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Anglo Irish Bank News update as viewed from home and abroad


‘So, [the loan] is bridged, until we can pay you back . . . which is never’

Banker laughs at making repayments and mimics voice of Financial Regulator read full article

irishtimes.com

Anglo Irish bankers ‘tricked’ government into bailout

Telegraph.co.uk
The partial transcripts, published in the Irish Independent newspaper, appeared to show the bank’s then head of capital markets, John Bowe, admitting that Anglo had deliberately hoodwinked the government over the size of the bailout required. Speaking

Irish opposition calls for bank inquiry after tapes leak
Reuters
DUBLIN (Reuters) – Ireland’s opposition called for a full inquiry into the collapse of Ireland’s financial system on Monday, after a newspaper published recordings of talks between Anglo Irish Bank executives about a bailout. Rescuing indebted banks 

Ireland’s rage over Anglo-Irish rescue revelations is justified – Enda Kenny
The Guardian
Ireland’s prime minister, Enda Kenny, said Irish people were entitled to be angry about revelations that an executive at the firm that almost bankrupted the country boasted he had picked the €7bn (now £6bn) figure purportedly needed to rescue Anglo 
See all stories on this topic »

Irish bankers ‘hoodwinked’ government over bailout, secret recordings show
The Guardian
Taped phone calls between two senior executives at Anglo Irish have compounded suspicions in the Republic that bankers lured the then Fianna Fáil led government during the crash of September 2008 into a costly financial trap by saving the debt-stricken 
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Kenny Faces Irish Bank Inquiry Calls as Anglo Tapes Released
Bloomberg
Irish Prime Minister Enda Kenny faced growing calls for an inquiry into the collapse of Anglo IrishBank Corp. after the Irish Independent released recordings of talks between executives as the lender sought a bailout. The partial transcripts from 

Tapes expose culture within toxic Irish bank 

Senior figures in the former Anglo Irish Bank, John Bowe and Peter Fitzgerald, were recorded discussing how the toxic lender was seeking a €7 billion rescue fund, but that it needed more. read full article

irishecho.com.au

Irish Government to Push for Banking Inquiry
Wall Street Journal
DUBLIN—The Irish government is determined to implement new laws to help launch the country’s first wide-ranging inquiry into the causes of its banking debt crisis and help assuage “the rage and the anger” of people deeply affected by it, Irish Prime 
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Anglo Irish still offering insight into banks’ crisis
Financial Times
A phone call between two executives at Anglo Irish – just days before Dublin issued a blanket guarantee to its banks in mid-September 2008 – suggests the bank wilfully deceived regulators about its financial health, an allegation that John Bowe, head 
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Finance Minister had ‘no idea Anglo phone recordings existed’

FINANCE Minister Michael Noonan had no idea the Anglo tapes existed until he read yesterday’s Irish Independent. read full article

independent.ie

Abuse the bank guarantee, don’t get caught – Drumm

ANGLO Irish Bank boss David Drumm laughed about “abusing” the bank guarantee and warned his executives not to be caught abusing it, the Anglo Tapes reveal. read full article

independent.ie

Former executive John Bowe denies misleading Central Bank

JOHN Bowe says that he “categorically denies” the allegation that he misled the Central Bank or was aware of any strategy to do so. read full article

independent.ie

Bounced into the bank bailout

A recorded conversation between senior officials at former Anglo Irish Bank appears to confirm what the public has long suspected: that the Central Bank and last government were bounced into bailing out the banking system and lacked detailed knowledge of the extent of the crisis. The manner in which this exercise was conducted: through obfuscation, veiled financial threats and political pressure, exposes a clientelist system where power and contacts are paramount and nobody is held to…. read full article

irishtimes.com

Bank inquiry to begin by autumn, say Coalition sources

John Bowe says he deeply regrets tone and language he used in phone call read full article

irishtimes.com

‘Anglo tapes show need for banking inquiry’ – man who wants to run inquiry

Ciarán Lynch, the chair of the Oireachtas finance committee, says the tapes may be “the tip of the iceberg”. read full article

thejournal.ie

 

 

Irish Golden Circle still shining despite massive recession — Still running the show despite bankrupting the country


Brian Goggin, formerly of the Bank of Ireland

 

They were called the golden circle, the people in the inside loop who made lots of money during the boom years here.

I’m not just talking about the property speculators and developers playing with their borrowed billions who were in an inner platinum circle all of their own. The golden circle was far wider than that.

It included bankers, lawyers, accountants, financial advisers, brokers, management consultants, IT experts, the top layer of professionals of all kinds — and it also included the senior levels in the civil service and state agencies, the guys and gals who actually run the country for the politicians.

So having comprehensively screwed up the country and plunged us into a financial catastrophe so bad that we had to be rescued by the IMF and the EU, all these guys and gals are now out of a job, right?

Not at all. This is Ireland, after all. The unbelievable, extraordinary truth is that almost all these experts and advisers have held on to their top jobs and are still doing very well, thank you very much.

While the ordinary folk here struggle in the darkness of lay-offs, welfare cutbacks and tax hikes, the sun is still shining brightly on our golden circle.

Of course there has been some token changes. At the very top of the Department of Finance, the Central Bank, the Financial Regulator‘s office and, of course the banks, a few people were shifted. A couple went to cozy positions in Europe with big salaries attached, and the others were put out to grass with pension pots worth millions and huge golden handshakes so they can continue to enjoy the privileged lifestyles they expect.

Only a very small number of people were moved from the leadership roles they had. In fact you could count on two hands the number of top dogs who were moved.

The majority of the top layer of people, who all played a part directly or indirectly in destroying our economy, are still there. The senior civil servants, the financial experts, the consultants, the lawyers, the accountants and auditors are all there and still being paid boom time salaries and fees.

The game has changed, of course. Instead of advising the government and businesses on the boom, they are now advising them on the bust.

The bankers and accountants and auditors and consultants who failed to see the developing bubble are now the ones making fortunes dealing with all the businesses that are going bust. Dozens of them have even been hired to play key roles in NAMA, the national bad bank where all the toxic property loans have been dumped.

So the very people who made the mess are now the ones making a very lucrative living out of trying to sort it out.  Two or three of the biggest legal firms and accountancy firms here which were up to their necks in the boom are now “advising” on the bust.

This is enough to give you indigestion.  But what is really sickening is that the members of this very large golden circle are still charging eye-watering fees for their services.

We’re talking hundreds of euros an hour here.  And

they are getting away with this even though the country is broke — and it’s broke thanks to their incompetence.

It starts right at the top, of course, with our politicians, who are paid far more than their European counterparts.  We all know the taoiseach (our prime minister) earns more than the U.S. President.  But he also is paid more than the British prime minister and more than the heads of most European countries, which may be a less dramatic comparison but is more relevant.

The same applies to the civil servants who head up government departments here, and to many other areas of Irish government and professional life.  Consultant doctors and top lawyers in Ireland earn far more than their counterparts in Europe.

Further down the ladder, senior teachers here earn at least 20 percent more than teachers in Britain, for example.  And it goes on and on, increasingly dividing Irish society into those who are comfortable and those who are struggling to make ends meet.

The common factor among those who are doing okay — in case you haven’t spotted it already — is that they all work for the state or for semi-state organizations (except for the bank bosses, although you could say they also work for the state since the state now owns the banks).

This influences fees that are charged by others who provide professional services to the state (like lawyers and accountants) and so they keep their fees and charges high.  Why should they bring them down when they see all the others in the golden circle hanging on to their high pay and status?

What all this means is that we are developing two Irelands.  There are those who are paid by the state, directly or indirectly, and who see no reason to moderate their pay or pensions as long as the state can borrow enough to keep going; since it’s all paid for by borrowing, there’s no real limit.

Then there is everyone in the private sector, where pay and pensions depend directly on the ability of a company to make a profit and stay in business –and for more and more of them, the cost of keeping a job or continuing to get a pension means taking huge cuts in what they are getting.

The pension divide between the two Irelands is even more nauseating than the pay situation.  Let’s start with two of the most infuriating examples from the top of the golden circle.

You may remember the name Brian Goggin, the boss of Bank of Ireland during the boom.  You also may remember the name Eugene Sheehy, who was the boss of AIB during the boom and property bubble, which of course only happened because the two banks (the biggest in Ireland) made it possible through reckless lending.

Sheehy has a bit of extra notoriety because he was one of the senior bankers who had the late night meeting with the taoiseach and the minister for finance in September 2008 and pleaded for help to help them get through their “temporary liquidity problem.”

The result was the government guaranteed all bank debt, a decision that has bankrupted the country because the real level of the bank debts was many times greater than Sheehy and his buddies revealed to the government that night.

The banks did not just have a liquidity problem. They were insolvent.  They were completely bust,  owing tens of billions of euro with not a hope of ever being able to pay it back.

So Goggin and Sheehy were major players in destroying the Irish economy and losing us our economic sovereignty.  Not only that, but we taxpayers have had to meet the cost of pouring billions into AIB and Bank of Ireland to keep them open.

Did the two boyos go to jail?  Or even have to do some community service to atone for what they had done?  Not at all.  This is Ireland, after all.

They were both moved, given early retirement.  And this is the best bit.  Goggin is on a pension of €650,000 a year for the rest of his life. Sheehy’s pension is €450,000 a year for life.

Both are still relatively young.  Sheehy has gone

back to college.   Goggin is back at work, playing a leading role in a multi-billion U.S. investment group that is targeting distressed property loans in Ireland and buying baskets of insurance policies from finance institutions here that are under pressure.

These are extreme examples of the way golden circle members here get looked after.  But the same stuff goes on all the way down the state food chain, with state employees getting very generous guaranteed pensions for life, typically between half and two thirds their final salary.

And it’s all funded by state borrowing, so there is no limit on what it costs.  Contrast this with the private sector, where almost 80 percent of company pension funds are bust, thanks to the financial collapse.

Let’s take an example to illustrate what’s going on.   The pension fund in Independent Newspapers, the biggest newspaper group in Ireland where this writer has worked, now has a black hole in it of some €160 million and is probably going to be closed down, leaving a lot of people with little or nothing.

Meanwhile out at Dublin Airport, the umbrella pension fund that looks after staff in Aer Lingus, the DAA company that runs Irish airports and a linked aircraft maintenance company, has a black hole in it of €750 million.  Because Aer Lingus and the DAA are semi-state companies, the unions are trying to force the government to pump money into this pension fund so staff can get their full pensions.

And you are all going to know about this very soon because the unions are threatening a wave of strikes in the run up to Christmas that could disrupt trans-Atlantic flights.

The fact that the pension fund is bust — there’s no way back from a €750 million deficit — and the state is bust, makes no impression on these semi-state workers.  As far as they are concerned the state must borrow to back fill their pension fund. It’s that simple.

In the real world of the private sector, such nonsense is not an option for workers because their companies cannot borrow like this and could go under if they tried.  Independent Newspapers is already struggling for survival, quite apart from its pensions problem.

It’s a two Ireland scenario.  Unfortunately the politicians and the civil servants who run the country are all part of the Ireland that is okay.

They talk a lot, but there is no action to reduce the problem for the private sector workers who are part of the other Ireland.  Instead we get lectures from union leaders about avoiding a race to the bottom in wages and pensions.

Like I said, the golden circle is still shining, but the glow is making the rest of us feel like throwing up.

via Irish Golden Circle still shining despite massive recession — Still running the show despite bankrupting the country | Ireland Calling | IrishCentral.

Enda Kenny threatens banks on mortgage debt forgiveness for homeowners –


TAOISEACH Enda Kenny has warned he is unhappy with the pace at which the banks are engaging in debt forgiveness with homeowners in mortgage distress.

Mr Kenny threatened to bring in new laws to force the banks hands if the Financial Regulator asked for extra powers.

The Taoiseach also said homeowners would have the use of a Personal Insolvency Bill soon.

He said if the banks did not engage with customers, then homeowners would have legislation behind them to allow debt forgiveness and writedowns.

“It’s not a case of standing by while this boils over,” he said.

Mr Kenny said the banks had been called into the high-powered Economic Management Council and told “in plain English” that they had to speed up the pace of debt forgiveness.

The Taoiseach came under pressure in the wake of one of the most senior regulators in the Central Bank criticised the banks’ attitude to the mortgage crisis.

Dealing with the banks is like dealing with troublesome teenagers, the Central Bank’s director of bank supervision Fiona Muldoon said.

She said banks were in denial about the extent of the mortgage crisis, and were refusing to come up with realistic solutions.

Earlier, Social Protection Minister Joan Burton claimed banks were keeping the cash given to them by the taxpayer for loans, rather than lending to businesses and families.

Ms Burton said the banks were given money to boost their balance sheets and allow them to lend.

“Banks are conserving their capital, rather than lending to business and housebuyers,” she said on RTE‘s Today with Pat Kenny.

She also once again hinted at a cut in child benefit payments.

The minister said she was “going to do my best” to protect basic weekly social welfare payments, such as the pension and dole.

But she again failed to say child benefit won’t be cut in the Budget.

Ms Burton said she wanted to take a look at the services available for children.

The minister spoke about school meals schemes and book loans, but appeared to rule out giving food vouchers instead of cash.

She said she preferred the taxation model for child benefit, but this wasn’t possible, and was also examining a top-up system for low income families.

“This has to take place over a number of years,” she said.

“What we need to do is the best thing that brings the best outputs to those in poverty,” she added.

An in-house group in the Department of Social Protection has recommended a cut to the €140 monthly child benefit payment of €40, with top payments for families living in poverty.

via Enda Kenny threatens banks on mortgage debt forgiveness for homeowners – National News – Independent.ie.

via Enda Kenny threatens banks on mortgage debt forgiveness for homeowners – National News – Independent.ie.

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