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Do they ever do that? Not convinced the regulator does much really... They keep saying everything in ok but why do the markets not believe them?Quote:
Originally Posted by OneRedArmy
The regulator in the UK seemed to be asleep which almost let Northen Rock & Bradford & Bigley go under.
Insider trading is very, very difficult to prove in a court of law, verging on the impossible.Quote:
Originally Posted by pete
Regulator's do what they can but they can't pre-approve every decision banks make.
Northern Rock and B&B went under, there's no almost. FSA definitely asleep on the Rock case, on B&B I'd say they knew it was coming and were powerless to do anything about it as it was too late.Quote:
Originally Posted by pete
Nobody has ever really spent much time on widespread systemic failure (which is what we are seeing now). Regulator's generally focus on specific institutional risks (eg rogue traders etc.).
What we are seeing now is that the whole industry went in the wrong direction.
And the EU have said they'd be investigating this deal on competition grounds too.Quote:
Originally Posted by OneRedArmy
Not on last nights share prices - 50% stake in the 6 would've cost €5 billion, as opposed to €400-500bn risk of this deal.Quote:
Originally Posted by OneRedArmy
"Joe Duffy territory" possibly the most cutting insult I've ever got on line! :D Guaranteed bad debts mean that the bank is more likely to sit it out rather than take assets off the builders, imo.Quote:
Originally Posted by OneRedArmy
Would it be fair to say that the regulator can't do much now? That the banks are where they are because the regulator wasn't tight enough on them in the past?Quote:
Originally Posted by OneRedArmy
Unless I'm missing something, buying 50% of the bank doesn't in itself do anything to remove the risk. Any bad debts that there are will still exist.Quote:
Originally Posted by Macy
The bad debts still exist now. Even a part nationalisation would've have had the same effect as the deal, only with some form of return for the taxpayer.Quote:
Originally Posted by Bald Student
Maybe I'm just slow but I genuinely don't follow what you're saying.Quote:
Originally Posted by Macy
If the government had guaranteed the deposits by buying half the banks shares it would have exactly the same liability as it has now but would have paid 5 billion (or whatever) to the current shareholders to take on the liability. The government would still have to pay out if the banks ran short of money, I don't see how taking equity would have removed the 400-500 billion euro risk.
It wouldn't have to put up the €500bn as instead the €5bn investment would be enough to increase the Irish Banks credit rating and get them out of any pending liquidity problems without explicitly exposing the state to the risk it has. It would also have the power to penalise the executives that got the banks into this mess, and would have more control over future lending policy to avoid it happening again. At the moment there is zero consequence for the banks. If all goes well, the banks will enjoy and keep all their bumper profits (and their mega bonuses) as it ever was, and if it goes belly up they'll be bailed out by the Government at no cost to them or the shareholders. It's a no lose for the banks and the bankers in charge.
The government already guarantees 100k per account. In current circumstances unlikely any one is holding more than 100k in any bank if he can. Extending the guarantee to inter bank transactions hardly makes much difference & they will never have to pay 500bn anyway.
I'm no expert at this stuff (as you can probably tell) but if the banks have a liquidity problem rather than a solvency one then I don't see how the government stands to loose at all in the long run. If what you're saying is correct and the banks need 5 billion euro to get them over the current problems but they'll be able to repay it in the long run then the government isn't exposed at all. If the opposite is true and the banks assets have dropped to a value that they're not able to cover liabilities, then the government's exposed either way.
Also, are you correct when you say "and if it goes belly up they'll be bailed out by the Government at no cost to them or the shareholders."? In all the foreign examples the shareholders' investments have been forfeit when a bank went bust and the banks profits weren't protected either, they were put towards covering the liabilities.
Macy, the equity investment you have suggested wouldn't have taken away the need to provide the same liquidity support.
You are right that it would better reward Government for providing the liquidity but in and of itself, it would likely have resulted in the Government very quickly holding equity that was worth zero when one or more of the banks ran out of liquidity.
In terms of zero consequences to the banks, pretty much every employee of the aforementioned banks, from the CEO to the staff in the branches is sitting on shares worth a fraction of what they were. For those with a lot of years service (regardless of seniority), the loss is massive.
Its not heads on a plate stuff but again its very far from "no lose". As for "future bonuses and profits", I can't see that being an issue for quite a while.
The point is that building houses creates wealth, it's stating the obvious.Quote:
Originally Posted by OneRedArmy
If you build a house you have something of value, if you build two of them you have twice the value etc..
It may lower house prices but that's a good thing, high house prices make people poor.
Not feeling good about the government guarantees any more.
We are told everything is but no other government has made this move. The guarantee is i believe for all debts over two year period which is fairly wide ranging.
All I can see is this has boosted bank shares which does not solve liquidity issues. Again we were told the banks have access to cash in Europe.
:confused:
It only creates wealth if there's demand at a profitable price.Quote:
Originally Posted by tricky_colour
Woah, slow down Pete.Quote:
Originally Posted by pete
Lets leave the share price aside. It, in general terms, is nothing other than an indicator of market feeling in any company.
The Government guarantee should provide WAY more liquidity than the ECB fund to date by making it attractive to other banks to lend (as they always had pre-credit crunch).
This action stopped a bank going under last night. You may not agree with that decision (moral hazard etc.), but thats almost certainly a fact.
But its not a silver bullet for the poor lending decisions made over the last 5 years. As Macy alluded to, the next 2-3 years will be bad from a credit perspective as all the dodgy developer and investment loans wash through the system. A lot of these need to be provided for, and most probably written off in many cases, as the security will be close to worthless (certainly landbanks aren't worth tuppence).
So the liquidity provisions were a necessary decision to keep the domestic banking sector afloat. But many, many hard decision lie ahead. Based on the Japanese experience, ignoring and procrastinating over writing down loans only extends a recession.
Time to take our medicine.
I really don't know about this bill. Regardless of the other options open to Government, they can't seem to be able to give any concrete proposals on how this will work, how much it'll cost the tax payer, for what return and how it'll be controlled. The whole putting all the power with the Minister for Finance also appears to be questionable constitutional. It's a total mess.
I think the Banks should pay for this bailout with more that just Government protection charges, I think Heads should roll in the top 6 Banks, I mean CEO should be fired for reckless lending over the last few years..In the US this would be the case
In the US it was a whole lot worse but the FBI have already been investigating. They will jail people if have evidence something which would never happen here. I am not suggesting we have anything like the sub prime mess they have. Has anyone ever been jailed for insider trading in Ireland?Quote:
Originally Posted by Reality Bites
I heard that rumours of money moving out of UK banks into Irish ones due to this guarantee. Looks like Lenihan might have forced the hand of other governments.
Question for ye, with Halifax only just launched last year in Ireland, they're merging with Lloyds TSB in UK. What's going to happen to Halifax in Ireland?
I think heads will roll in due course.Quote:
Originally Posted by Reality Bites
But, lets be clear, the current level of crystallised losses in Irish banks is extremely low.That will change going forward as our own property bubble washes through obviously.
Also, what happened to shared responsibility?
What all those fools who leveraged themselves up to the hilt? What about the Government who when the brakes should've been applied just added more fuel to the fire?
The scapegoatery at the minute is ridiculous. Joan Burton made a fool of herself last night. No wonder Labour are unelectable.
On what, as what I saw on Prime Time (albeit interupted by a teething baby), it was O'Dea that was fumbling and not being able to answer specifics? It's only right that the opposition point out who helped fuel the bubble - Government and bankers. Mores the pity FG seem to have completely caved on it.Quote:
Originally Posted by OneRedArmy
Think you are covered by the UK goverment upto 50k and they will change name to Loyds TSB or what ever brand name they will use then. ( they where bank of scotland ireland here before Halifax )Quote:
Originally Posted by Pauro 76
Macy, you won't get me to defend O'Dea, or the rest of the Government! :DQuote:
Originally Posted by Macy
Burton really didn't understand what she was talking about, which I suppose was understandable.
Of course the Government and the banks were responsible, but all this talk of "joe public" losing out to the greedy bankers sticks in my craw. Joe Public piled into buy-to-let property like there was no tomorrow because of a simple human failing, greed. The same failing that affected the banks.
The whole idea being peddled in the media that banks and Government should be the sole moral guardian for the whole state is ridiculous.
The country got to this position because the majority supported decisions, either explicitly or implicitly and as is usual when times are good libertarianism and free market doctrines are expoused by people wanting the good times to roll on and then when it goes down the pan the very same people turn into nanny-staters, with wailing and gnashing of teeth and "why didn't the instutitions stop me?!""....
Obviously not everyone bought into this view (I know you didn't), but to the whiners who lived it up in the good times, as we say in Derry, "take yer oil".
Any deal that has the Banks purring is not a good deal for the people.
The Irish Gov. vote of confidence to underwrite all the top banks would make me very very nervous.
To me it looks like the State will lose bargaining position when it comes to taking shares as equity.
The people are going to take some serious hits.
I would prefer to underwrite the solid Banks and slaughter the one or possibly two reckless Banks.
I don't think there is a proper understanding of other possibilites of Equity Investment by the State.
The State provides capital and in return takes shares in the bank
The Iceland Gov. took equity (from one bank. Glitner) worth €2.8bn for €700m.
After the negotiations, the Bank's Board complained that they had been kicked around the floor, battered black and blue, pressed against the wall and under extreme pain were forced to sign the deal.
They called it the great bank robbery.
The State took over 75% of the total shares as equity, and the share price naturally drops 75%.
Immediate losers are the shareholders of whom some 1 or 2% are employees who received shares as bonus payments. Tough, but I am not that brokenhearted over top Bank employees losing a few eggs.
Nor over the loss to the large shareholders who ran the bank.
The next day, the share price rose by about 14%, means the Gov shares rose by €140m
With a bit of luck, the equity investment by the State will not prove to be a burden on taxpayers.
.
What would you call the solid Banks? AIB and BOI were in big trouble if this thing didnt go thru. We were told not to place money with any of the above banks as wwas too risky.Quote:
Originally Posted by geysir
I sent an email to my TDs in Cork East last night asking them to vote against the bill.
The only one that's replied so far is David Stanton. His reply seems to be saying "we know best" but "I might not vote anyway".Quote:
Sir,
I'm a contituent from Ladysbridge. Please vote against the bailout bill
that will be put before you tomorrow, rushed legislation is ALWAYS bad
legislation.
I'll be watching your voting record with interest, it will affect mine in
future.
Yours sincerely,
Adam Beecher
Quote:
Dear Adam,
Thank you for your email. We are all very concerned at the current banking
situation and the need to provide adequate, extensive and robust
legislation to protect any measures being taken. If the banking system
were to collapse, this would have major repercussions for everyone in the
country.
You may be aware that no vote is being called on the Bill today as the
debate is ongoing with Committee Stage being taken in the Dail. This
procedure gives the opposition parties a chance to put forward amendments
to the proposed legislation. I may not, in fact, get an opportunitty to
vote on the Bill at all, if a vote is not called.
Finally, Richard Bruton TD, is out Fine Gael spokesperson for Finance and
is responsible for tabling our amendments at committee stage. I can assure
you that he is very knowledgeable and well briefed on the issue and the
legislation put forward.
Best regards,
David Stanton TD
Who told you that?Quote:
Originally Posted by Billsthoughts
So Richard Bruton is knowledgeable and well briefed....... God help us.Quote:
Originally Posted by dahamsta
The legislation itself has more holes than a sieve and appears to leave all the detail to administrative notice.
It's all relative - compared to all the cabinet, and most of the rest of the Dail, I'd say he is.Quote:
Originally Posted by OneRedArmy
Whilst I'm not going to defend the knowledge of the Government (as I'd say its on a par with the rest of the Oireachtas, ie limited), in fairness, the Government do have the advantage of having the Central Bank and the Dept of Finance advising them.Quote:
Originally Posted by Macy
Who are the opposition relying on for technical advice?
I do think Adam's point around rushed legislation is fair though.
Dahamsta, I don't agree with your lobbying local TDs with negative responses to Government bailout, I have been a stern critic of both Lenihan and Cowen, but their decisive acts over the last two weeks have impressed me, It was vital that the Government stepped in to back up the Banks, if they didn't the Irish government faced "total chaos" and a failure of the financial system.
Head of finance/Clients,(not our own money - client money)Quote:
Originally Posted by OneRedArmy
Interesting. Did he say anything about Anglo, Nationwide or PTSB?Quote:
Originally Posted by Billsthoughts
Isn't Bruton actually economist? The Central Bank and Dept of Finance presumably were advising the Government whilst they were getting us in this mess in the first place, so not exactly a ringing endorsement (either the Government was following their advice, or ignoring it - either way doesn't bode well for now).Quote:
Originally Posted by OneRedArmy
Goes without saying, especially when it turns out to be as flimsy and non-specific as this one. The Devil is in the detail, only it appears the Government are deliberately leaving the detail out!Quote:
Originally Posted by OneRedArmy
Depends who the Gov are batting for.
I'm fed up listening to some moronic TD's on radio going on about protecting the interests of the Bank shareholders as if they were little frail old people depending on this nest egg.
There is no one bailout solution.
The quality of any government intervention depends on the terms of the agreement.
The terms can vary. Its time for the Government to kick Bank ass, those who come looking for taxpayers money should be squeezed within an inch of its life in order to safeguard taxpayers money.
More worrying, I'd say they haven't got that far yet.Quote:
Originally Posted by Macy
If reports are true and at least one bank was hours away from falling on Monday night, they obviously came up with the idea and decided that the detail could be worked out later.
I'd be staggered if they are anywhere near the detail yet, unless they've translated the Swedish plan from the 90's on which all this is based.
Bruton is a former member of the ESRI so has the knowledge but on that basis is as up to his neck in it as Government.
only one he(treasury manager 40 yrs exp) said they were told to place deposits with were HBOS. said the day HBOS was taken over that nationwide and anglo look in trouble and last monday I was asking him and he said BOI/AIB in same boat now. AAA rating taken away. Think gov decision changes that.Quote:
Originally Posted by OneRedArmy
AIB & BoI never had a AAA rating. Around A+/AA.Quote:
Originally Posted by Billsthoughts
S&P maintained the same ratings yesterday.
well he said their rating had changed and we werent doing business with them.Quote:
Originally Posted by OneRedArmy
Good debate with Vincent Browne on TV 3 tonight.
One of the experts said NCB stockbroker estimate the actual cost to Irish taxpayers of state guarantee could be E14billion or 25% of single years GNP. This was disputed by expert no.2
A friend of mine missed 2/3 payments on a student loan a few years ago and because of that he was refused a car loan.So you could say he made 2/3 "mistakes".The bank chiefs however get a whopping bailout and help when they make other related mistakes.Ill tell you if i dont get approved for a loan in a few weeks time after similarly missing 2/3 payments when i was a student(all of 3 years ago) there'll be war.
Where do we stand with this now? Did it go to a vote today? The news coverage is very thin on the ground bar saying that now they're talking about covering foreign owned banks too. FFS.
No offence but thats a ridiculous comparison. Its more akin to payment protection insurance that the banks are getting. Which I presume you didn't have?Quote:
Originally Posted by eamo1