The Oireachtas should insist on clarity from the Government as to its plans for running Anglo. It’s not credible for the Government to say Anglo will operate “at arms length” from Government when, for example the Bill (s.17.3) provides:
“The Minister or the Minister’s nominee may by written instrument direct the
directors of Anglo Irish Bank to take or not to take any action or do or not to do anything including (without prejudice to the generality of the foregoing) to dispose of all of its assets or a specified asset. The directors shall comply with such a direction.”

I hope the Government outlines a plan for Anglo which would focus on debt recovery and the orderly winding-up of its affairs, perhaps over the course of 3 or 4 years. The “bad bank” idea seems to me a recipe for disaster with the losses of all Irish banks heaped on the taxpayer. I see no case of injecting capital into Anglo but that would be essential if the Government intends that it should be a “going concern”. I would be concerned that the records of Anglo have already been compromised (you will recall the fiasco of Irish Trust Bank).

Current circumstances justify drastic measures but it is essential to mitigate the risks which inevitably arise for a State-controlled bank. Deputies and Senators need sound advice to ensure that this Bill is not adopted in haste to the detriment of our economic future.

maybe the state should instead prop up a stronger bank and not focus on a ‘no bank left behind’ approach that will never work without breaking the coffers of every citizen in the process. Perhaps letting a bank go to the wall would be better, like any company in this position, the functional parts are bought out and kept on as profitable entities, the rubbish is left to burn.

the depositors have to keep their money somewhere so that would likely be the stronger bank -that’s what the guarantee is for - who were rewarded with bailout money for doing a better job than Anglo did.

The anglo deal truly is a reward for bad behavior and now that every banker knows bailouts are ready they’ll focus more on arranging their ‘handshake’ money than caring about any meaningful recovery. Essentially saving the weakest removes a need for survival of the fittest, if you save the worst then you’ll definitely save the best.

(If anyone does know of a 19th. century economist who forsaw an era in which the working class would be overburdened with consumer debt, I’ll join the fan-club.)

Patrick,
On your main point - Distressed firms need to be decisively restructured, and not kept alive on a drip-feed - I don’t see how property speculators can be “decisively restructured”. There are construction firms connected to the speculators but they are already being restructured in very decisive manner (builders and architectural firms are laying-off staff in large numbers).

The property boom began as system allowing local monopolists to extract profits from the original “Celtic Tiger” i.e. the export-led growth generated by imported multinationals. Once the export growth ceased, it became a pure pyramid scheme i.e. there is no business model once the price collapses.

Aggresive foreclosure on existing bad loans would undermine the fragile property market. The banks’ only realistic prospect of recovery, therefore, is through recourse to the speculators’ previous gains. As the banks pursue that logic, we are likely to see a succession of high-profile cases replicating the Michael Lynn saga.

“Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism”

Karl Marx, Das Kapital, 1867