Financial Crisis

[geysir]

Not exactly, you use models to predict this and the problems occur when the models don't correctly predict the number and magnitude of defaults.
What ever the models banks use to calculate risk,
the horses have bolted away from the restraints imposed by the models of predictions ages ago.
Even if you could try to make a case for that, at the very least then it would be about the criminal stupidity of a banking system that built its foundation of their risk/ loans policy on a little limited prediction model while at the same time ignoring the screams of all the alarm bells of prudent banking procedures being shattered.


You have Whoa, this is now liquidity risk, not credit risk, which is what you were discussing above.
I mentioned only one aspect of deregulation, specifically the deregulation to do with ratio of cash reserves held by banks/to savings on deposit, which you considered irrelevant.
Please note that in the U.S., while the reserve ratio for checking accounts is 10%, there are no reserve requirements on savings accounts and fixed deposits, thus theoretically allowing banks to create an infinite amount of money.
The cash reserve ratio has just but a part to play but it has significance. When a bank is not required to hold 20 % to 30% in cash/ liquid assets in reserve from a depositer then it will loan it out/ invest it elsewhere. A bank cannot loan out what it should be required to hold in reserve from a depositer.
A bank can lend out 100% of the money held on deposit, there is no reserve ratio imposed. In this case the money supply can increase indefinitely. The total money supply is even more than 10 times the total amount of cash printed by the government.
In 2006, when the Federal Reserve stopped publishing those M3 figures, there was roughly 700 billion US dollars of currency, i.e. bank notes and coins, in circulation ("real money", if you like) whereas the broad money supply, including checking accounts, fixed deposits, money market funds, etc., was 10 trillion dollars ("bank money"). Therefore, only 7% of the money in the USA is issued by the government and the rest is created by the banks. That is what makes a credit crunch in the society today such a dangerous thing and why it is so difficult for the government to contain it.
To have the banks circulating money is quite different from allowing banks to create 93% of all money in circulation.
In Australia, currency in circulation in 2007 was about AUD 40 billion, while the total money in banks etc. was AUD one trillion.
Speculation and take-over bids do not add any real wealth to the society.
The whole balancing act works until some speculation goes sour and loans cannot be paid
back. Then the whole house tumbles down.
The Banks make up the regulations to suit themselves but just need the blessing of a Regulator who has guidelines somewhere written in a complicated language. The same regulator who gave the Iceland banks in England a licence with triple A rating :). So you will have to forgive me if I dismiss the effectivness of current regulations process out of hand. In practice, it is absent with leave until the shít hits the fan. And this is just the so called regulated sector.


No, does not follow. A bank run will kill any bank, regardless of their loan profile
As I said, runs on bank happen (after certain circumstances) when trust goes.
What we have around the world, instead of banks collapsing, are Government bailouts. Since the bailout when the South Sea Bubble burst in England in 1720, up until today, all bailouts in history tend to be a way for the lower income people to subsidise the rich and protect their profits.
The limited liability of corporations is an insurance policy for the rich, which makes speculation a win-win for them. If the loss for the bank is too high, the government steps in and bails them out at the expense of ordinary people. In effect, what is in place is not capitalism. It is
socialism for the rich.


To date, its been fear of future credit losses that have caused liquidity issues, not actual credit losses
I don't go along that, or that if there was just less fear around then everything would start rolling again. Truly, that is a con.
This recession is evidence based, not fear based. Fear is a symptom, not the disease. Future credit losses are a reality, the fear of that happening is based on rational analysis.

Of course, this is just afaics now.
It´s probably much worse.
The troubles in the banking and stock market systems are only the beginning of economic problems

[OneRedArmy]

What ever the models banks use to calculate risk,
the horses have bolted away from the restraints imposed by the models of predictions ages ago.
Even if you could try to make a case for that, at the very least then it would be about the criminal stupidity of a banking system that built its foundation of their risk/ loans policy on a little limited prediction model while at the same time ignoring the screams of all the alarm bells of prudent banking procedures being shattered.Yes, the models didn't work, thats clear. But seriously, whats your point? You're going to have to do better than vague, sensationalist pronouncements like the emboldened above. Thats pure Joe Duffy.


I mentioned only one aspect of deregulation, specifically the deregulation to do with ratio of cash reserves held by banks/to savings on deposit, which you considered irrelevant.
Please note that in the U.S., while the reserve ratio for checking accounts is 10%, there are no reserve requirements on savings accounts and fixed deposits, thus theoretically allowing banks to create an infinite amount of money.

The cash reserve ratio has just but a part to play but it has significance. When a bank is not required to hold 20 % to 30% in cash/ liquid assets in reserve from a depositer then it will loan it out/ invest it elsewhere. A bank cannot loan out what it should be required to hold in reserve from a depositer.
A bank can lend out 100% of the money held on deposit, there is no reserve ratio imposed. In this case the money supply can increase indefinitely. The total money supply is even more than 10 times the total amount of cash printed by the government.
We live in Ireland and operate under EU rules that I quoted previously. You read a few pages on wikipedia which referenced Fed rules, which are not relevant here.

Please explain, in as much detail as you can, how European banks can create infinite amounts of money? Personally, I can't see it. If you could track it from monetary policy through to M0 that would be ideal.
I still maintain that loan, and therefore money supply growth, is bounded by regulatory capital rules (Basel II).


I don't go along that, or that if there was just less fear around then everything would start rolling again. Truly, that is a con.
This recession is evidence based, not fear based. Fear is a symptom, not the disease. Future credit losses are a reality, the fear of that happening is based on rational analysis.
Thats not what I said. I said the bank runs to date were caused by expectation of future credit losses. Those catastrophic losses had not YET crystallised in many of the instutitions which suffered liquidity problems. Thats a fact. I'm not arguing the recession isn't real, nor am I arguing that lending wasn't excessive. It clearly was. But by the same token I'm not throwing my hands up in the air and screaming "won't someone please think of the children" unless I can identify a better way of doing things.

There's no doubt requiring banks to hold more reserves would have reducing the likelihood and impact of the credit crunch, but it would obviously have impacted global growth significantly over the last 20 years. That is undeniable.

Therefore the rest of your argument is effectively anti-capitalist, which, whilst having merit, is purely theoretical unless someone can come up with an alternative. As I said earlier, capitalism by its nature is cyclical. I don't know why this seems to surprise people every time we enter a recession :confused:

I didn't see many people complaining during the good times.

[Stuttgart88]

The limited liability of corporations is an insurance policy for the rich, which makes speculation a win-win for them. If the loss for the bank is too high, the government steps in and bails them out at the expense of ordinary people. In effect, what is in place is not capitalism. It is socialism for the rich.
I largely agree with that. Would Goldman Sachs have behaved the same way if they still operated as a partnership with the partners on the hook when things go wrong?

[pete]

Irish Times (http://www.irishtimes.com/newspaper/breaking/2008/1106/breaking35.htm)



The Bank of England slashed borrowing costs today by 150 basis points to soften the blow of a sharp economic downturn. The cut took interest rates to 3 per cent.


Apparently the ECB has also dropped rates but by 0.5% down to 3.25%.

[John83]

...Since the bailout when the South Sea Bubble burst in England in 1720, up until today, all bailouts in history tend to be a way for the lower income people to subsidise the rich and protect their profits...
The alternative is something like what happened to Argentina a few years back, when the country becomes something of a minor hell for the lower and middle classes.

[OneRedArmy]

The market basically doesn't believe their [Irish banks] forward projections, particularly their ability to sustain high dividends.

Time will tell.


I'd be mildly surprised if we get to the end of this week without something coming out, very surprised if the Irish banking market looks the same at the end of October and absolutely shocked if haven't seen some change by Christmas.I made the above posts in mid-late Sept and I'm honestly surprised its taken so long for movement, which nowappears to be happening very quickly.

Its going to be a long weekend for some people in Dublin, looks out for gangs of pinstriped M&A bankers and Private Equity yanks roaming around!

Listened to the IBOA muppet on the radio this morning, he made the Siptu Aer Lingus reps seem like Ghandi, they've a real shock coming when the slash and burn asset strippers from the US takeover. The 10% wage claimed lodged by the IBOA a few months ago will be the last of their worries. I'd expect thousands of layoffs from top to bottom.

On the proposed mergers, I'm not sure putting the two big residential lenders (BoI and PTSB) and the two big commercial property lenders (AIB & Anglo) together is a particularly sensible choice, diversification surely would mean reversing these combinations?

Interesting week ahead in whats been a staggering year.

[pete]

On the proposed mergers, I'm not sure putting the two big residential lenders (BoI and PTSB) and the two big commercial property lenders (AIB & Anglo) together is a particularly sensible choice, diversification surely would mean reversing these combinations?

Interesting week ahead in whats been a staggering year.

Putting BoI, PTSB, AIB & Anglo into 2 new entities will destroy competition in the Irish market. Once you create those monsters cannot break them.

Not keen on government bailout but state taking preferencial shares seems a good alternative as the state is already stuck with deposit/loan guarantee so might actually make some money out of the deal. It is suggested state could get 8-12% interest on that investment.

Maybe Anglo should be allowed go bust as it has little retail business & remains can be carved up among the remaining banks.

[OneRedArmy]

Putting BoI, PTSB, AIB & Anglo into 2 new entities will destroy competition in the Irish market. Once you create those monsters cannot break them.

Not keen on government bailout but state taking preferencial shares seems a good alternative as the state is already stuck with deposit/loan guarantee so might actually make some money out of the deal. It is suggested state could get 8-12% interest on that investment.

Maybe Anglo should be allowed go bust as it has little retail business & remains can be carved up among the remaining banks.Agree on Anglo, no risk to depositors or of contagion so it just be left to fight for itself.

Re the Government participating, last I heard Carlyle and JC Flowers were doing the dealmaking and asked they Government if they wanted to get involved (and not the other way around).

Given the increase in spreads on Government debt and the catastrophic predictions on public borrowing with the fall in tax revenue, I really don't think the state can afford to put a whole lot in. Otherwise they'd have done it earlier.

[Student Mullet]

I have a question.

Instead of capitalising the banks, why doesn't the government capitalise the post office? Let them give the loans and treat the whole thing like a utility.

[BohsPartisan]

I haven't really been following this thread but I presume its mostly just along the lines of "BohsPartisan was right all along!" ;)

[pete]

Given the increase in spreads on Government debt and the catastrophic predictions on public borrowing with the fall in tax revenue, I really don't think the state can afford to put a whole lot in. Otherwise they'd have done it earlier.

Use the Pension fund? Last I heard they had 18 billion or so. As far as I can see it is a fairly secure investment in the long term... VCs would mean Eircom Mark II with banks resold every few years.

[Student Mullet]

Use the Pension fund? Last I heard they had 18 billion or so. As far as I can see it is a fairly secure investment in the long term... VCs would mean Eircom Mark II with banks resold every few years.

Would that be more expensive than cashing in the pension at the bottom of the market?

[OneRedArmy]

I have a question.

Instead of capitalising the banks, why doesn't the government capitalise the post office? Let them give the loans and treat the whole thing like a utility.Are the staff in the post office any better at deciding who a good risk is than the banks?

[OneRedArmy]

Despite an early bounce yesterday the Government re-capitalisation is generally being viewed poorly in comparison with UK and other government actions.


1)Its too little. Even with the most optimistic projections leaves the banks less well capitalised than international competition and could be a lot worse given potential for Ireland to fare much worse comparatively
2) It doesn't gave enough Government control for the period of issue and also limits the upside potential for tax-payer return
3) Its the wrong type of capital. Despite (poorly informed) press reports, its not pari passu with equity and will (rightly) be viewed as inferior. The core equity ratios therefore are unchanged and the banks will still be relying on tapping existing investors (or private equity) to improve this.

[MariborKev]

Are the staff in the post office any better at deciding who a good risk is than the banks?

At this stage, they can be no worse....:p

[pete]

This says it for me (http://www.irishtimes.com/newspaper/opinion/2008/1223/1229728473144.html?via=mr)

The Post Office don't really run a bank in the normal sense. It is really just a retail arm of another bank in Irelands case Fortis where customers can access savings, lodge cash etc...

[JerseyRed]

Have several friends over here who work in the finance industry and thought they were pretty bullet proof due us being an offshore island. Increasing murmurings of difficult times ahead over here.

[Stuttgart88]

The more I think about it the more I believe that banks should be run & regulated like utilities. Their role should never be solely to maximise profits, as traditional economic theory assumes private companies strive to do (in an upturn anyway). Provision of essential services such as health, power, heat and water have to be more tightly regulated to ensure compliance with safety standards, continuity of service and abuse of market position to avoid profiteering. I’d say food provision is different because barriers to entry are lower and hence a normal widely competitive market is easier to create.

Changing Investment Banks’ corporate status to limited liability private companies from their partnership structures was one key factor in getting to where we are now. Look at how the UK building societies fared having shed their mutual status (though it’s not as if the remaining mutuals were unaffected).

This isn’t just hindsight. During the boom here in the UK I was calling for the banks to be levied on their enormous profits, just to get them to think twice and to add some symmetry to the bank-state relationship. I think the same has happened in Ireland previously. Systemic state bailout has always been assumed in banking, just like state intervention to guarantee power provision, so why shouldn’t the state have more input into how banks can behave? Sure, let banks try to earn good returns for shareholders but these shareholders should invest in the knowledge that unchecked free-marketism isn’t the environment in which they’ll operate.

In most areas the private sector allocates resources more efficiently than the state sector. But utility provision has unique circumstances – for example, would you let a nuclear power provider operate “at the lowest point on its average cost curve” as traditional competition theory dictates? Letting banks go unchecked, or regulated badly, has caused near-meltdown of a different type.

[Student Mullet]

The more I think about it the more I believe that banks should be run & regulated like utilities. Their role should never be solely to maximise profits, as traditional economic theory assumes private companies strive to do (in an upturn anyway). Provision of essential services such as health, power, heat and water have to be more tightly regulated to ensure compliance with safety standards, continuity of service and abuse of market position to avoid profiteering. I’d say food provision is different because barriers to entry are lower and hence a normal widely competitive market is easier to create.This is what I agree with.

[pete]

Building Societies are probably more corrupt than the banks as almost impossible for the members to change the boards - I would l;ike to see less of them & not more.

If the Regulator did his job would we be in the current situation? How does he still have a job? See this clip from the start of October after the state had to jump in with deposit guarantee.

UuHRulXfzGA&eurl

Good article again in the Irish Times (http://www.irishtimes.com/newspaper/opinion/2008/1227/1229728559363.html?via=mr) about the golden circles in the Irish banks. The fact that the author was a former chief economist with the Central Bank and a board member of the International Monetary Fund says a lot.



The banks have been bailed out without any sanctions. The fact that Anglo-Irish Bank is deemed to pose a systemic threat is surprising - clearly the Government's Christmas spirit knows no bounds.

Banks are part of the establishment in Ireland, and have been for many years. In the 1960s and 1970s virtually every family in the country hoped to get one or more of their children "into the bank".

It is also worth remembering that the major mistakes made by the banks were centred on lending to property speculators, who are also part of the establishment. The bailout of the banks will also take pressure off property speculators and avoid forced sales of land and buildings.

By giving massive guarantees and capital injections to the banks, the Government has severely constrained its own ability to borrow. Hence, taxpayers and consumers and workers will have to pay the price over the next few years - for mistakes which they had absolutely nothing to do with.

[Student Mullet]

If the Regulator did his job would we be in the current situation? How does he still have a job? See this clip from the start of October after the state had to jump in with deposit guarantee.I've heard that a lot but I'm skeptical of it. From what we discussed earlier, the regulator's job was to ensure that, amongst other things, the banks didn't lend more than 100/6.5% of their tier 1 capital and he seems to have done that. He refereed the banks to the appropriate international standards. The problem seems to be that those standards weren't good enough, not that this man didn't do his job.

[OneRedArmy]

I've heard that a lot but I'm skeptical of it. From what we discussed earlier, the regulator's job was to ensure that, amongst other things, the banks didn't lend more than 100/6.5% of their tier 1 capital and he seems to have done that. He refereed the banks to the appropriate international standards. The problem seems to be that those standards weren't good enough, not that this man didn't do his job.In terms of prudential supervision, the role of the regulator is not just ensuring that banks are well capitalised on a point in time basis but also for the forseeable future. I would argue that they completely ignored the latter part.

Prudential supervision also covers liquidity and concentration risk and the Financial Regulator completely dropped the ball.

I would totally agree that the international standards failed, but I'm not sure that is enough to let the Irish regulator off the hook.

Consumer protection is the other key area of responsibility of the Financial Regulator (along with financial crime) and they really performed absymally here. There wasn't even a regime of consumer protection until last year, despite the Financial Regulator being formed 5 years (iirc) ago. The whole area of mortgage lending was ripe for enhanced scrutiny with house prices (and mortgage lending) rocketing and the Regulator did absolutely nothing (apart from a too-little-too-late change on high LTV lending last year).

At the end of the day, a lot of people were loaned amounts that were not in their best interests, and whilst these individuals need to take responsibility for this (caveat emptor must apply), consumer protection means that the Financial Regulator should be there to protect the consumers interests.

It plainly didn't.

[Student Mullet]

Does that translate into saying that he is at fault for not anticipating the housing crash? That he didn't stop people from buying houses which were due to drop in price and he let the banks become excessively exposed to the building industry?

[Stuttgart88]

Agree entirely with ORA.

Student Mullet, in my opinion the regulator should have done more to avoid the "this time it's different" thinking that prevailed among both borrowers and lenders. High LTV mortgage lending and high levels of development lending is never a good idea.

In one sense the national regulator can't really be blamed: the international capital adequacy regime was clearly at fault: it was was conceptually misperceived, lent itself far too much to "regulatory arbitrage" (i.e., rule bending but not rule breaking) and was too dependent on the pereceived quality of credit ratings.

[Student Mullet]

Student Mullet, in my opinion the regulator should have done more to avoid the "this time it's different" thinking that prevailed among both borrowers and lenders. High LTV mortgage lending and high levels of development lending is never a good idea.You're saying that it was his job to shout stop but he didn't?

[OneRedArmy]

Does that translate into saying that he is at fault for not anticipating the housing crash? That he didn't stop people from buying houses which were due to drop in price and he let the banks become excessively exposed to the building industry?
1) Failure to anticipate the housing crash
Banks at any point-in-time are supposed to be adequately capitalised to sustain them through a full economic cycle (which by its nature includes a crash). The fact the Irish economic cycle was so long is of limited excuse, as there are plenty of international crashes we could have used data for (UK 91-94, Japan 90's, US 80's, Scandinavia 90's etc.) but the Financial Regulator chose not to use this data themselves or force the banks to stress test on it.

2) Stopping people buying houses which were due to drop in price
Price drops are irrelevant up and until you can't pay your mortgage. Its clear some brokers and banks repeatedly broke their own rules in encouraging people to provide less than full information to maximise their borrowings. This is absolutely the Financial Regulators remit. This has led to people not being able to repay their mortgages.

3)Over-exposure to the property development industry
Large Exposures and concentration risk. FinReg was absolutely awol in allowing huge concentrations both at an individual institution level and systemically to a relatively small number of developers.

[sonofstan]

http://www.irishexaminer.ie/irishexaminer/pages/story.aspx-qqqg=business-qqqm=business-qqqa=business-qqqid=80933-qqqx=1.asp

It's even worse than we thought - LoI club owner comes to rescue of bank!

[Billsthoughts]

At the end of the day, a lot of people were loaned amounts that were not in their best interests, and whilst these individuals need to take responsibility for this (caveat emptor must apply), consumer protection means that the Financial Regulator should be there to protect the consumers interests.

It plainly didn't.

Disagree on this point. How do you define "best interests"? Consumer protection is to stop the consumer being ripped off. I dont see these instances as ripping off the consumer. Everyone went into these with their eyes open. The one guarantee is that house prices are going to go back up anyways.

[pete]

Isn't one of the big problems with Anglo Irish that they don't have an adequate deposit base so they have to borrow on money markets? Surely the Regulator has rules for minimum deposits?

:confused:

[Stuttgart88]

Yep, one failure of the Anglo model was its dependence on "wholesale funding" - borrowing both short & medium to long term from banks and other financial instutions. When Northern Rock went down in Sept '07 I immediately thought Anglo would struggle. There were subtle differences - N Rock depended on one type of wholesale funding, securitisation, almost exclusively, whereas Anglo mainly borrowed on an unsecured basis.

What astonished me in October '07 when Anglo reported interim results was that it had a deposit-to-loan ratio of 72% (if I recall correctly). I just thought that this felt wrong. Banks always engage in "window dressing" i.e., they try and make their key ratios look better at reporting dates than they'd look on non-reporting dates. Sean Fitzpatrick's director loan and temporary arrangement with INBS was an example.

In one sense it was felt that the ultimate regulator was the market. If the debt markets thought Anglo didn't have enough deposits their cost of debt would rise substantially, or even availability of debt would disappear. Likewise the stock market would make its feelings known. This is ultimately what happened. The fact that the market overlooked Anglo's financing model for so long probably lured everyone into a false sense of security.

It's funny in a sense, but all the old established sound banking principles (and other economic matters like growth cycles etc.) always seem to hold true. I'm still relatively young. I hope next time things get out of kilter - which they undoubtedly will - i'll have the sense this time to see it all coming that bit more assertively. I don't day trade or make many financial investments other than my pension, but with one hand I pat myself on the back for having invested every pension contribution I made since January 2007 in cash, but with the other hand I'm livid I didn't reallocate all my existing pension assets. Luckily my dad brought me up to be very cautious of debt.

[Stuttgart88]

Everyone went into these with their eyes open. There are none so blind as those that won't see.

The FT cited psychological research into why so many experts failed to predict this crisis. Many actually did but the fact is that few people take on board information that doesn't suit them.

[dahamsta]

1) Failure to anticipate the housing crashI don't think that can be regarded as a failure. At best, it was burying heads in the sand, but it's probably worse than that. I certainly felt that the property market would adjust downward at some point many, many years ago, and the closer it got to 2008, the more it looked like it was going to be a crash than an adjustment. I reckon I converted to "crash" about 2 years ago, and by a year ago most people I talked to agreed. Apart from those that were invested, of course...

adam

[OneRedArmy]

I don't think that can be regarded as a failure. At best, it was burying heads in the sand, but it's probably worse than that. I certainly felt that the property market would adjust downward at some point many, many years ago, and the closer it got to 2008, the more it looked like it was going to be a crash than an adjustment. I reckon I converted to "crash" about 2 years ago, and by a year ago most people I talked to agreed. Apart from those that were invested, of course...

adamWill post more tomorrow, but Adam it's the Financial Regulator's job to expect the unexpected and ensure banks are up to it (stress testing etc.).

We got into a bizarre situation where the FinReg was maintaining all was well and banks were adequately capitalized. Nobody believed them and the Market was proved right.

At the minute FinReg have zero credibility.

[dahamsta]

My meaning wasn't put across very well there ORA: IMHO "failure" is far too weak a word. "Criminal" would be better, and if there was even the vaguest possibility of a criminal prosecution against the regulators (and everyone else of course: the executives and directors of the banks, the government*, and the people that call themselves economists), I'd be screaming for it.

adam

* And the "opposition" of course, for being criminally incompetent.

[pete]

Heard a story recently where someone transferred funds to Irish bank when moving back to Ireland but when tried to withdraw later the bank did not have or did not want to pay the cash. The bank tried to offer 3 houses as alternative payment. Might hear back soon which bank it was...

Seems the banks offering the highest deposit rates last year were Anglo & Irish Nationwide. In hindsight probably an indicator of trouble ahead...

[monutdfc]

Heard a story recently where someone transferred funds to Irish bank when moving back to Ireland but when tried to withdraw later the bank did not have or did not want to pay the cash. The bank tried to offer 3 houses as alternative payment. Might hear back soon which bank it was...

I'd be amazed if that was anything other than complete BS. Or is 2 stories mixed up (I've heard more than one of developers offering creditors houses in lieu of unpaid debts).

[OneRedArmy]

Heard a story recently where someone transferred funds to Irish bank when moving back to Ireland but when tried to withdraw later the bank did not have or did not want to pay the cash. The bank tried to offer 3 houses as alternative payment. Might hear back soon which bank it wasBanks can't stop you from withdrawing your money Pete, unless of course the person had defaulted on another loan.

Very usual in the current environment that property developers and investors offer houses rather than repayments.

[pete]

Banks can't stop you from withdrawing your money Pete, unless of course the person had defaulted on another loan.


Story was only second hand as opposed to 5th or 6th which is why I took notice. I think the bank were trying to suggest the person accept houses instead of cash. Sum involved was less than 500k. Even if I did hear which bank it was would be unfair for me to mention given no proof.

[strangeirish]

Gotta love Larry Flynt (http://globaleconomicanalysis.blogspot.com/2009/01/larry-flynt-seeks-porn-industry-bailout.html)

:D

[Macy]

Heard a story recently where someone transferred funds to Irish bank when moving back to Ireland but when tried to withdraw later the bank did not have or did not want to pay the cash. The bank tried to offer 3 houses as alternative payment. Might hear back soon which bank it was...
That story's doing the rounds - heard it in the pub over the wend, but was told as if though it was a friend of a friend, so unless it's been on the radio then it's an urban myth in the making (or a small world I suppose). Version I heard was that it was 4 €100,000 darfts that he wanted to give to his kids, bank begged him not to, and offered him 3 houses, he said he had 4 children, so they gave him 4 houses...

[pete]

That story's doing the rounds - heard it in the pub over the wend, but was told as if though it was a friend of a friend, so unless it's been on the radio then it's an urban myth...

Until hes been on Joooooe Duffy its an myth :p



"With all this economic misery and people losing all that money, sex is the farthest thing from their mind. It's time for congress to rejuvenate the sexual appetite of America. The only way they can do this is by supporting the adult industry and doing it quickly."


:D

[Bald Student]

A friend of the family sold his farm in Galway to a developer for 6.5 million 2 years ago. He bought the same farm back from the bank for 1 million a few months ago.

[dahamsta]

A friend of the family sold his farm in Galway to a developer for 6.5 million 2 years ago. He bought the same farm back from the bank for 1 million a few months ago.<applause>

[pete]

Irish Times (http://www.irishtimes.com/newspaper/breaking/2009/0108/breaking64.htm)



An investigation by the Financial Regulator into allegations of a potential conflict of interest between mortgage brokers and estate agents found an unspecified number of companies were unaware of their obligations.

The inquiry began last July following allegations that some mortgage brokers may have shared information on clients' purchasing power with estate agents seeking to sell them a property.

The practice may have resulted in inflated prices being paid for properties.

Some estate agency firms also sell mortgages while some larger firms operate their own broking business or offer mortgages through an affiliate company.

Publishing its findings today the regulator said it had investigated 91 of the 2,100 mortgage intermediaries in the market to examine how they handled potential conflicts of interest when also providing property services.


Confirming many views about Estate Agents no doubt. Strange that is just an obligation & not illegal. Interesting that there were 2,100 mortgage intermediaries in Ireland. Easy solution might be to ban estate agents offering mortgages.

[Reality Bites]

Irish Times (http://www.irishtimes.com/newspaper/breaking/2009/0108/breaking64.htm)



Confirming many views about Estate Agents no doubt. Strange that is just an obligation & not illegal. Interesting that there were 2,100 mortgage intermediaries in Ireland. Easy solution might be to ban estate agents offering mortgages.

If there is one good thing about the recession it's seeing these wretched individuals suffer, I hope to see recruitment consultants burn in hell too.. Employers with sense would see it as a complete waste of money to go about recruiting staff through a very pricey intermediary when it would be cheaper and in the currently climate easier in to do it directly...

[pete]

Irish Times (http://foot.ie/showthread.php?t=100788&page=18)



Chief Executive of the Irish Financial Services Regulatory Authority, Patrick Neary, is to step down, it has emerged.

The Financial Regulator announced his decision this evening to retire, effective from January 31st. He will step down as a member of the Irish Financial Services Regulatory Authority's board, and also as a member of the board of the Central Bank and Financial Services Authority of Ireland.

Mr Neary has come under pressure in recent weeks after it was claimed that staff at the regulator's office first learned in January 2008 that the chairman of Anglo Irish Bank Seán FitzPatrick had been transferring loans of up to €87 million off the bank's book to conceal them from shareholders.

This evening, Mr Neary said he had not known of the issue before December 10th.

"I had deferred a decision about my retirement until the Report of the Committee of the Authority examining the internal communication of matters relating to loans to Directors of Anglo Irish Bank Corporation was concluded," Mr Neary said in a statement.

"So far as I am concerned, I was not advised of any such matters in early 2008 and there has been no oral, written or email escalation of these issues to me or to the Authority over the period until the matter was raised with me by the Minister on December 10th, 2008."


Financial Regulator jumps before he is pushed? Minister saved from actually making a decision?

[Fr Damo]

I have a small, a very small bit of sympathy for Neary. The Anglo thing was obviously the final straw but If the Board of Anglo and their Auditors couldn't find the 87m worth of loan arrangements, how was he supposed?

Nobody was calling for his resignation last year or any other year (except Shane Ross maybe) when although obviously in trouble at least employment was still holding up and therefor the public opinion is more emotion than anything else.

[pete]

Nobody was calling for his resignation last year or any other year (except Shane Ross maybe) when although obviously in trouble at least employment was still holding up and therefor the public opinion is more emotion than anything else.

He is the Financial regulator so taxation policy not part of his remit.

I am sure got paid a good salary & will have nice pension. He failed in his job & if he did not have the powers to do it he should have asked for more.

[OneRedArmy]

I have a small, a very small bit of sympathy for Neary. The Anglo thing was obviously the final straw but If the Board of Anglo and their Auditors couldn't find the 87m worth of loan arrangements, how was he supposed?

Nobody was calling for his resignation last year or any other year (except Shane Ross maybe) when although obviously in trouble at least employment was still holding up and therefor the public opinion is more emotion than anything else.
I think your second point is a valid one and not just relevant to the Financial Regulator (generally people want more protection in bad times, if there's money to be made they are generally more laissez faire, completely hypocritical of course!).

But in my mind anyway (as someone who deals regularly with various regulators here and abroad) he's not going because of the Anglo loan, he's fallen on his sword (by the tried and tested "early retirement" option" because of the wider failure to identify and deal with systemic risks in our financial system that everyone from the OECD to the Economist magazine had pointed out going back years but the Financial Regulator effectively ignored.

That said, my understanding in relation to both Sean Quinn' hand in the cookie jar and Fitzpatricks loan FinReg knew for a period of months and didn't do anything. Thats the final nail in the coffin.

[Fr Damo]

Heard a piece on Morning Ireland that the loans totalled more than 87m! Unbelievable. Some commentator suggested that Fin Reg was simply leaving it to the bankers etc becuase in his naivity he assumed surely the banks will be looking after their balance sheet and not be taking undue risks with the lending. Pete, I take it back, they were sitting on their hands but I am one of the uninformed average joe I mentioned earlier, that is, the ones who will pay for this in the Short, Medium and looks like long run.