The alternative claim - made by Gurdgiev, and actually stated as a reason by Noonan - was that it was about protecting IBRC's assets from market movements, which makes no real sense to me in the light of the legislation itself, which does nothing, as far as I can see, to protect IBRC's assets.

Admittedly, possibly I misread Noonan, and Gurdgiev was talking rubbish. This is Noonan:

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.

I have no idea how what Noonan did "secured....the value of its assets".

cordially,
Scofflaw

Bits_n_Bobs

Presumably the IBRC assets consist pretty much solely of loans?

Sponge Bob

Scofflaw wrote: »

I have no idea how what Noonan did "secured....the value of its assets".

cordially,
Scofflaw

Neither do I but today,.


http://www.irishtimes.com/newspaper/breaking/2013/0207/breaking25.html

Four TDs - Clare Daly, Luke Flanagan, Mick Wallace and Joan Collins - want to be joined to businessman David Hall's challenge to the Government's payment of promissory notes, including a €3 billion payment scheduled for late next month, the Supreme Court heard today.
The State contends any such challenge may become pointless if the European Central Bank gives the go ahead this afternoon to the Government's move to liquidate the bank as part of its plan to defer payment of the promissory notes over a longer period.

I am not at all sure of the states contention in this case. McDowell was in fine form and taking no crap from them pesky Supremes. He could be Chief Justice yet.

The State also submitted, "under no circumstances", could the Supreme Court address the issue of the constitutionality of the legislation under which the promissory note payments were made.

Sand

Interesting that despite the claims of an imminent deal with the ECB last night, the ECB have now apparently pulled back and now need more time to consider their options. The Irish have been played.

antoobrien wrote: »

Yesterday morning: IBRC owe CBI €32bn paid for via promissory notes.
Last night: IBRC liquidated, asset management to be done by NAMA
This morning: NAMA owe CBI value of PNs to be paid via bonds.

Change: none - one government vehicle (NAMA) still owes another government vehicle (CBI, which is a member of the ECB) €32bn.

The CBI is not a government vehicle. It is a component part of the ECB so its not one government vehicle owing another.

NAMA already holds a loan and portfolio assets that the IRBC did not - you could previously liquidate the IRBC and leave all legal/political issues localized in the ruins of a dead bank. Which is what the government have just done by overruling peoples property rights, sacking all the employees without notice and preventing any creditor from taking a case. I think NAMA was a disastrous idea (and I remember the usual suspects being as puzzled then as they are now) but NAMA is practically running the country - it cant be parceled away like the IRBC could.

NAMA bonds are not promissory notes

@Scofflaw

No, I don't see that any of that makes the slightest bit of difference. Defaulting on the promissory notes and telling the ECB to "go sue IBRC" isn't even slightly a serious proposition, since IBRC was 100% state-owned - not only that, but a default on the promissory notes would in any case have collapsed IBRC, leaving the CBI holding the notes.

So what? The government has just passed legislation overruling property rights "for the common good" and preventing creditors - including the employees sacked with no notice - from making their own application to wind up the IRBC. The government owed the promissory notes to the IRBC. The ELA liability is the IRBCs problem. It would be the IRBC defaulting on the ELA and the CBI would simply have to accept the loss. Politically and legally difficult, sure but not impossible.