Government Banking Inquiry Proposals

After repeatedly ruling out the idea that a banking inquiry would occur in the near future, the government has now released its own proposals for exactly such an inquiry. The formal proposals are here (this is an amendment to Labour’s proposal) while the Minister for Finance’s speech on the issue is here.

The essence of the proposals are as follows:

The inquiry will have two stages.

First, the Government will immediately commission two separate reports – one from the Governor of the Central Bank on the performance of the functions of the Central Bank and the Financial Regulator and the second from an independent ‘wise’ man or woman with relevant expertise to conduct a preliminary investigation into the recent crisis in our banking system and to inform the future management and regulation of the sector. These reports will also consider the international, social and macro-economic policy environment which provided the context for the recent crisis. I expect both reports to be completed by the end of May this year and laid before the Houses shortly thereafter.

The second stage of the inquiry will be the establishment of a statutory Commission of Investigation which will be chaired by a recognised expert or experts of high standing and reputation. The terms of reference for this commission will be informed by the conclusions of the two preliminary reports. The aim will be for the commission to complete its work by the end of this year. Its report will then be laid before the Oireachtas for further consideration and action by an appropriate Oireachtas committee.

A couple of initial observations. First, as I understand it, it seems unlikely that the second stage will involve any public hearings. The Commissions of Investigations Act of 2004 (link here) states that:

A commission shall conduct its investigation in private unless (a) a witness requests that all or part of his or her evidence be heard in public and the commission grants the request, or (b) the commission is satisfied that it is desirable in the interests of both the investigation and fair procedures to hear all or part of the evidence of a witness in public.

Neither (a) or (b) seem too likely to occur.

Second, to my mind, the request that the Governor of the Central Bank be charged with writing the definitive report on its past performance puts Patrick Honohan in an invidious position in light of the fact that he will have to work on a daily basis with many of the staff who remain on from the previous regime.

Third, the terms of reference only go up to events up to September 2008. I would prefer to see the date extended at least up to early 2009 as there are serious questions to be asked about the Regulator and Department of Finance’s understanding of the scale of the problem facing our banks and the advice they received from outside sources such as PWC (see here and here).

110 thoughts on “Government Banking Inquiry Proposals”

  1. @Karl Whelan
    The banks started to get into trouble from 3 years ago (the start of 2007) at the latest. So we have already been waiting three years. We need the truth, in public, starting immediately. A mature 21st century democracy should not have to wait 4 minutes, let alone 4 years, for the full, blunt truth about the collapse of it’s banking SYSTEM.

    As Vincent Browne wrote:
    “The Department of Finance and Brian Cowen personally must have had prior notice, from at least the beginning of 2007, that the banks were in crisis, especially Anglo Irish. Michael Somers, then head of the National Treasury Management Agency (NTMA) said he knew Anglo was in trouble from then and it isn’t believable he didn’t tell anybody.”

    The government just don’t get it, even now. We’re not peasants, we’re citizens of one of Europe’s oldest continuous democracies. Even under Edwardian British rule we would have gotten more answers, more quickly about a bank collapse – never mind a banking system collapse.
    The government also want to exclude NAMA, as a result of which,
    “the Irish state will be engaged in the riskiest derivative instrument undertaking of all known to man to date.”
    (Dr Constantin Gurdgiev of Trinity College Dublin.)

    They want to exclude AIB’s giving of half a billion of public money to Zoe in March 2009 for a farcical degree of security (how much of that will we see back?) (Irish Independent Today).

    Then there is the fact that we have been building houses since mid-2005 with no buyer (Irish Independent Today).

    On second thoughts, the government get it only too well. That’s why they are pushing this into the future for as long as they can. A 21st century democracy should show them the door forthwith.

  2. I’d also like to be the first to call for a Tribunal of Investigation into the establishment of the Commission of Investigation (Banking and Regulation Failure 2010).

    :mrgreen:

  3. @Greg
    I second that call and I’d like to make a call of my own.
    Can we now call this what it is, an Establishment Cover Up?

    Take a look at the membership of the Council of the ESRI, the Economic and Social Research Institute, the most prestigous government policy research institute:
    http://www.esri.ie/about_us/the_institute/governance/council/

    David Begg, General Secretary, Irish Congress of Trade Unions:
    He was and still is on the board of a Central Bank whose banking system collapsed! In disgrace? No, on the board of the Central Bank, the ESRI and Aer Lingus!

    John Hurley, former Governor, Central Bank and Financial Services Authority. In disgrace, as we have been told? No, on the board of the ESRI!

    David Doyle, Secretary General, Department of Finance since mid 2006.
    Disgrace? ESRI!

  4. @ Paul Iticsdotayee

    No director of the Central Bank who was in position from 1st January 2005 should be a current director. I’m not saying they did anything wrong I don’t even know who they are). It’s just that with the Nation having been brought to the brink of destruction (to paraphrase Alan Ahearn) it seems utterly absurd that those tasked with the protection of the Treasury at the time should still have that responsibility.

    And, as Karl points out, Honohan is required to report on Begg and others. You’ll be able to cut the atmosphere in that board room with a sledge hammer.

    Nothing like having the Board of the Central Bank dripping with mutual suspicion in times of crisis.

    @ Paul,

    I’m slow at the best of times.

    But what does Iticsdotayee mean? Are you a Mayan God?

  5. For the two Tribunals of Inquiry that I have suggested I would also suggest that the cost of such inquires should be levied on banks having a domestic franchise in proportion to their deposit base.

    It would be beyond stupid that the Citizen should have to bear the cost on investigating corporate and regulatory failure.

  6. @Karl Whelan

    I agree – ‘this does place ‘The Governor’ in an ‘invidious position’- and a very, very difficult one. Politically, of course – and from the FF/PD perspective – it is also a means ‘of shutting him up’ ….. good tactics from their perspective……. I’m now giving up on the minor party in Government …….. softballs are not of much use to us at the moment.

    There is no evidence here that the ‘social aspects’ – noted in The Governor’s recent press release on an Oireachtas committee – such as the networks of power and influence, will be addressed – and these, by definition, would need to address the nodes of this network within FF & the PDs over the time period in question.

    If a referendum is required to open the pathways for an ‘open and transparent’ Oireachtas committee inquiry [ with teeth] – then may I be the first to suggest that FG, Labour and SF walk from the Dail and stay outside the bl**dy gates until the present Gov agrees to hold one asap, like before Paddy’s Day. If we don’t get transparency here we are not living in a democracy let alone a republic …………

  7. It goes back to ancient traditions. (Cue the Sinead O’Connor music) The Irish story is a human story and an old one. I can imagine how Alexander the Great must have felt like when he looked at the state of his country. This collection of thugs and war lords. Alexander began to think of how he might harness these brutes – who would rather take lumps out of one another – into an organised fighting force.

    That is the challenge facing Ireland as we stand in 2010. Who will be our leader? The man on the white charger who will lead the cavalry. A cavalry consisting of Dublin docklands property developers such as Bono of U2, Harry Crosbie, Sean Dunne, Liam Carroll and so forth. The problem is the number of different tribes which has separated this island during the Celtic Tiger years. Who speak in many different tongues. On the island, we produced wild and fantastic species of war lord, the likes of which are found no where else on the planet.

    We have regional banking branch managers who have amassed vast property empires. We have local authorities who have become developers themselves, such as DunLaoghaire Rathdown County Council at Cherrywood. We have bankers who operated as local authority chair persons (such as Sean Fitzpatrick) on one of the ‘largest buildings sites in Europe’, the Dublin docklands area. We have politicians who actually became builders. Some that we know about, such as Bernard McNamara. Morgan Kelly would argue, we have no real idea what loan book is outstanding to Irish politicians. That is a question that could be asked?

  8. Minister O’Dea did not rule out Oireachtas examination of the findings of the two reports. I presume we can believe him!

  9. @Joe Lawlor

    We need a referendum so that such Oireachtas committees can use TEETH – as presently constituted all they can do is blather, blather, blather ……. Supreme Court finding on Abbeylara ….. hence, per Dev’s Magnum Opus, the people decide. I’m confident that it would be carried with a massive majority if all the opposition went for it ………. doubt the GP could stand the heat. So lets see FG, Labour, SF take responsibility – that is the purpose of opposition – forget the bought gombeen ‘independents’ ……..

  10. Willie O’Dea. Hmmm..

    Lets call a spade a spade.

    If a group of tribal leaders like the Talaban had raced through one’s country leaving it in ruin, would be raising concerns about impugning on the character of persons involved, to use an expression by Willie O’Dea on PrimeTime RTE television this afternoon.

    And just because they choose not to use Nissan pickup lorries with mounted artillery as their form of transport, lets not make distinction between the Irish breed and their brethren in the deserts.

  11. @Garo, Greg
    Let me answer by saying that the government’s top secret, classified bank inquiry is being discussed on POL ITICS . IE on the following thread: “Government Proposes Banking Commission of Investigation”.

    It has only been up seven hours but has already attracted 139 responses, a huge number for a Current Affairs discussion. Cyberianpan, a bank investor AND a government supporter, who joined us on our first post here, is a frequent contributor. However, the question he raised in the first post here seems to my mind to be very significant.
    http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=THE+MARKET-qqqs=themarket-qqqid=38056-qqqx=1.asp

  12. There are times when I am ashamed to be Irish. While I understand there is a certain amount of balderdash going on so that Ireland can continue to borrow from the international markets, it is very difficult to stomach the total lack of responsibility from these ex bankers.

    I remember talking to a solicitor about obtaining a mortgage in 2000. He mentioned Irish Nationwide. However I instantly ruled that institution out.

    The reason being I remembered watching a eviction of a family down in Waterford (or Wexford, I can’t remember) sometime in the late 1990’s or very early 2000. The family borrowed something like 80K, fell behind in their payments incurred heavy penalties and eventually paid back over 160k. But it was still not enough, the payments were too infrequent and erratic. It made headlines on RTE at the time. Some of you may remember it.

    But I will always remember the trauma on the young daughter’s face as the family were turfed out. Not a pleasant experience.

    However the more revelations I read about in the press the more depressed I become. This time its not the one family down in the sunny south east that is getting the rough end of the stick. This time its all of us together.

    @ Karl Whelan.

    Correct me if I am wrong but I believe you went to study in the US in the past. Do you have any information on the RTC commission which was set up in the early 1980’s to offload toxic loans from US banks?

    Would it be worth drawing up a comparison between the RTC commission and NAMA? Or am I asking you to compare apples and oranges?

  13. This would be Minister O’Dea who sees no problem with lying under oath, until found out by tape recordings?

    Besides, from the squeaks and grunts I got that he was talking about after the commission had reported. So January 2011 at the earliest.

    But then maybe he was retelling the plot of his favourite episode of Wanderly Wagon. His Bosco impression is so flawless, it is hard to know.

    Back to you Brian, top that one…

  14. @ Bond. Eoin Bond

    “Oh come on, you’re better than that. Say it quickly. ALL of it.”

    Now I know I’m slow.

    Your inscrutability leaves me almost wordless.

    Maybe all that good Maltese sun has fired my brain.

    What are you getting at Mr Bond?

    What All? Do you know something I don’t?

    Oh, by the way. What is the value of €3,500,000,000 (Par), €3,500,000 (Nominal) Perpetual Preference Shares @ 8% when the dividend is not paid?

    You’re a banker Mr Bond.

    Is there some formula for calculating the current value of non-dividend paying perpetual preference shares?

    That of course excludes the probability that they will be converted at Nominal to non-dividend paying Ordinary shares.

    Your insight in this matter would be useful here before the €3,500,000,000 (by 2) vanishes just like the €4,000,000,000 given (not invested in) to Anglo Irish Bank, and of course the next €6,000,000,000 to be given to Anglo Irish Bank and the €2,000,000,000 to be given to Irish Nationwide Building Society.

    As a banker it is of course possible that you believe that the Treasury should be looted to the tune of (oh what the hell) €65,000,000,000 to save the banks. Maybe you have a lesser figure.

    As a banker do you have an opinion on how much of the Treasury should be expended on saving the Citizen?

  15. @Greg
    Paul (POL) itics (ITICS) dotayee (.IE)…
    In case you haven’t seen Paul’s explanation above (I had to wait for it too).

    Anyone know why 3.5 bn of 8% preferreds only gives a dividend of 250 mn and not 280 mn?

    Oh, and Greg, in theory we should get common equity instead of the dividend, so about 14.3% of th bank for 250 mn euro missed dividend… can’t wait until we own, like, 3,000% of BoI…

  16. Why doesn’t the banking inquiry enlist the services of a medical professional? Someone like Dr. Gregory House? Having played around with the ‘war lord’ analogy above, I will attempt to use one other analogy. I will attempt to draw some analogy between the world of medicine and the world of inquiries into banking/political systems. From my viewing of the hit TV series House M.D. I have already learned the following.

    When Dr. Gregory House would find a case that was deemed ‘interesting’ he would proceed as follows. His job was as a diagnostician in a hospital, where he dealt with the ‘hard to diagnose’ patients. The thing with diagnosis is you have to follow a very rigorous procedure based on logic and first principles. A patient might have problems with one or more of the following, and Dr. House would attempt to diagnose based on symptoms the patient might exhibit.

    Genetic.
    Cancer.
    Allergy.
    Infection – Viral, Fungal or bacterial.
    Neurological.
    Psychological.

    The important point to note, is that an early mis-diagnosis could result in the waste of much valuable time for the patient’s chances of recovery. It was only possible to think about ‘treatments’ for the patient, if one could identify where all the underlying symptoms were coming from. Very often, Dr. House would find some problem hiding behind another one, and so forth.

    Any inquiry into the problems in Ireland should consider the following. There is no doubt the ‘Celtic Tiger’ madness in Ireland was some kind of virus which spread throughout the population. But there were certain ‘genetic’ factors – things we cannot do much about. There is certainly a need in any inquiry to look for cancer. But then, if cancer is not present, or is not the leading cause of the patients problem, we should not try to blame everything on cancer either. Because the treatment for cancer eliminates the patient’s immune system and thereby eliminates their ability to fight any kind of infection.

    The symptoms which are purely psychology, that is, in our own heads (we imagine them) have to be eliminated also from the equation. In any case, psychological treatments are conducted in a different branch of the hospital. What Dr. House often found was the best way to identify an infectious disease for sure – one which might be hiding away cleverly in all kinds of nooks and crannies of the system – the best way to flush it out was to make it temporarily worse, in order to diagnose the symptom properly.

    If the problem is neurological, things can get extremely complicated. The brain of the system is a vast and complex organism, which human beings do not understand fully. Let us hope that the Irish inquiry does not discover it is a neurological problem. But still, this possibility has to be eliminated in order to proceed to the proper eventual diagnosis.

    Note that Dr. House would be very careful in the earliest stages to stay away from the patient. Dr. House made sure he did not know the patient or feel in any way emotionally attached or ‘invested’ in the patient’s well being. The easiest way to conduct an effective and timely diagnosis, was ironically, not to care the slightest about the patient’s welfare, or that of his/her immediate relatives. You can imagine this produces some funny scenes in the TV show. Dr. House’s sheer absence of any human feelings towards his fellow man, never fails to amuse me, I have to admit.

    Best Wishes, BOH.

  17. Call me a cynic but I am betting the timeline for this may go as follows.

    A. Proposal brought to the dail in May. They decide the timing of this is a bit close to the 4 months holidays so it gets deferred.

    B. Back in end of September in the Dail. Finally decided and then on to set up a committee to agree how it should function.

    C. Committee sets up in December just in time for 6 weeks holidays.

    D. Starts in January 2011.

    E. After many injunctions and High court interventions we get a result that we all knew already in May 2012, just in time for holidays and it cannot be debated so it will be forgotten due to other important matters. It is all in the past and mentioning it again might damage Irelands reputation further.

    Am I being a bit cynical !

  18. I forgot one other possible cause of the patients illness above – narcotics. That is, there is no point in treating a patient for an apartent symptoms, which might be produced by natural causes, when it is in fact being produced by artificial means, because the patient is lying to you.

    BOH.

  19. @yoganmahew
    I suspect there is a fixed percentage of BOI which we will be allowed to own. We will be allowed to get closer and closer to it but we will never go over it.

    It’s shocking to think that one seventh of the money we put into AIB went in March 2009 to prop up Zoe on the basis of extraordinarily fragile security. Anyone who said Zoe was being kept afloat was dismissed as a conspiracy theorist. No conspiracy theorist could have dreamt the reality exposed today.
    http://www.independent.ie/national-news/courts/judge-shocked-at-aib-security-when-lending-to-carroll-firms-2020808.html

    “Mr Justice Kelly said it was “fortunate” for AIB that the Zoe companies acknowledged the errors and that the intention of the legal undertakings — to hold on trust the title deeds for AIB — was to create an equitable mortgage over the portfolio of commercial and residential properties, most of which were located in Dublin.”

    Pure incompetence as usual. No question that they were just trying to give it to him. No question that the government knew half a billion put in to the banks to help small businesses was actually going directly to Carroll. They had no idea what was going on in the banks in Mar 09….MARCH 09!!!!!

    A) If they knew they mislead us on the purpose of capitalising AIB
    B) If they didn’t know everything the banks did in March 2009 and approved it they are grossly incompetent

    I say this every day – but surely this is the FINAL straw.

  20. @ yoganmahew

    “Paul (POL) itics (ITICS) dotayee (.IE)…
    In case you haven’t seen Paul’s explanation above (I had to wait for it too).”

    Thanks. My mother loved scrabble. Never could see the point myself. Now I know I’m right, to the tune of (at least) €30,000,000,000. Words and the playing with them have a funny way of reliving the Treasury of money. But then, perhaps money is just words.

    “Anyone know why 3.5 bn of 8% preferreds only gives a dividend of 250 mn and not 280 mn?”

    Being a dunce I’d say that was an auctioneer’s view of long term economic value. But in my more lucid moments I think it speaks to plain old sloppiness.

    “Oh, and Greg, in theory we should get common equity instead of the dividend, so about 14.3% of th bank for 250 mn euro missed dividend… can’t wait until we own, like, 3,000% of BoI…”

    On this I think you are mistaken. The conversion of an unpaid dividend is at the absolute discretion of the directors of the bank.

    http://www.finance.gov.ie/viewdoc.asp?DocID=5669

    “Dividend: Fixed dividend of 8%, payable annually. Dividends payable in cash at the discretion of the bank. If cash dividend not paid, then ordinary shares are issued in lieu at a time no later than the date on which the bank subsequently pays a cash dividend on other Core Tier 1 capital.”

    So, as long as the bank doesn’t pay dividend on ordinary shares they don’t have to pay the dividend on the preference shares. No?

    How many years will it be before AIB and BOI pay dividend on ordinary shares?

    What if AIB and BOI don’t pay a “cash” dividend on Core Tier 1?

    What if they get really clever (with ECB approval of course) and find a non-cash way of paying dividend to new (and unknown investors)?

    Can we call that a “reorganisation” of the capital of the banks in the “public interest”?

    Sounds good to me. But then I’m just Paddy Six Pack.

    This has been planned.

    They (Cowen & Lenihan) knew when they “gave” €7,000,000,000 to AIB and BOI that it simply wouldn’t be acceptable to Paddy Six Pack. So they dressed it up as €560,000,000 annually to the Treasury. Paddy Six Pack took the bait. The two Brians knew that the cash would never be forthcoming and that the €7,000,000,000 was as good as the money they put into Anglo Irish Bank.

    They did that with the oversight and collusion of the ECB.

    Anyone for Treason charges? Conspiring with a Foreign Power to undermine the ability of the Government of Ireland to protect its Treasure?

    The ECB has now stopped the payment of the dividend to the Treasury. Is there anything you can think of that would in future allow the ECB to permit the Irish (what used to be a) Government to insist that the dividend be paid?

    Nothing.

    This has been planned.

    I call it Treason.

    Treason/Treasury.

    Why are those words so close?

    It is the looting of Treasure that is Treason.

  21. @Greg
    “They (Cowen & Lenihan) knew when they “gave” €7,000,000,000 to AIB and BOI that it simply wouldn’t be acceptable to Paddy Six Pack. So they dressed it up as €560,000,000 annually to the Treasury. Paddy Six Pack took the bait. The two Brians knew that the cash would never be forthcoming and that the €7,000,000,000 was as good as the money they put into Anglo Irish Bank.”

    You make a strong case and it would not surprise me in the least. It would be €500 million annually though, going by yoganmahew’s figures?

    Here is the extended case against the government on the Zoe loan:
    http://www.irisheconomy.ie/index.php/2010/01/20/bank-of-ireland-and-the-governments-preference-shares/

  22. Well at least we know that we are protected from blasphemy now. But not theft of the nature being discussed here.

    Is there a chance that anyone else will join in or is it manifestly evident that NAMA is indefensible?

    Which suggests that there is as much hope of getting the truth from any enwuiry as there is of finding what was written by Gillian Tett at http://www.ft.com/cms/s/0/99b57662-012d-11df-8c5400144feabdc0.html as linked by http://www.nakedcapitalism.com/2010/01/could-england-be-the-next-iceland.html.

    It seems our neighbours in the “UK” need our money again, to stave off their creditors! Thank God we aren’t all republicans or else we might demand that no money be paid to them!

  23. The way this so-called ‘enquiry’ has been framed indicates a strong desire on the part of those still in office to keep the lid on ‘sensitive’ findings.
    That in itself speaks volumes – as no doubt the actual reports will not ‘speak volumes’.
    As an aside, it is to be hoped that this site will not be polluted by the unmoderated rabble who populate the ‘politics.ie’ site.

  24. The focus of Karl’s initial post is on the mechanics of this inquiry, but I think it’s necessary to examine the purpose of, and tactics surrounding, this inquiry in order to assess properly the mechanics.

    The proposed inquiry is just the next phase in the ongoing War of the Survival of the Government. It should buy the best part of a year as any fallout isn’t scheduled to emerge until the beginning of next year. It will provide some cover for the Government to address bank recapitalisation, the blanket guarantee and to introduce another, very likely severe, budget. There will be an effective separation of investigation of the causes of the problems and the remedies being pursued by the Government.

    In the meantime and tactically, the Government spin machine will be in overdrive and much effort will be expended to erect excrement-deflecting shields. I expect we will hear, inter alia, about:
    1. The importance of keeping financial regulation separate from direct politcial influence and that this prevented government from intervening to curtail credit growth;
    2. Government policy to welcome workers from the new EU members from 2004, the requirement to house immigrants and an increasing population and to ensure that the construction industry was incentivised appropriately to do its bit and to generate growth in the wider economy;
    3. That the Irish banking system, unlike others, was not exposed to losses from toxic, exotic financial instruments. The drying up of the international money market arrived out of a clear blue sky;
    4. The PDs exerting undue influence on economic and financial policy and infecting FF ministers such as Charlie McCreevy and Seamus Brennan.
    5. .. and so on.

    The mechanics mesh into this overall strategy and set of tactics by minimising the extent to which the inquiry will be open to public observation and scrutiny. And I agree that Governor Honohan is being placed in an extremely difficult position and it is entirely inappropriate. Any investigation of the Bank’s behaviour prior to Prof. Honohan’s appointment should be investigated by an independent external body which would prevent its findings to the Governor and allow him to effect whatever remedies he is empowered to effect. The Minister expressed his welcome for Governor Honohan’s call for an inquiry through gritted teeth. This looks like payback time: “You wanted an inquiry; you can kick it off.”

    The pursuit of this nakedly politcial strategy by the Government will not address the serious underlying problems of public policy formulation and scrutiny (going far wider than the banking system), the exercise of democratic governance and the entire, citizen-damaging “facade” of better regulation and competition that successive governments have erected.

    And, if it were possible, it diminishes even further the authority of the Oireachtas. It’s time for the people to take steps to remove this Government.

  25. Cue a cast of Pontius Pilates!

    Without access to big project files, the “wise expert” will be hobbled from the start.

    Unless there is a proper assessment of risk management, the inquiries will be a buck passing exercise and the buck wont stop on Cowen’s desk.

    If its a lawyer that’s appointed rather than an outsider such as Colm McCarthy or Karl Whelan, expect very little.

    What senior lawyer hasn’t worked for finance firms and besides one of their own was chairman of AIB.

    Ditto for chartered accountants: in the club, McCreevy and several top bankers of the bubble.

    As for the Central Bank, there should be a purge of the likes of Begg, writer Deirdre Purcell and “demographic dividend” booster Dermot O’Brien, late of NCB Stockbrokers.

    As for Pontius Pilates, when Governor John Hurley was asked at an Oireachtas hearing last year who had the power to control the banks if he – – as governor of the Central Bank – – could not do so, Hurley replied: “The Government and the Financial Regulator have the power. The Central Bank certainly does not.”

    Seven members of the CB board were on the board of the Financial Regulator.

    Ireland: Where the buck stops nowhere – – Irish banking inquiry, DCC and a cast of Pontius Pilates:

    http://www.finfacts.ie/irishfinancenews/article_1018860.shtml

  26. @ politics.ie

    “It would be €500 million annually though, going by yoganmahew’s figures?”

    yoganmahew was not suggesting that it was €500,000,000.

    It is the Bank Of Ireland that “thinks” they owe €250,000,000 (per the next thread).

    “In accordance with the terms of the 2009 Preference Stock, the NPRFC would become entitled to be issued, on February 20, 2010 or on a date in the future, a number of units of Bank of Ireland Ordinary Stock (based on the average trading price of Ordinary Stock in the 30 trading days prior to February 20, 2010, assuming the Ordinary Stock was settled on that date) related to the cash amount of the dividend that would otherwise have been payable (€250m), should there be no change in these circumstances.”

    They’re very good at sums at the Bank Of Ireland.

    They should be running a bank.

  27. @Pat Donnelly
    I am certain that if Patrick Honohan prepares a report he will do so completely honourably. But that doesn’t matter. There is no way the Icelandic people would have been satisfied with their government promising that:
    their parliamentary representatives would have a Q and A session in three months time, with Honohan and another international banking expert, even ones of indisputable integrity.
    that the reports would have limited scope and terminate right at or before the key moment of the banking crisis, but nowhere near the end of the crisis which continues to date.
    that the Q and A session would be followed by a secret inquiry that will go on for years.
    that events such as the half a billion Zoe loans in March 2009 would be completely excluded.
    that NAMA, the biggest single financial decision in the history of the country, would be excluded.

    Honohan should not possible be expected to simultaneously:
    Work with AND investigate his own STAFF and his own BOARD,
    Continue to POLICE the banks,
    Liaise with the DOF on the preparation of NEW central bank legislation, Work with European regulators on the development of NEW EU wide regulations,
    At EU level make the case for Quantitative Easing and the ECB continuing to loan money to our banks for as long as possible against the securities they hold and keep interest rates low. And I am sure there is a lot more.

    Prediction 1: If you gave Honohan 2 identical clones he still wouldn’t finish his report by 31 May 2010.

    Prediction 2: Ending the enquiry at Sept 2008 is to protect Lenihan, who may well have come to an understanding with Cowen, who will eventually go, probably before he can be questioned.

    It’s astounding that Lenihan should even presume Honohan should do this. If I was Honohan I wouldn’t touch this with a 54 Billion foot barge pole.
    THIS IS OBVIOUSLY A COVER UP.

  28. A Banking Inquiry- The Icelandic experience one year later.

    1. Despite the establishment of an Inquiry by the parliament, the outside investigator (‘wise woman’) threatens to quit over lack of political will.

    http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5507616/Iceland-corruption-investigator-Eva-Joly-may-quit-in-frustration.html

    2. Parliamentary hearings and public hearings are not the only answer.

    “Perhaps her biggest achievement so far is to ensure that any prosecutions are on the agenda at all. Parallel to the criminal investigation, a sort of “truth and reconciliation” commission guided by parliament is also looking at the events of the past year, and is due to report its findings early next year. Joly has warned that political hearings are no substitute for prosecutions. “Icelanders were very discouraged when I arrived,” she says. “Lots of newspaper articles were saying that what happened was just bad luck, that a new page had to be turned and that was that. But before reconciliation, before forgiveness, you must first establish responsibilities, you must find out the truth.” Partly because of Joly, only 27 per cent of ­Icelanders say they trust the parliament’s investigation committee.

    She warns that, while momentum is building, the investigation is still only just beginning. She sees the first cases being prosecuted by the end of next year, but thinks the whole inquiry is likely to last five years. It has to, she thinks, if it is to be done properly. “This is huge. It will involve other European banks,” she says. “It will show that what happened in ­Iceland is not just an Icelandic problem.”

    Financial Times:
    http://www.ft.com/cms/s/2/b4979f3a-cf2a-11de-8a4b-00144feabdc0.html

  29. @Eoin
    Thank you. So it will be 280 mn next year.

    How do you see this one panning out?

    It seems to be rather locked at the moment.

  30. @ Eoin,

    Thanks for the link.

    I don’t see that it states that the “coupon date has been fixed at the 20th February”.

    Perhaps you meant to provide another link?

    “Bank of Ireland (Governor & Co)

    31 March 2009

    Bank of Ireland announces that, following satisfaction of the conditions to the NPRFC Investment and the Direction of the Minister for Finance, completion of the NPRFC Investment took place today.

    Under the terms of the NPRFC Investment, Bank of Ireland has received €3.5 billion and in return has issued 3,500,000,000 units of New Preference Stock of €0.01 nominal value at an issue price of €1.00 per unit and granted Warrants to subscribe for up to 334,737,148 units of Ordinary Stock of €0.64 nominal value to the NPRFC.

    Capitalised terms used in this announcement have the same meaning as given to them in the Circular to Stockholders which was published on 4 March 2009.

    Ends”

  31. @ politics.ie

    “It’s astounding that Lenihan should even presume Honohan should do this. If I was Honohan I wouldn’t touch this with a 54 Billion foot barge pole.”

    Honohan should immediately declare himself unavailable on the basis of prior commitments and should recommend that Joe Stieglitz take the job.

  32. @ YM

    there’s been a suggestion overnight (though i actually heard the same thing suggested from Goldman’s a few months ago) that BOI will try to do a debt-for-equity swap for their outstanding subordinated debt. This would (a) create some fresh equity and (b) possibly allow the EU Commission to waive the dividend suspension on the prefs by the time they roll around again next year, because outside of the govt prefs there won’t really be any non-senior debt on the books at that point.

  33. @ Greg

    all the info is actually in your own head right now, you’re just still in holiday mode… 😀

    http://www.irisheconomy.ie/index.php/2009/12/02/aibs-government-preference-shares-and-the-eu-commission/

    “Greg Says:

    December 2nd, 2009 at 2:00 pm
    @ Eoin,

    This from BofI Annual Report 31 March 2009. Page 174

    “Principal rights

    The 2009 preference stock is perpetual.

    The 2009 preference stock entitles the NPRFC to receive a non-cumulative cash dividend at a fixed rate of 8 per cent of the issue price per annum, payable annually in arrears on 20 February at the discretion of the Bank. If a cash dividend is not paid by the Bank, the Bank shall issue units of ordinary stock to the NPRFC.”

  34. A few points:

    1. Scoping investigation now.

    I agree that it would be desirable to have (a) an inquiry along the lines suggested by P. Honohan, and (b) a public enquiry suggested by Colm McCarthy straight away but I don’t think this is possible due to the limited capacity of the DoF and the Banks to do the urgent and important work of the next year.

    I don’t know if people are fully aware of how all-consuming inquiries are for witnesses. Anybody who has prepared for a complicated legal case will appreciate how disruptive it is to other work.

    In those circumstances, in order to maintain momentum towards an enquiry and to bring it about as soon as possible, I think it is correct that we have a scoping stage before a public stage. I see stages one and two as both being preliminary to the public hearings. The consideration by the committee and its further action are the public stage. The important thing is that the process has begun.

    2. Constraints on actors in the ongoing crisis.

    I don’t see how we can have inquiries into the bank guarantee and the bank rescue measures while they are still ongoing. All actors are constrained in what they can say or do while this process is ongoing. It is always the case that during crises Government, officials and bankers must speak with great care and are constrained by the necessity of preserving and rehabilitating the financial system. Everybody knows this is the case so let’s not pretend otherwise.

    To suggest that all parties should be cross-examined in public now on the events surrounding the guarantee and bank rescue measures is wrong-headed. I don’t believe that either Colm McCarthy or Patrick Honohan have called for an inquiry in those terms. Certainly the events leading up to the guarantee need to be scrutinised at a later date. However, we need to get out of the woods before we stop to have an inquiry as to how the bear managed to take a bite out of our arse. For that reason, a cut off date of before the Guarantee is correct. Any investigations into the Guarantee and rescue measures are a matter for the next Government.

    3. Central Bank Governor Patrick Honohan’s role

    I agree with Karl Whelan that Patrick Honohan is not well placed to investigate the Central Bank and the Financial Regulator. Furthermore, the timeframe for him to complete his report appears to be too ambitious considering all his other responsibilities. However, it is not surprising given the wide ranging and somewhat unrealistic demands that have been made by the opposition and some commentators.

    On the other hand, Mr. Honohan is probably well qualified to define the scope of any banking investigation and may be able to do so without much preliminary work. Considering Mr. Honohan called for an inquiry into the deeper lying causes of the systemic breakdown, and considering he is very very bright, we should probably welcome his involvement at the early stages. The best thing might be if Mr, Honohan were allowed to delimit the extent of his investigations in the scoping stage.

    4. Social policies

    Whilst we need to investigate social policies and organisational behaviour it is hard to see how such an investigation could lie within the competence of Mr. Honohan and his staff. Perhaps the “wise man” (or wise woman) will address this?

  35. @Elaine Byrne
    The Min for Finance and the NPRF agreed to give AIB €3.5 Billion in February 2009.

    This was to recapitalise AIB so it could lend to small and medium sized businesses. Knowing this money was coming (it was paid in May 2009) AIB then lent €550 MILLION to mega developer Liam Carroll with the flimsiest of security. In effect, €550 million from the NATIONAL PENSION FUND, was given to prop up Mega Developer Liam Carroll, with grossly inadequate security, on the pretext that it was going to help AIB give loans to small and medium businesses.

    Either:
    The government were dishonest. OR
    The government, even up to Mar 2009, didn’t know what was going on in the banks and allowed things like this to happen.

    The government will say it was the second but remember:
    The country was fully guaranteeing these institutions since Sept 2008.
    They should have been all over the banks. So either the government were recklessly negligent or knowingly allowed public money to be indirectly funneled to developers and were dishonest about it.

    If this doesn’t sink them I don’t know what will.

    Pension fund money anounced Feb 09.
    Revelation of reckless lending by AIB in MAR 09 yesterday.
    Money goes in May 09 but that is irrelevant – AIB and the government both knew it was going in, and AIB was fully guaranteed since Sept 08.
    Yesterday’s story in Irish Times just illustrates why AIB should have been watched like a PARANOID HAWK for ALL THE TIME since the bank guarantee.

    Reckless Gross Negligence vs Dishonesty and Corruption.

  36. @Elaine Byrne
    Pension fund money anounced Feb 09:
    “AIB and Bank of Ireland both get €3.5 billion”
    RTE 11 Feb 2009

    Revelation of reckless lending by AIB in MAR 09:
    “Judge shocked at AIB security when lending to Carroll firms”
    Irish Independent 19th January 2010

    Money goes in May 09 but that is irrelevant – AIB and the government both knew it was going in, and AIB was guaranteed since Sept 08.
    NPRF website:
    NPRF directed Investments

    This just illustrates why AIB should have been watched like a paranoid hawk ALL THE TIME.

    Irish Times 19th Jan 2010:
    “AIB still has questions to answer over Green deal”

  37. @zhou
    The British can govern and fight two wars while inquiring into a war.
    The US can govern and fight two wars while inquiring into the problems of a banking system for 300 million people.
    The Irish can’t govern while inquiring into the failure of a banking system for 4 million people.

    You must regard the public as incredibly dumb and hugely gullible.
    Shame on you.

  38. Our civil service and banking sector are nowhere near as big and diverse as the USA or the UK. Nevertheless, I am sure the Government will take the suggestion of starting two wars on board.

  39. why isn’t there a push to engage industry in this enquiry? could save a lot of money and get the job done quicker.

    a bit of whistleblowing would help get to the core of this faster than an enquiry from the outside will

  40. @zhou
    “Our civil service and banking sector are nowhere near as big and diverse as the USA or the UK.”
    The small size of our banking sector relative to our number of top officials and politicans means that – even excluding the fact that we are not fighting two wars – there is NO excuse for holding the inquiry in private. The government and the bankers are not victims of child abuse – they deserve no anonymity. It is obscene that they compare the banking inquiry to the clerical institutions inquiry.

    Give AIB billions more while an inquiry that stops in Sept 2008 won’t even look at this event in Mar 09?

    http://www.independent.ie/national-news/courts/judge-shocked-at-aib-security-when-lending-to-carroll-firms-2020808.html

    Knowing this money was coming since Feb 09 (it was paid in May 2009) AIB then lent €550 MILLION to mega developer Liam Carroll with the flimsiest of security in Mar 09. In effect, €550 million from the NATIONAL PENSION FUND, was given to prop up Mega Developer Liam Carroll, with grossly inadequate security, on the pretext that it was going to help AIB give loans to small and medium businesses.

    THIS IS A COVER UP.

  41. @Eoin
    “there’s been a suggestion overnight (though i actually heard the same thing suggested from Goldman’s a few months ago) that BOI will try to do a debt-for-equity swap for their outstanding subordinated debt. This would (a) create some fresh equity and (b) possibly allow the EU Commission to waive the dividend suspension on the prefs by the time they roll around again next year, because outside of the govt prefs there won’t really be any non-senior debt on the books at that point.”
    Yeah, there was a debate on thepropertypin about it too some months ago. I doubt that the dividend would be waived in such a scenario, but it could be rolled into the recap and would amount to small beer then.

    I still think it a somewhat unlikely scenario as it would give the state some 70% ownership of BoI and similar for AIB. I don’t see any will to admit that scale of problems. Mind you, it would mean that the state would mostly be diluting itself with NAMA recaps…

  42. @ALL
    Posters commenting on politics.ie on George Lee’s discussion with Mary O’Rourke on Newstalk Lunch Time, in which Mary O’Rourke justified the anonymity proposed for the banking inquiry by comparing it to the child abuse inquiry. Posters strongly disagree:

    Poster Fake Viking: pg 8
    “Getting really angry at how Mammy is using the sexual abuse of children to defend FF’s Galway tent chums.”

    Poster DCon: pg 8
    “Their army of media advisers probably told them to do this because people were happy with the Murphy report outcome.”

    Poster inthemire: pg 9
    “George Lee (should have) told Mammy Lenihan/O’Rourke that the reason the child abuse enquiry was held in private is that most people who were abused didn’t really want to describe in a public setting how they were being buggered by powerful people in positions of authority, and protected by the state for many a year.”

    This interview and Shane Ross’s earlier encounter with John Gormley:
    Gormley V Shane Ross on Radio 1 now – 20/01/2010

    Remember: THIS IS A COVER UP.

  43. @ E65bn

    “The government and the bankers are not victims of child abuse – they deserve no anonymity”

    Eh, legally and constitutionally in many situations lots of them probably do, so there’s no real easy way around it. In the same way that an enquiry, by itelf, cannot mete out ‘justice’, it also can’t mete out completely free and full information on lots of things. This is a really basic concept which the people who keep shouting for an inquiry need to understand, but sadly repeatedly fail to. Now i think as much of this inquiry as possible should be in public, but if you expect it all to be then you’re being ever so slightly stupid.

    Also, while the UK is currently engaging in two wars, they are, almost 7 yrs after it began, only starting to get into an enquiry on the reasons behind the first one. As such, they are a good example of how complicated issues require complicated and lengthy inquiries, and we shouldn’t expect anything different from our own look at the banking sector.

  44. @Paul Iticsdotayee

    Are you saying there is some kind of a cover up going on… ? Have the kids on politics.ie got it all figured ou… ?

  45. @ E65bn

    “Posters strongly disagree (on politics.ie)”

    If the posters on politics.ie suggested jumping off a cliff, would you jump off a cliff? Please, no one go posting malicous comments on there…

  46. @zhou
    Are you seriously claiming there is not a cover up going on? We had a banking collapse – those responsible are almost all still there. The others retired with generous payoffs.

    @Eoin
    ““The government and the bankers are not victims of child abuse – they deserve no anonymity”

    Eh, legally and constitutionally in many situations lots of them probably do, so there’s no real easy way around it.”

    Why are we so different from the US and Britain? Both common law, one a constitution? Is this also the case in Canada, NZ and Australia? Canada has a constitution too. The answer is we aren’t so different. The difference is our government are corrupt and cover up everything.

  47. @Eoin
    Professor Sandeep Gopalan is head of the Department of Law at NUI Maynooth. He doesn’t agree with you or with Willie O’Dea. He almost fell off his chair laughing at O’Dea’s bluster on Prime Time on Tuesday night. The inquiry MUST be in public, right from the start. Anglo got into trouble in early 2007 – it’s been three years already.

    See Gopalan’s article here:
    http://www.thepost.ie/story/eygbojkfgb/

  48. @ E65bn

    the only guys to appear before the US FCIC have been senior mgt/CEO level type guys. Moreover, the inquiry has focused on very high level general issues relating to the US banmking sector and the problems it has faced.

    I dont think anyone is suggesting that similar figures in the Irish banking industry are looking for anonymity from our proposed banking inquiry. Indeed, they regularly appear before Oireachtais committees on a number of issues. However, mid level management in the banks, and the information relating to their customers, many of whom, though hugely indebted, have done absolutely nothing illegal, are the ones no doubt seeking anonymity, which they are perfectly entitled to. Again, this is something fundamentally important to this inquiry, and something which is being fundamentally misunderstood.

  49. @Eoin “However, mid level management in the banks, and the information relating to their customers, many of whom, though hugely indebted, have done absolutely nothing illegal, are the ones no doubt seeking anonymity, which they are perfectly entitled to.”

    I would argue that middle-management have a hell of a lot to answer for, their incentives were totally out of line with the shareholders and they were the ones actually getting deals over the line and ensuring that they stacked up no matter what the reality was.

  50. @zhou
    Enda Kenny made the same point in relation to Mary O’Rourke’s disgraceful interview as the posters on politics.ie:

    “Mr Kenny told the Dáil this morning that while inquiries into clerical child sex abuse had to be held in private because the victims were children, there was no reason to hold the banking probe in secret.

    “The victims in this case are the working taxpayers of Ireland, who are now faced with pensions lost, negative equity, difficulty in paying mortgages and an understanding and perception that white collar crime does pay,” he said.”

    @ALL
    What is Honohan going to do when he tries to explain his report to the Oireachtas committee? As Joan Burton points out:

    “Because he is being asked to make a non-statutory report, without any legal protection or powers, the Governor of the Central Bank will be bound by section 33AK of the Central Bank Acts, passed in 2003,” Mr Burton said.

    “This section prohibits the Governor, the Bank and Ifsra from publicly discussing or disclosing in any manner any commercially confidential information in relation to any regulated firm or individual.”

    Still, he’s a resourceful man. I suggest he will perform an allegorical play for our public representatives based on the Irish banking crisis – using Star Wars figures. We already know who’ll be Vader.

  51. When dealing with organisations it seems to be easier to ask the people on the lower level to give information in exchange for immunity. Deal-making like that is not pretty but it is effective in gathering damning evidence for people in the top.

    Starting with the top is difficult. They thrive on deniability and will have a lot of resources to fight a poorly built case.

    If there are voluntary whistleblowers, go for the top. If not, I think it might be faster and more efficient to start lower.

    Still, I’m not sure if the current situation is due to some peoples intent (to profit on the expense of the shareholder) or simply their poor judgement.

  52. @Karl Deeter
    THIS IS 500 MILLION FROM OUR PENSIONS, GIVEN TO A DEVELOPER, BASED ON DOCUMENTATION SO FLIMSY THAT IF THE DEVELOPER WANTED TO TRY TO CONTEST RETURNING IT THE JUDGE THINKS HE WOULD HAVE A GOOD CASE.

    @Eoin
    No one is interested in persecuting mid-level managers. The way our establishment work it’s the investigative journalists, the whistleblowers and the mid-level employees who are left worst off. A few top guys retire on ginormous pensions then everyone below them is pushed out the door as cheaply as possible. Irish institutions are monarchies and mid-level managers are serfs – prosperous but still serfs.

    John Hurley was kicked out of the Central Bank – but is still on the board of the ESRI! The few top bankers who have left will still be treated as part of the club. As I have said repeatedly, a country’s banking system is the government’s responsibility. If it IMPLODES it’s the government’s responsibility. Only in Ireland is this not accepted as axiomatic.
    We need:

    1. A new government.
    2. The full truth.
    3. Transformation of our country so this never happens again.
    4. If laws have been broken with serious consequences then prosecutions.
    5. The cheapest way out of this disaster for the country.

  53. @ karl deeter Eoin etc on mid-level managers

    In the Banks – the buck stops with the Senior Management and the Boards – back to the DIRT Inquiry – where lessons were obviously not learned by Government, Dept. of Finance or Regulators, or indeed academics. Justice Blaney and Tom Grace place the responsibility for these Crimes – yes CRIMES – at the top – middle managers do what they are told or they get themselves another job such as FF TD or other such menial occupation [but they can provide useful info to any inquiry].
    In earlier post I noted that 92% of upper echelons of US banks still in position – based on E65Billion’s diggin endeavours – I suggest that 95-99 of upper echelons here still in position – NO REAL CHANGE at the top……………. Blaney and Grace, (the latter no stranger to handling the slippery ball in pressure situations], in their DIRT report noted that it is:

    “…important to set the conclusions of (their) report in relation to tax evasion in the context of the culture of the period…………..The problem of DIRT evasion was an industry-wide phenomenon……….The operational environment in the Bank at the time has also to be taken into account and the behaviour of individual branch managers and staff must be viewed in this context. The branch network was target driven – there were, amongst others, targets for fee income and deposits, but limited support by way of systems or training to enable the achievement of these targets. Managers felt under pressure to meet these targets, in the setting of which they had negligible participation and which many considered unreasonable; they feared criticism and possible humiliation before their fellow managers if they did not meet the targets set.” [p.4]

    Justice Blaney and Tom Grace (2004) Report on investigations into the affairs of National Irish Bank Limited and National Irish Bank Financial Services Limited: Summary and Inspectors’ Observations. Dublin.

    I suppose this will all end, to use Minister Martin’s phrase recently ‘in the fullness of time’ ……. As mere ‘ERRORS OF JUDGMENT’ as announced yesterday in another little minor matter of 80 million or so ……… peanuts really in the present context – wouldn’t worry too much about it ………..

  54. @ E65bn

    re “mid level managers”

    You don’t want to persecute them? Fine. But shouldn’t they then be afforded anonymity so that they will feel able to be as open and honest as possible? Particularly, as Karl D has noted, that they were ultimately signing off on a lot of the day to day decisions on loans and credit etc. As previously suggested, this is a story with far more incompetence than corruption involved. What about developers who did nothing wrong, but ended up losing a lot of money? Shouldn’t they be given some right to confidentiality on their finances? In principal, whats the difference between a home owner defaulting and a developer defaulting in terms of his/her personal financial arrangements?

    If we want to figure out how it all happened, we are going to have to have some level of closed door sessions or anonymous testimony involved. Its as simple as that.

  55. @Karl Deeter

    Good point on the whistleblowers. Previous witnesses against AIB at Oireachtas Committee meetings were told that they enjoyed no privilege. We need a degree of privilege for witnesses to get at the truth.

  56. I’m not sure what people expect. This is an “Irish Inquiry into an Irish Problem”. Irrespective of what emerges this Government has demonstrated it will not be swayed from any course of action it is determined upon by any volume of comment or criticism irrespective of how soundly-based it is (expect, perhaps, in the most minor details).

    I am reluctantly compelled to agree with “politics.ie”:
    “We need:

    1. A new government.
    2. The full truth.
    3. Transformation of our country so this never happens again.
    4. If laws have been broken with serious consequences then prosecutions.
    5. The cheapest way out of this disaster for the country.”

    Between 1916 and 1918 a majority of the Irish people changed their support for limited Home Rule within the British Empire to support for full independence. A similar change in popular opinion is required now to ensure that the Oireachtas in 2016 will have elected a competent and representative government and, more importantly, hold it fully to account.

    Everything else pales into insignificance when compared to this task which only the Irish people can undertake.

  57. Given that the Governor is independent (and this is protected under the Treaty of Maastricht) he should refuse outright to co-operate and reiterate his call for an inquiry similar to that of the 9/11 commission.

    He might also follow the example of the Governor of the Bank of England and call the government out on its poor policies for restoring growth and cutting the growth in public spending.

    Just a suggestion!

  58. @Ciaran Daly
    They are excellent suggestions and Governor Honohan should follow both of them.

    @Paul Hunt
    Both you and I thought before the local elections of June 09 that a resounding defeat would bring an end to the government. It didn’t.

    1. The opposition – haunted by memories of the eighties – wanted to leave FF in power as long as possible.
    2. The GP have more power now than they ever dreamed. A public inquiry could (this is a strange country so I won’t say for definite) bring down the government. Therefore we won’t have one. These organic turkeys are never going to vote for Christmas (apologies organic farmers, like Gormley I couldn’t resist).
    3. The bank crisis made the opposition cooperate with the government’s banking cover up and on NAMA.

    In the early eighties, the media and the opposition wanted FF out but the public stayed loyal. Now the public want FF out but the opposition and the media have – for the last year – been broadly supportive. The media took what FF said about the danger of the IMF completely seriously when, given all parties agreed the deficit had to be reduced, this was never going to be a problem. They also took what the government said about NAMA and the banks seriously – which was utterly insane – and turned a Nelsonian eye to the banking cover up and the NAMA deceptions.

    This has been a strange year for a bewildered populace:
    In the 2002 election the government chortled that the public had brought down the opposition, specifically FG.
    After the 2009 elections FG got revenge by bringing down the public – and Labour weren’t much better.

    In 2010 the opposition need to relentlessly oppose the government to the fullest degree. Otherwise they should be honest and support them.
    But no more deceptions.

  59. Maybe we can get to see the banks credit policies?

    I don’t see them as being good enough for anyone to want to use them so they shouldn’t have much commercial value…..

    Or if the credit policy was good, then (judging by the results) there should be plenty of occasions of it being broken & then there should be some disciplinary actions taken and maybe this could lead to the Gardai being involved.

  60. @Eoin
    (b) possibly allow the EU Commission to waive the dividend suspension on the prefs by the time they roll around again next year, because outside of the govt prefs there won’t really be any non-senior debt on the books at that point.”

    This would be in no one’s interest except the existing bank shareholders. Why should the government agree to it?

  61. @Paul Hunt
    “The Minister expressed his welcome for Governor Honohan’s call for an inquiry through gritted teeth. This looks like payback time: “You wanted an inquiry; you can kick it off.””

    Listening to Michael Soden on The Last Word this evening I can see you were 100% right. While watching Soden on TV last week it occurred to me that I hadn’t seen anything so small and yet so destructive since Nick Nack, “Scaramanga’s dwarf manservant and accomplice,” in “The Man with the Golden Gun”.
    http://en.wikipedia.org/wiki/The_Man_with_the_Golden_Gun_(film)
    I was really hoping that at the end of the show Peter Mathews would bundle Soden into a wicker cage and tie him to the nearest mast.

    Nick Nack made it very clear that Scaramanga (aka Brian Lenihan) really doesn’t want a banking inquiry. Not until we have seen the effect of NAMA he said. As far as Scaramanga is concerned only historians yet unborn should inquire into our banks. AIB effectively fired €500 million due from the national pension fund straight to Liam Carroll in March 09, backed by the flimsiest of security. So it is remarkable that Scaramanga and Nick Nack are so blase about firing in another €54 Bn into Irish banks in advance of any investigation.

    The REALLY disturbing thing, as with the cut off of Sept 2008, is the determination to investigate as little as possible. If something turns up, FF TD Dara O’Brian said, before 30 Sept 2008, we will continue to investigate it after that date (how gracious of their lordships). Anything after that we’re not interested in. No interest whatsoever.

    What I have always observed throughout NAMA is that the government’s initials statements are their most honest. Following public pressure they have completely begrudgingly conceded an inquiry. They will now issue passionate but entirely insincere declarations of their desire to find out the truth. But in reality they HATE this inquiry and they will do the maximum they can to stall and derail it. After all, as should now be clear to everyone…

    THIS IS A COVER UP.

  62. @Paul Itsabagel

    Maybe you should save the childish personal atacks on public figures for politics.ie. It seems like your more natural habitat.

  63. @Paul Iticsdotayee

    It is a huge issue… Anglo systematically mislead the markets on the most important issue: how much toxic debt it had.

    The few hundred million in share price prop ups, directors loans, or the deposits shenanigans were minor by comparison.

    Given the fallout this disclosure caused, the fact that this issue hasn’t been followed up more , is baffling. It rather makes me wonder why people want a public inquiry at all.

    http://www.politics.ie/economy/47446-anglo-overlooked-loans-re-categorisation-scandal-biggest-well-pay.html

    cYp

  64. @Paul Iticsdotayee: I am familiar with the sums of money involved, I’m just stating the reasons an institution would have for doing it. phone-call credit existed, I know people who had it, literally they would call up head office ‘I need X amount for Y’ and a one page fax is all the institution wanted. The documentation is a side issue, the bank were trying to save themselves via a further lifeline – donald trump is a well known example of this kind of thing (he went down fairly spectacularly in the late 80’s in a similar manner)

    @David O’Donnell: it is fair to say that all issues ultimately rest with the board/ senior management but it ignores the reality on the ground to a degree, i know of one commercial team that moved (the entire team) institution three times in c.5 years refinancing their entire book each time with their new employer! that is a really badly aligned incentive environment. When senior management look down the line they see that these deals have the correct valuations, due dilligence and numbers stacking up – they have no reason to question the probity of their own staff and the audit trail looks good, but then you later find out (usually after people have left) that the valuation never could have really stacked up, that the expected selling prices were not realistic etc. and all of these small policy circumventions add up to a rotten deal that should never have been placed.

    specifically the mid-level management on commercial teams have a lot to answer for, residential lending is nowhere near in the quagmire that commercial was (it was the commercial book that was the genesis of NAMA), and there are plenty of people who made deals stack that shouldn’t have, what is a senior level manager expected to do when his own subordinate team is working in collusion against him/the shareholder interest?

    If you looked into a company from the top down and everything looks good what should you do? go fire people just incase one of them was dishonest? The romans kept order in the ranks with decimation but even for them you needed to have a punishable action exist as a pre-requisite! middle level managers – specifically on commercial teams have a hell of a lot to answer for and the tragedy is that they are getting away scot free when you bear in mind the credit decisions they made and the outcomes.

  65. @ DE

    “This would be in no one’s interest except the existing bank shareholders. Why should the government agree to it?”

    How does paying coupons on the pref shares benefit the existing shareholders? I’m not suggesting a renewal of the ordinary share dividend.

  66. @ Paul Hunt,

    good contributions above. I enjoy getting your take on it, since I know you care genuinely about the function-ing of the political system. I guess, to go back to my Dr. Gregory House, TV series analogy above – the neurological causes of the patient’s illness – politics is part of the ‘brain’ of a society. My history teacher in school used always encourage us to understand a society in terms of social, political and economic. I guess, those form the brain organ of the system – as distinct from other organs of the whole corpus, which might face all kinds of medical problems.

    The heart, lungs, kidneys, liver and all of the other good stuff can have problems, which in turn relate back to neurological dis-functionality. It is often difficult in diagnosis to separate out, what might be infectious, allergic, viral, cancer, artificial drug-induced and what not.

    One thing I would like to emphasise, based on my earlier comments above to do with medical diagnosis and the banking crisis. The one consistent thing that I have noticed from my viewing of the said TV show, is the little amount of time Dr. Gregory House is dealing with often. House normally is stuck in a situation, where waiting for the ‘test results’ for the various ailments to return, the patient would be dead already. So in reality, Dr. House is often forced to treat the patient without knowing exactly what is going on.

    I suppose, this reminds us of the bank guarantee imposed by the minister for Finance, and what FF are telling us, the public, consistently through the media. If the bank guarantee wasn’t imposed, the Irish banking system would have collapsed altogether. But the point still remains, even where Dr. House is stuck in a situation, where he has no clue, and is forced to stick some sort of a needle in the patient – better than doing nothing – Dr. House will carefully look at how the patient reacts and change this tactics, having developed a better model of the diagnosis in his mind.

    This is what the FF minister for finance did not do. The guarantee was committed for 2 no. years. In other words, having began to kill the patient by the treatment prescribed, the FF minister for Finance left himself with no option, to change his tactics as his understanding of the problem developed. We heard recently, that the department of finance in Ireland, even advised the minister not to wade in too deep into one kind of solution.

    It is almost as if the minister for finance knew this was coming down the road for a long time, it was only a matter of time. We have been sold this BS story of the panic striken bank managers arriving on his doorstep. But what the Taoiseach Brian Cowen and Minister Brian Lenehan’s response indicates to me, is a situation whereby they already knew the patient had developed a drug-seeking behaviour. It was only a matter of time before one of the organs blew out, in some fashion, and they had a kind of antidote stashed away in a closet somewhere, ready and waiting to stick in the patient, the minute its palpitating corpse ending up on the front lawn of the Oireachtas.

    A certain scene from the movie Pulp Fiction springs to my mind here. I mean, the Irish public are not fools. This is the kind of thing the investigation needs to record down as fact. If Vincent Brown is correct, that a tribunal of inquiry (if it takes years) is required, then so be it.

    BTW, well done to Fintan O’Toole today on newstalk. I agree with his point that the Irish banking problems – are property related problems. It is not like FF want to make us believe that something un-explicable just happened within the Irish banks. The plain and obvious facts are, Ireland has 3 no. times the amount of debts to pay that it had 10 no. years ago. But we have still, at best, only the same income as we had 10 years ago. How is that going to stack up? How is that going to work? All of our debts, or the vast bulk are in residential mortgages and commercial property loans.

    How can we talk about banking problems and not talk about property?

    I would disagree with Elaine Byrne in her assessment of the situation – it is not a Stockholm syndrome, where Fianna Fail is our captor.

    The real Stockholm syndrome goes back much further than Fianna Fail. It is to do with land and property. Simon Kelly, the property developer and son of Paddy Kelly, wrote an article for the Sunday Tribune recently, in which a photo of John B. Keane’s the field appeared. I think that Simon was talking along the right lines.

    Lets look at main street for a quick second. I hear the following kinds of comments from folk a lot nowadays. A guy I know runs a pest control business. But the local folk tell me, he is only doing that because there is no work ‘on the buildings’.

    Someone else I know is a gym instructor. But the local folk tell me, he is only doing that because there is no work ‘on the buildings’.

    Someone else I know runs a sweet shop. But the local folk tell me, he is only doing that because there is no work ‘on the buildings’.

    Recognise a pattern? Anyone venture a guess, there might be a Stockholm syndrome of some kind at work here? Notice also, how little Fianna Fail features in the above main street perception.

    Oh, I forgot, of course when questioned about Fianna Fail, local people tell me – “Ah sure! They were always the builder’s party!”

    I rest my case.

    But it is not wrong that Elaine Byrne sees every problem as a political problem – that is the severe difficult in specialising in political science, or specialising in anything else. It happens all the time on Dr. House M.D. TV program. The cancer guy sees cancer everywhere. The neurological guys thinks everything is brain related. The immuneologist knee-jerks into seeing something different.

    Anyhow, that is why I think we need a Dr. Gregory House, who can work with Elaine Byrne, Pat Honohan, Joe Stiglitz, or Father Christmas – benefit from their key insights – but put it all together into an effective diagnosis. Preferably before the patient dies in the ward.

    BOH.

  67. Pat Donnelly

    While I hate to dispel your conspiracy theory of the day, Gillian Tett’s articles are all available on the FT website – in the comment section under columnists – including the article relating to UK debt, which I think is the one to which you are referring. I have copied some of it here.

    “Britain’s unsavoury debt mire
    By Gillian Tett
    Published: January 14 2010 23:01 | Last updated: January 14 2010 23:01
    Which country experienced the biggest jump in debt, relative to gross domestic product, over the past decade?

    A year ago, as the world reeled from the subprime mortgage crisis, most investors might have said America. And these days, countries such as Iceland, Dubai or Greece tend to spring to mind, in connection with deadly debt burdens.

    However, if McKinsey consultants are to be believed, the real leverage giant – at least among the big western economies – is actually the UK. After crunching the data, McKinsey estimates that the gross level of British private and public debt is now 449 per cent of GDP – up from 350 per cent at the start of the decade.

    And even excluding the liabilities of foreign banks based in the UK, the ratio still runs at 380 per cent – higher than any country except Japan (closely followed by Spain where debt has also spiralled dramatically, according to a McKinsey report issued today.*”

  68. @ALL
    “If something turns up, FF TD Dara O’Brian said, before 30 Sept 2008, we will continue to investigate it after that date (how gracious of their lordships). Anything after that we’re not interested in. No interest whatsoever.”

    That should have been Daragh O’Brien.
    http://www.darraghobrien.ie/index.php?page=profile

    Even though he was only elected in 2007 he is already:
    “Vice Chairman on the Dáil Committee of Public Accounts
    Convenor on Joint Committee on Foreign Affairs
    Member of Select Committee on Justice, Equality, Defence and Women’s Rights”

    Is there any point to these Dail committees? Our construction industry have been building houses with no occupiers since mid 2005, banks started tottering in early 2007 (we know), they all totally collapsed in Sept 2008 and the Dail committees will be looking into what has happened in….
    2011, maybe. What is the point of them? They are literally useless.

  69. @Brian O’Hanlon
    “It is almost as if the minister for finance knew this was coming down the road for a long time, it was only a matter of time. We have been sold this BS story of the panic striken bank managers arriving on his doorstep. But what the Taoiseach Brian Cowen and Minister Brian Lenehan’s response indicates to me, is a situation whereby they already knew the patient had developed a drug-seeking behaviour. It was only a matter of time before one of the organs blew out, in some fashion, and they had a kind of antidote stashed away in a closet somewhere, ready and waiting to stick in the patient, the minute its palpitating corpse ending up on the front lawn of the Oireachtas.

    A certain scene from the movie Pulp Fiction springs to my mind here. I mean, the Irish public are not fools.”

    The dramatic “Night of the Bank Guarantee” looks more and more like a work of pulp fiction concocted by FF.

  70. Sorry, I’ll zip it now, but to expand on my main street point above.

    Sam Walton, who founded Walmart began with a single store. Goldman Sachs started with one guy walking up and down the streets of downtown with piece of commercial paper stuffed into the band of his hat. Hewlett Packard started in a garden shed. Tom Watson who founded IBM started life driving his donkey and cart around the State of New York selling type writers. (Once he got drunk and lost the donkey and cart, so was determined never to drink again)

    The biggest problem with the banking crisis as far as I am concerned, is it has taken Main Street Ireland’s focus of what is important. Unless you are doing something brash, and big, and loud related to property – you are effectively seen as a second class citizen. That seems like a very dumb conclusion for some very smart people on main street Ireland to make. But this is how the rest of the world sees us now, for what we are. They don’t like us for it either. The gave Ireland the benefit of the doubt 10 years ago, because we were underdogs and deserved a shot.

    We have blown that.

  71. “The dramatic “Night of the Bank Guarantee” looks more and more like a work of pulp fiction concocted by FF.”

    I hope they could find the ‘magic marker’.

    BOH.

  72. @ DE

    “Wouldn’t the state be much better off if the dividends were converted into equity rather than deferred”

    But im not saying that they should be deferred, im saying they should be paid! Obviously this years coupon may have to be converted into equity, but im referring to the subsequent years?

  73. So AIB had four other candidates to replace Eugene Sheehy including a ‘very strong’ candidate from the US (RTE – Nine O’Clock News). But yet they went for an insider, Colm Doherty, who, like the Gov of the CB will hardly squeal on any former or still standing colleagues if questioned by the proposed ‘in private’ inquiry.

    The Dept of Finance knew about the 4 other candidates. And remember all the hoo-haa about O’Doherty’s salary?

    Is FF taking the piss?

  74. @Karl Deeter
    Michael Soden has highlighted the explosion in lending that took place after he left BOI. All this money was poured into a frantically booming Ireland and a few other simultaneously booming economies. If the top management of our now zombie institutions had continued to behave as prudently as Soden did they would still be alive and healthy. They would be ready to clean up in fact. So I don’t believe the middle managers killed our banks. Did they kill any banks anywhere? I’ve never read it. I know how to settle this – let’s have a public commission of inquiry.

    @ALL
    Did you vote in 1997, 2002 and 2007 for sky rocketing house prices and a huge lending bubble? Me neither. I voted for what they they told me were the prudent managers of a securely prosperous economy. So secure that it ran a surplus and put significant money aside from pensions. We are not all to blame – the government, the developers and the bankers are to blame. They’d never have won an election on a platform of, “vote for an unsustainable lending bubble that will damage hundreds of thousands of lives and ruin the country for years”.

  75. @ Brian O’ Hanlon

    Good analysis. I agree, its deeper than Fianna Fail, or what ever party happens to be in government. But Fianna Fail have been in power for 20 of the last 23 years! But you are right, by focusing just on a particular political party, we miss the point entirely, the point being the systematic failures. But there also the cultural failures, voters have to take responablity about the way in which they vote which is where the Stockholm Syndorme came out of.

    I rest my case.

    But it is not wrong that Elaine Byrne sees every problem as a political problem – that is the severe difficult in specialising in political science, or specialising in anything else. It happens all the time on Dr. House M.D. TV program. The cancer guy sees cancer everywhere. The neurological guys thinks everything is brain related. The immuneologist knee-jerks into seeing something different.

    Anyhow, that is why I think we need a Brian O’ Hanlon , who can work with Elaine Byrne, Pat Honohan, Joe Stiglitz, or Father Christmas – benefit from their key insights – but put it all together into an effective diagnosis. Preferably before the patient dies in the ward.

  76. Pressed reply by mistake.
    One more point, if we are to appoint a Dr. Gregory House for those obsessives among us, can we pick someone from Grey’s Anatomy instead?

  77. Grey’s Anatomy.

    I don’t know that TV show. I must pick up a DVD box set some time. I don’t go in for TV shows in general, that is the weird thing. But honestly, I watched 5 no. DVD box sets of House M.D. almost entirely in one sitting. That is 5 no. seasons of 24 no. 1-hour episodes in each season. Around 150 hours worth of viewing in total.

    I think something about Hugh Laurie’s character, reminds me so well of some of the best architects I have worked with. Something to do with problem solving. Everyone in the architecture world always deals with a lot of very intelligent and well meaning people, who are so emotionally invested in some project or another, which might vere off course in one way or another, the architects job is to try and detach from all of that, and assess the situation.

    The ‘treatment’ is the easy part, provided you haven’t completely mis-diagnosed the problem in the first place.

    The best architect I ever worked with reminds me a lot of something Edward De Bono once said. The crisis we face, in terms of the globe and the human race, is not climate change. It is a crisis in our ability to think. The point is though, had economists (from Ireland or any other part of the world) been exposed to situations like in any hospital, where sick patients come in, economists would have developed and grown certain instincts.

    As I understand it, Edward De Bono was trained as a psychiatric doctor to begin with. Maybe that has something to do with how he views the world.

    I also felt sure that economists should study more dynamics systems – be they natural, mechanical, virtual or whatever. I often used air-conditioning systems in tall buildings as an example I am familiar with. Those 2 no. things, patient diagnosis and dynamic systems. Two areas where economists in general, simply don’t get enough practice.

  78. @Paul Iticsdotayee
    If we want to see what is happening in P.ie I’m sure we can check it ourselves.

    Will you please stop spamming threads, you are worse than E65, or maybe the same….

  79. @politics.ie (and possibly B O’H and Elaine Byrne),

    Shhhhhh!

    The academics, economists and associated specialists wish to commune in peace. I’m sure the institutional dysfunctionality and the effective suspension of any semblance of democratic governance (and their impacts on economic policy and performance) are well recognised, but provoke serious comment or engagement only when formal proposals are advanced to alter these arrangements – or when an academic paper touching on these issues is published.

    In the meantime, the Government continues as an elected dictatorship and most posts (and comments) are directed at its proposed policies and policy decisions and at international experience and analysis that illuminate these policies and decisions. This frequently allows the principal contributors, if they wish, to draw on this engagement to present policy critiques in the wider media – which may or may not have an impact on public opinion and, ultimately, on the detail of Government policy.

    This is as far as it goes – and probably should go. Anything more is political campaigning – either within or outside the existing political parties.

  80. @ Paul Hunt,

    That is all very well Paul, and I agree with everything you say. However, the best gift the Irish people could receive, in political, economic or any other terms, is the ability to think better about themselves and their situation.

    This is really why I mentioned Edward De Bono. What we witness today, around the globe, and more specifically on the main street of the Irish Economy, as I know it, is a severe shortage in assisting ordinary folk to think their own way out of their predicaments.

    As long as people are to remain trapped inside this vicious and circular, cause-and-effect logic I described, which probably goes back to Fianna Fail’s home building projects of the 1950s – a time when women stayed at home – while men ‘worked on the buildings’, or went to the pub. That is all there was.

    It is a terrible shame to think that after the Celtic Tiger, the modern-isation and the sophistication of Ireland’s academics etc, that main street of the Irish Economy, as I describe, will not allow ordinary common folk to engage in any entreprise, which isn’t building-related are be-littled, by main street.

    In short, the pest controllers, gym instructors and sweet shop owners on main street deserve a better deal, in which they can construct an entire new paradigm, in which to rational-ise their own situation. I think honestly and genuinely, we are back again, to where Lemass was coming from all those years ago.

    Except this time, it is not the agricultural monopoly on thinking we have to deal with, but the builder monopoly instead. This is what a banking inquiry must look at, a new deal for main street. And fast.

  81. You see, the point I am making Paul, is all of the academic discussion is just that, academic discussion. As long as the Irish people on main street are hamper-ed with this over-simplistic model of their universe and of themelves, they will contain to vote into power, the same politicians who will work to re-instate, this over-simplistic arrangement, whereby men go back to work ‘on the buildings’.

    People on main street will continue to behave like they do, until they are presented with an alternative model, and way to look at their universe.

    The bankers know this better than anyone. The bankers know which side their bread is butter on.

    In Fianna Fail’s best interest, they don’t want to enlarge peoples’ perspective on main street of the Irish economy, because then they would lose their biggest lever, to win votes. Like I said, a lot of very intelligent people on main street seem to have arrived at very dumb conclusions. The require assistance in see-ing beyond their present situation, beyond to something different and new.

    Be careful too Paul, unless the government takes this opportunity now to start a new slate – in a time when they still have control over their situation – unless they display that courage, we will be looking back at history, 10 years from now, and saying to ourselves – yeah, we could have done something to stop that Fascist or Communist party dictatorship sweeping in, and cleaning the board in terms of votes. By which stage of course, it will be out of everyone’s control.

  82. Sorry to drag on, but simply to close the loop. The reason why main street would be happy in a situation, where the construction industry was stealing workforce away from other sectors of the economy (as happened in the Celtic Tiger) is simple. When construction is happening and inflation is going up, so is the value of peoples’ major investment, the roof over their heads.

    Irish people do not believe in entreprise, or earning a fortune. The Irish people on main street only believe one simple fact. That as long as their home is rising in value, all they are doing in their jobs is keeping a bank balance topped up, sufficient to pay a few bills. The home value index is the major entreprise.

    To refer to a major academic economist, Robert Shiller, who talks about giving people in the United States a ‘measuring stick’ to understand inflation, rather than what they own at the moment, a measuring stick which constantly changes in length and is completely useless. What we need in Ireland, is to give people a measuring stick, for the first time, which shows other things, other than the value of their homes.

    Over and out, BOH.

  83. A good article from Michael Casey in the IT today on what questions he wants asked at the banking inquiry.

    http://www.irishtimes.com/newspaper/opinion/2010/0121/1224262769895.html

    Note how he doesn’t make simplistic demands calling for justice or heads on plates, or claiming that somehow some proceedings being kept out of the public eye will make the inquiry irrelevant or a cover-up etc. Its a serious, rational and pragmatic response to some of the childish sh1te that had been spouted here, there and everywhere over the last few days. At the end of the day, whats truly important in this inquiry is what questions get asked and what answers get given. As he says:

    “But the methodology probably is not all that important as long as the major questions are answered fully and honestly within a reasonable timeframe. ”

    This should be the primary focus of all those who actually want to fix our broken financial system, instead of simply looking for people to blame for this sad sorry state of affairs.

  84. @ Eoin,

    I am rapidly coming to the conclusion myself, the more I look at this whole thing here in Ireland, we got the politicians we deserve. They told us what we wanted to hear. They provided us with policy we wanted in some strange and real way. Without changing that, changing the politicians or political party will not make much difference.

    Rather than a political system which warp-ed the economy, I would say we have an economy which is able to warp the political system.

    This theory has a distinct advantage, that is doesn’t support a burning need in the Irish mentality to put a head on a plate. However, my theory, does have a distinct advantage, in that it explains a lot more of the plain and honest facts.

    BOH.

  85. “Rather than a political system which warp-ed the economy, I would say we have an economy which is able to warp the political system.”

    Of course, to reference a real political economist, for other peoples’ benefit. I suggest a reading of Amartya Sen’s Development As Freedom.

    A book in which Sen argues which should come first – economics or social and political?

  86. @ BOH

    exactly. We all love to write high-and-mighty letters into the Irish Times vilifying the PD’s for the “neo-liberal capitalist policies”, but i really don’t remember anyone complaining all that much about rising wages and rising house prices in the first half of the last decade (please, no one start an argument over whether the new decade has started or not yet!!), complete with construction-fuelled full-employment. The PD’s policies were so successful and became so mainstream that SF ended up putting tax cutting pledges into their election manifesto the last time out. We did indeed get the politicians and policies we wanted.

  87. @karl deeter

    Yes – you have a point on those ‘mobile upper level gangs of pirates’ in the ‘commercial banking sector’ – but these operated on the principle of ‘by the time these fools figure this out we’ll be gone’ and Ireland is not unique here. They are back in action in Wall Street etc. Of course ‘legally’ these modern day pirates can claim that ‘we did nothing wrong’ – and they have been given a minimum of 36 months by the servants of the Irish State to stash the loot in various far-flung hide-outs ……and others not so far-flung ….. these ‘criminal gangs’ were actively recruited by senior management with the imprimature of their boards in an attempt to keep up with the Jonzez gang led by Long John Seanie and his sidekick Fingers Looty in the Sky with Diamonds ……..

    As to your reference to the Roman practice of ‘DECIMATION’ there is now more than sufficient anecdotal evidence that Decimation is now Item-1 on certain political party and upper-echelon agendas as the citizen Goths, Visi-Goths, Huns, Whiteboys, Ribbonmen, Roundheads, and other sundry low-lifes begin to wake up ………. or maybe not!

  88. Ah, remember the days when we used to hear the mantra “Garret Fitzgerald may be able to run to economy, but only Charlie Haughey can run the country”?

    Sticks in the throat now.

  89. @paul itsadotiyee: so soden had the place running perfect and it was only after he left that things went awry? tell ya what – go pull a few balance sheets from his time at the helm and see if they back up that story (they won’t!)

    @brian o’hanlon: i’ve read your posts and all i want to know is – is that show ‘house’ pretty good then?

  90. @ Karl Deeter,

    Thanks for reading the posts Karl.

    I keep applying this analogy of the medical diagnostitian to subjects such as banking regulation – all these kinds of subjects, which I am totally unfamiliar with – and at least, looking at them through lense of the ‘House M.D.’ TV show, it all seems to make a little more sense.

    The real reason I rattled on so much about it, is because, while I am so familiar with this designer type of problem solving routine, doing it every darn day of the week – I know that many other very qualified and intelligent people might go through their entire careers, without ever looking at the world from a designer’s point of view.

    The same way, as I rarely use balance sheets or Central Statistics Office figures in my daily chores. Yet, listening to economists talking, reference to CSO figures, seems like the most natural thing in the world to do. If I mentioned that to some of my architectural design colleagues, they would fall around the place laughing.

    I would be very interested as to what economists here would think of House M.D. TV show, since it describes what I do, pretty much to a ‘T’.

    BOH.

  91. Also, as a tac-on to that.

    I understand now, that given the sheer scale and complexity of financial trading system(s) these days, that financial regulators in the US are beginning to develop artificial intelligence systems to help them police the territory. A bit like that funny machine, The Greco, that secures the casino from fraud in the movie Ocean’s 13. The Greco immediately shuts down the casino when it perceives there to be an illegal threat.

    But seriously, couldn’t Ireland turn its apparent disadvantage of being in a financial mess, into an advantage? Is there not some opportunity now for Ireland to use its experience in financial collapse, to gain a lead in the new industry of financial security. This is something I would be very much excited about, and I think it would be cool if we could get the equivalent of a real Dr. Gregory House on board the project also.

    Now, as for the idea of including a real life Frank Abagnale Jr. is played by Leonardo DiCaprio, in the movie Catch Me If You Can, perhaps there is scope there too, to enable some of Ireland’s biggest fraudsters to help out with the national cause.

    BOH.

  92. @Brian O’Hanlon

    If I wanted to get a group of people to put together artificial intellegence systems to police financial security I would go to Hungary.

    I was interviewing a woman in that field out there a while back. I asked her why there were so many good AI people in Hungary. Her reply: “Because we (IT/AI people) have nothing else to do in Hungary other than to sit around coding all day.” She then went on to lambast the government and their lack of funding for the creme de la creme in universities and for being an all round bunch of wasters and then lifted the tablecloth on the table we were sitting at, stuck her head under the table and said: “And I don’t care if you hear that.”

    Clearly, not much has changed in Hungary since the old guard left.

  93. Interesting.

    I attended a lecture last night, and one jem in the lecture I thought was Ireland’s ability in facilitation of development and entreprise.

    One thing I remember reading about Silicon Valley a long time ago, I think it was a comment by a tech entrepreneur, he said it is so easy to do business in the valley. Because when you have an idea, all of the relevant sub-contractors to put the idea together are available, competitively and conveniently in the one spot. Hence, Silicon Valley can compete, even though its cost base might not be the lowest in the world.

    I think this is the way to go in Ireland, rather than trying to lead the world. Even if we pick one or two key focus areas, as was suggested at the Farmleigh conference, I don’t think it will be enough to succeed in something like energy. But Ireland could a wonderful location to facilitate developers from outside to come and do their thing.

    The Keystone Advantage:
    What the New Dynamics of Business Ecosystems
    Mean for Strategy, Innovation, and Sustainability
    by Marco Iansiti and Roy Levien; Harvard Business School Press, 2004.

    The book by Iansiti and Levien examines things such as the Adobe Acrobat format, to give one example, which created ‘value’ for itself by being in the middle, being the format that everyone settled upon.

    The book really explores this approach to innovation.

    When you begin to talk about Ireland and it’s role to play, I am much less interested in Ireland as a Leader per se, but more interested in its opportunities as being a facilitator for companies and investors all over the world – a kind of keystone strategy if you will.

    BOH.

  94. Or to be really tongue-in-cheek about it, if one wants to build something like The Greco in order to sell it to people such as Pat Honohan, to install in their basements, Ireland may not be a bad location from which to do that kind of product.

    Based on our native skills with mobile networks on the one extreme, and with the ‘down to the metal’ silicon fabrication on the other.

    BOH.

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