So our savings are next for the chop!

PRAF

KyussBishop wrote: »

The problem is, there is far too much money to be made by keeping the banks opaque, and then having them pump up bubbles (such as property bubbles) with excess credit again, once the crisis has subsided (probably a decade or more away for the full effects of it to subside); enormous amounts of money have been made in doing this, so I don't think consumers are going to have much capability of pushing reform there (we certainly haven't seen any thus far, and I have absolutely zero faith a proper widescale investigation and prosecutions will be undertaken).

There is every indication that the same mess will happen again in the future really, because there is zero reform, and even now there's still an effort to keep property prices propped up; when the prices bottom out, investors will flood the market with cash in hand to snap up property, and they are going to want to see the property-bubble-mill rolling again to get a return on their investments, and they have more access to political power (i.e. money) than the wider population.

If we start seeing investigations and people actually going to jail, I'd have more hope of seeing reform, but right now there is none.

Also worth mentioning, that our countries position as a lax-regulation financial hub, goes hand-in-hand with lax regulation in our national banks as well; that is a huge financial lobby group that will be dead-set against any kind of regulatory reform, who again have far more political clout than the people.

Good point. I also wonder how well we would actually be protected from a future property price bubble.

I think (and assume) that we do have some additional banking rules and regulations in place to prevent a reoccurence. I do think that the personal insolvency laws will prevent some of the excessive lending practices of the past. I also know that we now have a more invasive regulatory inspection regime. The govt has also reduced a lot of the property incentives and is now beginning to tax property.

All of the above should help to mitigate another hugely damaging property price bubble. However, I don't think they have gone far enough yet. One of the first things I would like to see addressed is having much greater penalties in place for poor governance / sterwardship of financial institutions (inlcuding the threat of jail).

nowanathiest

the blanket government guarantee on ALL deposits in Irish Banks was lifted today. Only deposits under €100,000 are now guaranteed in Irish Banks. Co-incidence in the same week as the Cyprus events? I doubt it.

If the Trokia were now to introduce a "tax" on deposits over €100,000 in Ireland, Spain, Greece, Portugal & Italy simultaneously at 30 or 40% it would solve a lot of their problems in one fell swoop. It's not stealing of course, because the depositors would be given shares in the banks in exchange for the case.

amacca

nowanathiest wrote: »

It's not stealing of course, because the depositors would be given shares in the banks in exchange for the case.

No, god no its not stealing...you would simply wake up with 30 or 40% less liquid assets in exchange for magic beans.

I for one would be delighted about that........now I just wonder where would I put my beanstalk?

nowanathiest

amacca wrote: »

No, god no its not stealing...you would simply wake up with 30 or 40% less liquid assets in exchange for magic beans.

I for one would be delighted about that........now I just wonder where would I put my beanstalk?

Brilliant, thank you. Haven't laughed so hard in ages!!! and ohhhhh so true...........do you think this was Johnny Ronan's last thought before he fell asleep last night??

Scofflaw

nowanathiest wrote: »

the blanket government guarantee on ALL deposits in Irish Banks was lifted today. Only deposits under €100,000 are now guaranteed in Irish Banks. Co-incidence in the same week as the Cyprus events? I doubt it.

Poor timing, possibly, but that guarantee would not have covered you against a deposit levy in the first place.

nowanathiest wrote: »

If the Trokia were now to introduce a "tax" on deposits over €100,000 in Ireland, Spain, Greece, Portugal & Italy simultaneously at 30 or 40% it would solve a lot of their problems in one fell swoop. It's not stealing of course, because the depositors would be given shares in the banks in exchange for the case.

I'm not sure how that would deal with "the troika's problems", given they're not the ones worrying about money so much. Nor could they institute any such tax off their own bat - the countries concerned would have to do so. And while a deposit levy might sort out a bit of Ireland's debt, there's no sign that the Irish government would want to go down that road at all.

cordially,
Scofflaw

Mr.Micro

nowanathiest wrote: »

the blanket government guarantee on ALL deposits in Irish Banks was lifted today. Only deposits under €100,000 are now guaranteed in Irish Banks. Co-incidence in the same week as the Cyprus events? I doubt it.

If the Trokia were now to introduce a "tax" on deposits over €100,000 in Ireland, Spain, Greece, Portugal & Italy simultaneously at 30 or 40% it would solve a lot of their problems in one fell swoop. It's not stealing of course, because the depositors would be given shares in the banks in exchange for the case.

If the depositors wanted their money instead of these shares, then is it still not stealing? Any bank is risky now, there is no safe bank at all IMO. In future then its the customers who will pay for the bank if it fails, and will hope the so called financial regulators will do their jobs to keep the banks in line. Deposits will suffer now, that they may be open targets. It will be interesting as to what wheezes the banks invent to make up for the lack of this cash base? I hope the regulators are up to speed, lol.

Scofflaw

Mr.Micro wrote: »

If the depositors wanted their money instead of these shares, then is it still not stealing? Any bank is risky now, there is no safe bank at all IMO. In future then its the customers who will pay for the bank if it fails, and will hope the so called financial regulators will do their jobs to keep the banks in line. Deposits will suffer now, that they may be open targets. It will be interesting as to what wheezes the banks invent to make up for the lack of this cash base? I hope the regulators are up to speed, lol.

Again, I can't really see that as such a bad thing. Is there some reason we need the banks to be absolutely stuffed with cash and throwing out loans like confetti?

cordially,
Scofflaw

Mr.Micro

Scofflaw wrote: »

Again, I can't really see that as such a bad thing. Is there some reason we need the banks to be absolutely stuffed with cash and throwing out loans like confetti?

cordially,
Scofflaw

No, but on a simple level alone depositors could earn interest on their money/savings and the banks too. Old fashioned but still worthy IMO. The banks loaned out in recent times despite not having even remotely enough assets or deposits or stuffed with cash, so cash or no cash the banks may still do as they please and dream up other schemes.

Icepick

What actual laws that would prevent a banking crisis have actually been passed since '08? I mean laws that would make mortgages above 80% illegal.

LoveCoke

NIMAN wrote: »

What about the countless surveys telling us how many people have no disposable income after bills are paid. We last heard something like 1.7 million people have less than €50 (or was it €100) left after bills are paid.
.

that hardly means they have no savings but i agree they are unlikely to have 100k

nowanathiest

Scofflaw wrote: »

Poor timing, possibly, but that guarantee would not have covered you against a deposit levy in the first place.



I'm not sure how that would deal with "the troika's problems", given they're not the ones worrying about money so much. Nor could they institute any such tax off their own bat - the countries concerned would have to do so. And while a deposit levy might sort out a bit of Ireland's debt, there's no sign that the Irish government would want to go down that road at all.

cordially,
Scofflaw

Scofflaw, with the greatest of respect, you seem a little niaive.......do you think it was the Cypriot representatives who suggested the depositors "tax"? of course it wasn't, and they didn't have any choice in instituting this decision, given that their backs were against the wall, with a deadline of Monday last given by the Troika to "take it or leave it" with regard to their bail out loan.

In the face of a worsening financial situation (day by day presently) the Troika must consider all options to keep the Euro afloat now, and individual governments will implement them no matter how unpalatable, because like all debtors they will have no other options......where else can they go for the next top up loan which will enevitably be required? You seem to think that individual countries have options here.......they do not, there are no options other then ever increasing austerity measures or "cash grab" manouveurs.

Scofflaw

nowanathiest wrote: »

Scofflaw, with the greatest of respect, you seem a little niaive....

Dear me. I shall adjust my cynicism levels accordingly.

nowanathiest wrote: »

...do you think it was the Cypriot representatives who suggested the depositors "tax"? of course it wasn't, and they didn't have any choice in instituting this decision, given that their backs were against the wall, with a deadline of Monday last given by the Troika to "take it or leave it" with regard to their bail out loan.

Of course they had a choice - to reject the loan. It's interesting how many people don't see that as a choice.

nowanathiest wrote: »

In the face of a worsening financial situation (day by day presently) the Troika must consider all options to keep the Euro afloat now, and individual governments will implement them no matter how unpalatable, because like all debtors they will have no other options......where else can they go for the next top up loan which will enevitably be required? You seem to think that individual countries have options here.......they do not, there are no options other then ever increasing austerity measures or "cash grab" manouveurs.

There are a lot of different options - at least as many as there are forms of taxation, for a start.

Ireland, despite a bailout, took money neither from depositors nor from senior bondholders - instead, we made up the difference from the NPRF and with new taxation. Even Cyprus isn't using just the Laiki large depositors to fund their portion.

cordially,
Scofflaw

sock puppet

Icepick wrote: »

What actual laws that would prevent a banking crisis have actually been passed since '08? I mean laws that would make mortgages above 80% illegal.

There's been Basel III (though the deadline for implementation has been extended to 2019). Not a law but banks will have to hold more capital, which would reduce their lending capacity. But then we know how stunningly successful Basel II was in preventing financial crises...

hmmm

Icepick wrote: »

What actual laws that would prevent a banking crisis have actually been passed since '08? I mean laws that would make mortgages above 80% illegal.

F**k all as far as I can see. And Irish people are only gagging to get another property bubble going given the chance.

Scofflaw

hmmm wrote: »

F**k all as far as I can see. And Irish people are only gagging to get another property bubble going given the chance.

To be fair, I think the Irish Central Bank are thinking of various regulatory ways of helping prevent another property bubble. Whether they've gone past thinking about them, or ever will, I don't know.

Following the crisis, there has been much work on the development of macro-prudential tools that reduce the likelihood of property-driven financial crises, and that reduce or limit their consequences if they do occur. As the Central Bank is the macro-prudential authority in Ireland,[21] the bank is following this debate closely.

What are macro-prudential tools? The IMF (2011c) proposes two criteria. First, they explicitly and specifically target the build-up of risk across the financial system – systemic risk – as the bubble grows. Second, they are controlled by the macro-prudential authority.[22] However, few macro-prudential tools have been used systematically and there is little practical experience for policy makers to rely on.[23] Nonetheless, several tools that target real estate lending have been adopted in a small number of economies.[24] They can be grouped in three broad categories.[25]

The first category relates to capital requirements on property lending. For instance, capital requirements for mortgages for buy-to-let properties could be increased relative to those for primary dwellings. This would tend to reduce this type of lending, which appears to be associated with greater credit risk, and ensure that banks’ resilience is bolstered by the additional capital buffer.[26]

Second, dynamic provisioning requires banks to hold provisions against expected losses due to credit risks. This tool has been implemented in Spain, where banks are required to build up buffers against performing loans in an upturn, which can then be drawn down in a recession.[27] This naturally slows bank lending in the boom phase and leaves banks in a better position to withstand loan losses in a crash.

Third, limits on loan-to-value (LTV) and loan-to-income (LTI) ratios target the creditworthiness of borrowers more explicitly. While LTV limits help ensure that the underlying collateral – the property – is sufficient to cover the loan, were the borrower to default, LTI limits enhance the creditworthiness of borrowers by limiting their repayment burden. Tightening these ratios in the as the boom gets underway raises the ability of the financial system to cope if the bubble bursts. Their potential use in Ireland warrants further reflection.[28]

It is sometimes argued that tighter monetary policy – higher interest rates – is the appropriate way to deal with property bubbles. However, monetary policy is a blunt tool that affects all lending, risky and less risky. In contrast, macro prudential tools can be targeted narrowly on the most risky borrowers. Such a sharp focus may lower the overall cost of preventive action.

The section quoted is most of the way to the bottom, under the heading "Macro-prudential policy".

http://www.centralbank.ie/press-area/speeches/Pages/SpeechbyDeputyGovernorStefanGerlachonHousingMarketsandFinancialStability.aspx

Certainly the Irish media - particularly the Indo stable - are absolute property shills.

cordially,
Scofflaw

Bob_Latchford

http://en.wikipedia.org/wiki/Macroeconomic_Imbalance_Procedure

http://ec.europa.eu/economy_finance/economic_governance/macroeconomic_imbalance_procedure/index_en.htm

has something related to housing, I dont know how effective these will be at preventing bubbles though

Amberman

there are a plethora of ways to hold fully reserved, instantly accessible cash outside the banking system. Banks arent the only game in town.

LoveCoke

Amberman wrote: »

there are a plethora of ways to hold fully reserved, instantly accessible cash outside the banking system. Banks arent the only game in town.

such as?

Phoebas

LoveCoke wrote: »

such as?

Under the mattress.

clairefontaine

Cavehill Red wrote: »

Revolutionary thought here - but what about holding bank officials personally liable too?
I don't mean tellers - I mean directors of the board, CEO, CFO, etc. Let's face it, there's little sympathy these days for someone who did something generally perceived as being of low risk - ie buying a house for market price with a mortgage. The attitude tends to be - your bad luck, you did the deal, suck it up and pay your debts. They are considered to be held responsible for their own poor financial decision.
Well, where's the moral hazard for top bankers? How come they get to stay in their mansions, living it up on vast pensions and pay-offs while mug taxpayers and depositors get hosed for their poor decision making?

Yes I have often wondered this too and why there is so much obfuscation and so little transparency.

The only answer I can come up with is they are in the pockets of the politicians and there are dealings and kickbacks none of us know about.

Amberman

Under the mattress, yes. PayPal, money bookers etc spring to mind, foreign deposit accounts in strong banking systems like chile, hong kong etc are also good alternatives to the European banking system... An etrade account or similar...theres loads of ways to get out of dodge before its too late.

I think Cyprus has shifted many europeans from focusing on return ON savings, to return OF savings.

Bob_Latchford

What if paypal deposited in a european banking system maybe even cyprus?

LoveCoke

Amberman wrote: »

Under the mattress, yes. PayPal, money bookers etc spring to mind, foreign deposit accounts in strong banking systems like chile, hong kong etc are also good alternatives to the European banking system... An etrade account or similar...theres loads of ways to get out of dodge before its too late.

who knows how secure any of them are. the mattress is vulnerable to robbery

Amberman

Bob_Latchford wrote: »

What if paypal deposited in a european banking system maybe even cyprus?

Then the company takes the hit...not you. They are likely depositors in money market funds.

Amberman

LoveCoke wrote: »

who knows how secure any of them are. the mattress is vulnerable to robbery

I'd say a European bank account is more vulnerable to robbery. I'd also say that Paypal is ultra secure. Someone hacked my account 4 years ago and transferred $8k. I had the money back that day.

LoveCoke

Amberman wrote: »

I'd say a European bank account is more vulnerable to robbery. I'd also say that Paypal is ultra secure. Someone hacked my account 4 years ago and transferred $8k. I had the money back that day.

Did Paypal refund you or did theytrack the hacker?

nowanathiest

Source: silverdoctors.com http://silverdoctors.com/fdic-bank-of-england-create-resolution-authority-for-unlimited-cyprus-style-bail-ins-for-tbtf-banks/#more-24140

BREAKING SD ALERT*

On Wednesday, SD broke the news that Canada had buried a provision for depositor bail-ins for systemically important banks deep inside its official 2013 budget, and stated that the Cypriot bail-in was not just a one-off event, but is in fact the new collapse template for the entire Western banking system.

We suspected that the same policy change had been made by the US & the UK, but was simply yet to be discovered, buried in the website of a Federal agency.

We suspected correctly…

[MOD]Please don't quote articles in full, and please make it clear when you're quoting, thanks.[/MOD]

Amberman

LoveCoke wrote: »

Did Paypal refund you or did theytrack the hacker?

They tracked the hacker and reversed the transfer. They actually notified me about a suspicious transaction in minutes of it happening.

nowanathiest

Bomb from Brussels: Cyprus Model May Guide Future Bank Bailouts

http://www.spiegel.de/international/europe/cyprus-bank-bailout-model-has-increasing-numbers-of-adherents-in-eu-a-891849.html

Nate--IRL--

nowanathiest wrote: »

Bomb from Brussels: Cyprus Model May Guide Future Bank Bailouts

http://www.spiegel.de/international/europe/cyprus-bank-bailout-model-has-increasing-numbers-of-adherents-in-eu-a-891849.html

Good, it seems the consensus is shifting toward Investors and shareholders taking the pain, instead of the taxpayer. Proper order.

Nate

Scofflaw

nowanathiest wrote: »

Bomb from Brussels: Cyprus Model May Guide Future Bank Bailouts

http://www.spiegel.de/international/europe/cyprus-bank-bailout-model-has-increasing-numbers-of-adherents-in-eu-a-891849.html

They're just reprising Djisselbloem, though, and writing an article purely based on his comments, as opposed to anything else that's been said.

cordially,
Scofflaw

Amberman

Nate--IRL-- wrote: »

Good, it seems the consensus is shifting toward Investors and shareholders taking the pain, instead of the taxpayer. Proper order.

Nate

Well said. Why should tax payers be on the hook for private businesses? Should also put the banking system back in its place as only a moron would deposit into a risky bank.

sock puppet

I though Der Spiegel was a respectable publication? As you'd have to be a fucking retard to think that shareholders have been protected in the Bankia bailout.

Nate--IRL--

sock puppet wrote: »

I though Der Spiegel was a respectable publication? As you'd have to be a fucking retard to think that shareholders have been protected in the Bankia bailout.

Where did it say that?

Nate

sock puppet

Nate--IRL-- wrote: »

Where did it say that?

Nate

Failing banks, such as Germany's Hypo Real Estate (HRE) or Spain's Bankia, were kept on artificial life support while shareholders and creditors were spared

The only explanation I can think of is that the writer doesn't know what a shareholder is.

Dampintheattic

Powers that be, are deliberately creating unease, in the ranks of savers right across Euroland. They hope that savers, will in the light of unease about the security of their deposits, decide to spend it before it goes up in smoke.

Scofflaw

Dampintheattic wrote: »

Powers that be, are deliberately creating unease, in the ranks of savers right across Euroland. They hope that savers, will in the light of unease about the security of their deposits, decide to spend it before it goes up in smoke.

...because obviously they're going to spend their savings rather than moving them somewhere they consider secure, or splitting them up across banks.

amused,
Scofflaw

Dampintheattic

Scofflaw wrote: »

...because obviously they're going to spend their savings rather than moving them somewhere they consider secure, or splitting them up across banks.

amused,
Scofflaw

because "obviously", not all punters are comfortable with the idea of or the mechanics of moving money across different accounts and different institutions.
Plus we have seen with own eyes, the entire banking system of an entire nation, shut down overnight. Capital controls and haircuts introduced, across all banks in the system.

No doubt, you personally are highly educated and versed in economics and money / wealth management. What is clear and "obvious", to you is not quite so clear to many Joe Citizens, with regard to spreading cash over different accounts and institutions.

Then again you know, a great many Joe Citizens, have woken up to the fact, that the financial system, has pretty much failed over the past number of years, despite being run, managed and supervised, by the informed, and educated managers and regulators.

Scofflaw

Dampintheattic wrote: »

because "obviously", not all punters are comfortable with the idea of or the mechanics of moving money across different accounts and different institutions.
Plus we have seen with own eyes, the entire banking system of an entire nation, shut down overnight. Capital controls and haircuts introduced, across all banks in the system.

No doubt, you personally are highly educated and versed in economics and money / wealth management. What is clear and "obvious", to you is not quite so clear to many Joe Citizens, with regard to spreading cash over different accounts and institutions.

Then again you know, a great many Joe Citizens, have woken up to the fact, that the financial system, has pretty much failed over the past number of years, despite being run, managed and supervised, by the informed, and educated managers and regulators.

If you have more than €100k in a bank, it probably is time to wake up and smell the coffee, certainly - but I think most people/companies with that much probably have done so.

Banking is not a risk-free exercise.

cordially,
Scofflaw

Amberman

Scofflaw wrote: »

...because obviously they're going to spend their savings rather than moving them somewhere they consider secure, or splitting them up across banks.

amused,
Scofflaw

Or get it out of the banking system all together.

Honestly, I think these Eurocrats are far too stupid to recognise the consequences of their actions. This is a royal screw up.

Scofflaw

Amberman wrote: »

Or get it out of the banking system all together.

Honestly, I think these Eurocrats are far too stupid to recognise the consequences of their actions. This is a royal screw up.

People have complained bitterly all the way through that banks have been saved at cost to the taxpayer, and are now complaining bitterly that they haven't been saved at a cost to depositors. But banks can't be saved without money coming from somewhere, and can't fail without costing somebody something.

Everybody wants everything to be a cost-free exercise.

cordially,
Scofflaw

Amberman

Scofflaw wrote: »

People have complained bitterly all the way through that banks have been saved at cost to the taxpayer, and are now complaining bitterly that they haven't been saved at a cost to depositors. But banks can't be saved without money coming from somewhere, and can't fail without costing somebody something.

Everybody wants everything to be a cost-free exercise.

cordially,
Scofflaw

I've been complaining bitterly that they've been saved at all...as you know. If foolish depositors get wiped out, so be it. They're highly unlikely to get wiped out twice. Public deposit insurance shouldn't exist, that way, crowdsourced bank ratings would spring up...(Reggie Middleton springs to mind) and weak a reckless banks would be starved of depositors until they changed their ways.

Bailouts don't have to happen. There are better ways.