Financial Crisis

[Macy]

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

Heard them on the Last Word with is, reckoning that worse case scenario is that banks assests over valued by 3.5%, which if they're into developers as much as everyone thinks seems low to me.

Of course, a stokebroker might be considered a vested interest in all this, which I was extremely disappointed in Matt Cooper not at least putting that fact out there.

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.

You would expect so, but I can't see a Government that has been constantly bailed out politically by "missing" bank records going very hard on the banks.

[OneRedArmy]

On a slightly more humorous note, the Brits are absolutely up in arms at what Ireland has done, as apparently there are already seriously large flows of deposits being withdrawn from British-owned banks in Ireland and even British banks in Britain into Irish owned institutions, including the British Post Office bank (which is run in a joint venture with BoI).

I've heard anecdotally that Northern Irish and English branches of Irish institutions are jammed with people opening accounts.

Payback for the 800 years of oppression starts here

[pete]

The bill passed with 18 No votes as only Labour voted against.

Why is the government not guaranteeing the deposits & loans of foreign owned Irish banks (with Irish customers) but is guaranteeing Irish bank branches abroad (with non-Irish customers) ? When you read it like that the government is helping Irish banks first & not their Irish customers.

Mary Hanafin described this as "the bravest decision in a long time" when surely it is the biggest gamble in a long time.

[OneRedArmy]

Why is the government not guaranteeing the deposits & loans of foreign owned Irish banks (with Irish customers) but is guaranteeing Irish bank branches abroad (with non-Irish customers) ? When you read it like that the government is helping Irish banks first & not their Irish customers.

Because the aim of the Act is to stabilise the Irish banking sector by opening up the interbank funding market. It has nothing to do with customers (the proportion of "customers" impacted is minimal).

If they didn't do what they did on Monday night, there wouldn't have been an Irish banking sector to help.

[geysir]

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.

Yes the nature of greed is the same for everybody.
The effects of Corporate/ speculator greed is more damaging in effect by multiples to society than that joe public guy..
When a bank/institution removes its normal checks and balances and advertise/push those services they are responsible for spreading/propagating the greed. Selling a service akin to a pyramid scheme.
Yes people fall for it in the same way they fall for a pyramid scheme.
But what part has that joe public in the greater damaging schemes of corporate/speculator borrowing to invest in the exaggerated current values and future profits of companies/schemes.
Joe public was only a pawn in the scheme.

It is only some of the people have no right to complain.

When I bought my house it was about 3 times my annual salary, my kids atm would have to pay 12 to 15 times annual salary for something similar.
The most of the damage is experienced by people who did not live it up, who acted responsibility and more damage in proportion is experienced by lower income people.

[OneRedArmy]

But corporate culture, left unregulated or unsupervised, will only ever be reflective of underlying individual morals. The whole idea of corporations having more moral responsibility than individuals is unrealistic.

Thats why we rely on regulations and supervision of adherence to these regulations.

That definitely failed, and failed globally, not just in Ireland.

[Macy]

I don't know OneRedArmy, if people came under pressure to take more money than they needed like we did when we were going for our mortgage, I don't think you can put it down purely to individual morals. Can people sue for missold mortgages in Ireland like you can in the UK?

[pete]

When I bought my house it was about 3 times my annual salary, my kids atm would have to pay 12 to 15 times annual salary for something similar.

I am not sure if that is relevant as interest rates might have been 15% which we are unlikely to ever see again. 5% is probably a good realistic rate.

When I got my mortgage in 2001 the Bank were very strict on the 3 time salary issue but sometime they changed this. My brother got mortgage a couple of years ago & the test seemed to be if he could afford if interest rate increased by 1%. I don't know what the best test is but 3 times salary was unrealistic.

[OneRedArmy]

Just listened to what masqueraded as a debate on both The Right Hook and Last Word shows

Lets forget about the "ordinary man on the street" for a minute. What happened happened not because of normal residential lending issues. Arrears remain very low and although unemployment is worrying, if rates remain steady then arrears shouldn't climb hugely.

The liquidity crisis happened because fears around US subprime (which impacted Irish banks not a jot, they weren't part of that pyramid scheme) were transferred to fears around property development and investment in Ireland. These fears are absolutely realistic IMHO, there has been an impending bloodbath here for 12 months+ as demand dried up. But these transactions involved two or more parties, investor/developers and banks, both out to make a profit. Both are and will feel the pain and so they should.

Secondly, everyone is bandying around E400bn as if its second nature. NOBODY knows how this is going to look. I'd wager it hasn't cost the Government a cent to date, or worst case they had to make one payment to one counterparty on behalf of one bank on Monday (or so the rumour goes). A guarantee is only that, a guarantee to step in, until its actually called.

Nobody comes out of this with much credit, but I would expect a much more rigorous and pro-active Financial Regulator to emerge out of the end of this.

[NeilMcD]

http://news.bbc.co.uk/2/hi/business/7649453.stm

[tricky_colour]

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.

Hmmm... do you think you have some God given right to get a car loan?
Personall if I were a bank manager I would not give you a loan untill you had paid off your other loan(s). Actually I would not give you a loan at all, well not for a car anyway. If you want a car you can save up for one, if you can't do that, well your're not credit worthy anyway. I have never had a loan for anything apart from my house, which was pretty much unavoidable. You can get a car for a few hundred euro, if you can't afford that get a bicycle!!

Anyway I can tell you now your chances of getting a car loan are pretty much zilch so you better start stocking up on weaponary for your 'car war'.
Most banks have not got enough money to pay for next weeks loo paper never mind a rust bucket.

All the financial crisisses around the world are due to irresponsible lending which has been going on for years. If I was a bank manager I would not have lent a penny on houses in the last 8 years or so as it was obvious they were grossly overpriced, obviously I am not a bank manager because I am not a corrupt irresponsible idiot, so I would not 'fit in'. I can also add up so I would be ruled out on those grounds too.

So you won't get a car loan but you will be paying for a car, other people's cars that is, and houses too, in higher taxes due to the the governments bail out of the banks irresponsible lending.

To many people have been living on credit for too long and it looks like that
particular bubble has burst, and won't be back for a long time, hopefully.

[SMorgan]

On the Government scheme to under-right the 6 banks. If any member of those banks are found to have bought shares in banks immediately before the announcement and at a time that they would have been aware of the scheme, then I believe they should not just lose their jobs, but they should face a criminal investigation.

[tricky_colour]

But corporate culture, left unregulated or unsupervised, will only ever be reflective of underlying individual morals. The whole idea of corporations having more moral responsibility than individuals is unrealistic.

Thats why we rely on regulations and supervision of adherence to these regulations.

That definitely failed, and failed globally, not just in Ireland.

The beauty is that those responsible in the banks have no liability afterall it is not their money the were flushing down the bog. They will be all right, their massive 'performance' bonuses will keep them going for a long time.

If they were really paid according to their performance they would be lined up against a wall and shot.

[Reality Bites]

The beauty is that those responsible in the banks have no liability afterall it is not their money the were flushing down the bog. They will be all right, their massive 'performance' bonuses will keep them going for a long time.

If they were really paid according to their performance they would be lined up against a wall and shot.

Irish Nationwide Gaffe is as stupid as it is funny, you just know by the name alone that Michael Fingleton Jr is a Grade A1 A-hole

[OneRedArmy]

Not surprised at Nationwide, glorified piggy bank, run by an arrogant so and so who has been in charge for 40 years, with a dose of nepotism thrown in.

He could've got every member 15k 2 years ago but decided that wasn't enough.

[pete]

Pathetic actions by Irish Nationwide. Seems fairly obvious how Junior got his job.

“I will have no tolerance for any financial institution which seeks to exploit competitive advantage from this guarantee”, Mr Lenihan said on Wednesday.

Empty words? Unless emails or other communication leaked how will we know. The Financial Regulator has no powers anyway.

Saw small bit of FinReg on Prime Time last night. He could be a good politician the way he avoided questions. He kept saying he was convinced Irish banks had the equity to cover their losses yet he could not even estimate what their liability was. How can he say everything is ok if he has no idea what the exposure is?

[geysir]

When I got my mortgage in 2001 the Bank were very strict on the 3 time salary issue but sometime they changed this. My brother got mortgage a couple of years ago & the test seemed to be if he could afford if interest rate increased by 1%. I don't know what the best test is but 3 times salary was unrealistic.

Sounds like you just got in on time Pete.
Anyway, I am talking about the rise in the cost of buying a house in relation to an annual salary, not the change in criteria for deciding what mortgage you can get.
Housing prices have risen, by multiples in relation to income earned, since early 1970's, from a steady rise to crazy.
That is a serious problem now, for many of those first time buyers (from the past 5 years?) making off payments on a house loan the size of an elephant.

I am not sure if that is relevant as interest rates might have been 15% which we are unlikely to ever see again. 5% is probably a good realistic rate.

Mortgage interest rates were 4.25% to 4.9% when the price of a house was 3 times a teachers annual salary

[geysir]

Well lads and lassies, I have seen the future effects of the beginning of this depression.

This injection of cash into Banks around the world won't put out the fire of depression.
It is an impossibility.
Prepare as best you can.
Reduce your exposure as best you can.
Ask around for advice on what you can do for your own situation

Even if this inevitable collapse was slowed down, the onward effect of what has been lost would roll on for ages.
But there is no sign of it slowing down, there is no solution. The US general election will be about which monkey is sitting in the chair witnessing all the drama for the next 4 years.

[OneRedArmy]

Well lads and lassies, I have seen the future effects of the beginning of this depression.

This injection of cash into Banks around the world won't put out the fire of depression.
It is an impossibility.
Prepare as best you can.
Reduce your exposure as best you can.
Ask around for advice on what you can do for your own situation

Even if this inevitable collapse was slowed down, the onward effect of what has been lost would roll on for ages.
But there is no sign of it slowing down, there is no solution. The US general election will be about which monkey is sitting in the chair witnessing all the drama for the next 4 years.

What are you talking about Nostradamus?

That the Western world is entering a period of recession?

Hardly groundbreaking news I would've thought.

[Newryrep]

When I got my mortgage in 2001 the Bank were very strict on the 3 time salary issue but sometime they changed this. My brother got mortgage a couple of years ago & the test seemed to be if he could afford if interest rate increased by 1%. I don't know what the best test is but 3 times salary was unrealistic.

If that was the case it is an absolute joke.

It is all the fault of house prices which are now overvalued and have been ever since 3 times your combined salary and a 25 year mortgage couldnt get you on the property ladder. Everything stems from this, people who wanted on the property ladder needed higher salaries to fund higher mortages which drove up costs.

3 times your combined salary is about what the banks should be lending and a 25 year mortgage. The fact that this would hardly buy a garden shed is the problem.

I genuniely feel for those who have borrowed money of parents, and are mortaged up to the hilt on the first house they have bought with no prospect of getting it back.

A missed opportunity and I dont think history will be too kind on the governement in the last 10 years