Financial Crisis

[OneRedArmy]

Does anyone really believe the Banks won't be back for more money soon?

Whilst the banks have done a lot wrong (and heads must surely roll), I find the expectation of certainty that the opposition expect ridiculous.

The reason this recession/depression is so bad is because of its speed and scale, we haven't seen anything like this before.

Therefore if we ignore why we got into this situation for just a minute (and as I said, heads need to roll for this), if anyone does claim to know what lies ahead they are, frankly, talking through their holes. Nobody really knows how much money will be required. You can only react to what you know and can reasonably forsee.

[pete]

Whilst the banks have done a lot wrong (and heads must surely roll), I find the expectation of certainty that the opposition expect ridiculous.

Fine but going from no money required to billions in a few months is some change. AFAIK the banks haven't written off that many bad debts yet. From lay man point of view I don't see much difference in the recession in the last 3 months.

Got to laugh at the reason for giving bonuses in the UK - if they don't pay the "best" people they will work for someone else. I am sure many bonuses are based on X amount of new loans but surely someones bonus is dependent on % of bad debt?

Seems Brian Lenihan says recapitalisation scheme will be linked to pay cuts at the top. Maybe he has an a/c here...

[OneRedArmy]

Am I the only one who thinks today's "news" about Anglo & IL&P is much ado about nothing?

Not only is this widespread in banking and has been for eons, it's standard practice in almost every sector.

Find me a business that doesn't manipulate it's year end stock figure.

Unfortunately this poor journalism obscures the real criminality and shady practices (directors loans etc.).

[Macy]

Am I the only one who thinks today's "news" about Anglo & IL&P is much ado about nothing?

Probably, but only because of what has been uncovered before. However the timing of it makes it look particularly bad in context of what has subsequently happened with Anglo

Just add it to the list of how crap the regulation was and how shady some of that sectors business practices were (are?).

[drummerboy]

The Financial Regulator were aware of these transactions and has only now decided to look into them. What a joke.

[pete]

The Financial Regulator were aware of these transactions and has only now decided to look into them. What a joke.

Indo

FORMER Financial Regulator Pat Neary retired with a secret €630,000 payoff, the Irish Independent can reveal.
* He was on an annual salary of €285,341.
* He was paid an additional €202,000 handshake in return for his resignation -- equivalent to being paid for eight months.
* He was also paid a lump sum of €428,000.
* He will also receive an annual pension of €142,670.

Three cheers for Incompetence!

If that is standard practice in the Banks does it means they are all fradulant? By that logic a bank could get say a 50billion overnight loan & so they could show the markets they have massive deposits.

[OneRedArmy]

As I said, year-end stock manipulation happens in every line of business. It's not fraudulent.

My understanding was that the deposit was correctly recorded in the interbank line, therefore it wasn't mistrepresenting it as customer deposits as the news media have incorrectly stated.

This information is only really relevant to equity & bond investors and if they don't know about it, they shouldn't be in the investment game.

In the grand scale on what's gone on in the last fees years, this is way down at the bottom of the priority list.

[Sheridan]

What's really amusing me about this crisis is the capitalist government of Ireland denying that capitalism has failed in Ireland, insisting instead that capitalism has failed everywhere. What's less amusing is that they'll get re-elected on a capitalist platform.

[endabob1]

[MOD EDIT: This is an op-ed from the IT: http://www.irishtimes.com/newspaper/...867931066.html --adam]

Thanks Adam

I just got it via email so didn't have the link

[Sheridan]

Fianna Fáil could send that out as campaign literature and still get elected. What the Irish people lack in brains and morals, they make up for in having no balls either.

[pete]

Is Brian Lenihan under pressure to resign?

Minister for Finance Brian Lenihan has said he has no plans to step down after coming under intense political pressure following his admission that he only learned about the transfer of €7 billion to Anglo Irish Bank last month, even though his department informed the Financial Regulator about the issue last October.

This morning Mr Lenihan said: “I wouldn’t fault my department for not telling me at that stage”.

“They did tell me subsequently when the matter came into sharper focus when a subsequent due-diligence exercise was analysing the deposit base of the bank," he told RTÉ's Morning Ireland . “I don’t believe my officials should be scapegoated on this matter.

Whatever about forcing him to resign what hope can we have these people can solve the crisis? They really are just lurching from one crisis to another...

[OneRedArmy]

As I said, year-end stock manipulation happens in every line of business. It's not fraudulent.

My understanding was that the deposit was correctly recorded in the interbank line, therefore it wasn't mistrepresenting it as customer deposits as the news media have incorrectly stated.

This information is only really relevant to equity & bond investors and if they don't know about it, they shouldn't be in the investment game.

In the grand scale on what's gone on in the last fees years, this is way down at the bottom of the priority list.

More info in today's papers about the IL&P "loan" to Anglo.

Turns out it was a back-to-back transaction, but IL&P routed it via IL Investment Managers so that it would be recorded as a customer deposit rather than interbank (and therefore viewed as more long-term).

This makes IL&P look awful and they have indicated they did it with implicit Government approval based on prompts to help out other Irish banks "for the good of the green jersey".

Certainly changes the complexion of the issue, particularly the alleged Government involvement.

Meanwhile, instead of pursuing this, Labour are trying to cost the taxpayer even more money by effectively pushing a mortgage amnesty.

[pete]

Turns out it was a back-to-back transaction, but IL&P routed it via IL Investment Managers so that it would be recorded as a customer deposit rather than interbank (and therefore viewed as more long-term).

This makes IL&P look awful and they have indicated they did it with implicit Government approval based on prompts to help out other Irish banks "for the good of the green jersey".

It is very relevant that it was IL&P given there already declared involvement in the Fitzpatrick loans.

We all know this won't be the last story about those Banks. If BOI & AIB get infected by it directly will be carnage in the markets.

Maybe the government should just give the money to the citizens of the state. Any one with debts arrears will probably pay off that & others woll likely save it for rainy day so the banks will get a lot of the money anyway.

[Fr Damo]

Meanwhile, instead of pursuing this, Labour are trying to cost the taxpayer even more money by effectively pushing a mortgage amnesty.

Agree that this is going to cost (the banks and by default the Government) but as it is there will be a people putting the keys back through their closed door with the negitive equity situation never mind the stress of a court hearing and a repossison order so at least the latter might be postponed for 12 months.

[OneRedArmy]

Agree that this is going to cost (the banks and by default the Government) but as it is there will be a people putting the keys back through their closed door with the negitive equity situation never mind the stress of a court hearing and a repossison order so at least the latter might be postponed for 12 months.

Unfortunately that part of the Govt plan was just for show.

None of the mainstream lenders have ever sought to repossess a primary dwelling within 12 months of arrears.

The sub-prime lenders who adopt this approach aren't covered by the scheme.

Pure Government spin.

[Dodge]

None of the mainstream lenders have ever sought to repossess a primary dwelling within 12 months of arrears.

So how will Labour's plans cost tax payer money (genuine question haven't researched it)

[OneRedArmy]

So how will Labour's plans cost tax payer money (genuine question haven't researched it)

Labour want a guarantee that no houses will be repossessed. That would encourage more people to stop paying mortgage (no moral hazard). Mortgage arrears increase. Banks report worse financial performance as losses increase. Capital decreases. Market reacts by increasing cost of debt. Liquidity and funding clobbered. Spiral of doom. Government end up fully nationalising sector.

Which is right up Labour's street....

[pete]

Labour want a guarantee that no houses will be repossessed. That would encourage more people to stop paying mortgage (no moral hazard).

12 months seems a reasonable time to protect people from repossession orders but as you say not often down in Ireland anyway. I am sure the banks don't want property & would prefer lower payments over longer term.

I hear because of the way the US government is buying up bad debt it has not stopped the practice of loaning money to people who cannot pay it back.

[Saint Tom]

It is very relevant that it was IL&P given there already declared involvement in the Fitzpatrick loans.

We all know this won't be the last story about those Banks. If BOI & AIB get infected by it directly will be carnage in the markets.

Maybe the government should just give the money to the citizens of the state. Any one with debts arrears will probably pay off that & others woll likely save it for rainy day so the banks will get a lot of the money anyway.

IL&P had no involvement in Fitzpatrick's loans, that was Irish nationwide. also, by the shabby standards of anglo, BOi and AIB - IL&P were the most restrained of lenders and do have an adequate capital base to not require governoment injections. No significant commercial or developement finance on the books. And whie IL&P did allow 100% mortgages, overall the book is about 88% residential property with an average loan to value in the region of 65-70% despite the tumbling house prices of late.

As an employee of IL&P I am extremely disappointed with how the hierarchy of the group behaved during this matter. They have said themselves it was wrong and the group chief executive, along with two other senior executives have resigned.

As I said before, IL&P are sound in comparison. Beyond the government guarantee (which was offered rather than sought) we should be in a position to ride this out independently which is more than can be said for the "Big 2".

[Macy]

12 months seems a reasonable time to protect people from repossession orders but as you say not often down in Ireland anyway. I am sure the banks don't want property & would prefer lower payments over longer term.

That's fine, unless you were one of the fools talked into 105% mortgage over 40 years - not too much extension left for most people in those circumstances.

Presumably you could put a process in place to show inability to pay? Wouldn't be that hard.

People should also be able to write down the amount if they can show they were encouraged to make false declarations and were missold products.