Anglo Split Announcement

The statement from the Department of Finance is here.

A quick reaction. That the new bank isn’t making lending is a good thing. The bank didn’t have the capacity to transform itself into a small business lender or the other proposals that the management were floating. It will presumably need less money to be capitalised as a pure deposit-funding bank.  However, nothing in this statement about the bad bank gives us any reason to think that Anglo will cost the taxpayer less than the projections that have been floating around. That it is still going to be “a licensed regulated bank” (unlike, I believe, the Northern Rock equivalent) could be interpreted as a sign that all bondholders will get their money back, though that may be over-reading this (pretty minimal) statement.

149 replies on “Anglo Split Announcement”

Irish sovereign bond spread vs. bunds narrowing.

Seems to be some relief that the bondholders were not forced to take losses.

Taxpayers, however, have less to be cheerful about.

No numbers. No loss projections, just a statement that the loan portfolio will be run “in a manner to maximise the return to the taxpayer”.

Some uncertainty removed I suppose but has anything really changed?

Has the funding bank not crystallised the cost of the deposit book? (Since it will need capital to the amount of the liabilities it has taken on)

With the ARB likely to be able to pay back the bondholders? (Since it has an excess of assets (however much they are written down) over liabilities (since it no longer has the pesky depositors to worry about).

Bounced into a decision again. And in the passing of time, like every decision Lenihan has made it, it will prove to be wrong.

@Frank, bank deposits are seperate from customer deposits.

At interim report bank deposits were €33bn and customer deposits were €23bn

@Karl, Am i correct in assuming that this plan will do nothing to remove the uncertainty or end the speculation regarding the full cost of the bailout of Anglo Irish Bank? It seems clear to me that we are still no clearer on what discount will be applied to the remaining loans that will be transferred across to NAMA or the eventual losses that will will be written down on the non-NAMA loans that will remain within the Asset Recovery Bank. The Minister for Finance has said that today’s decision ‘is essential to the promotion of confidence and stability in our financial system’. I’d be surprised if today’s announcement will achieve that objective.

Typical cynical comments on this blog in response to any action taken to deal with the problem. Open your minds guys

This funding bank / recovery bank split is a surprise, at least to me. The intention is clearly to maximise the retention of deposits in the bank while not risking additional losses on new loans. But does it make sense? I have two immediate concerns. First, I assume that the deposits in the funding bank will have to be fully backed by government bonds. This adds yet another layer of complication to the already convoluted national balance sheet. Are these (guaranteed) deposits really a low-cost source of financing for the State? And second, it doesn’t appear the government intends to share losses with non-guaranteed legacy creditors – or at least the loss sharing mechanisms are not obvious from the statement.

Help me please. The funding bank will accept deposits but not engage in lending. Where is the interest on deposits coming from? The taxpayer? The recovery bank apparently will have a range of assets of varying low quality. Won’t that set the scene of for a dingdong with NAMA? Why the two?

Am I missing something here? It seems that neither entity is constructed as profit making enterprises. Who ever heard of a government creating two loss making banks? Sorry three, we have NAMA. Throw in the other banks and I suppose we might stretch to seven card trick.

@LorcanRK

My concern is whether the customer deposits will stick around for what is clearly a chaotic, on the hoof situation. As Adrian says, they were bounced into this decision. Now we know why Alan Kelly didn’t have anything to talk to Mr Almunia about.

This seems like an optical exercise – ringfence the depositors in one structure, the FB, who’s only asset would in theory be a big dirty IOU from the ARB.

Depo’s were guaranteed before today, but people were still probably withdrawing them irrationally on the basis of not wanting to be there when the winddown began, but now you can sell a story that there is a clear structural differentiation between depos and loans, even though nothing has fundamentally changed. Its actually a relatively clever way to reassure depositors.

Today’s decision was effectively a winddown in all but name, but the important thing was to keep depositors/funding involved going forward. Hopefully it will have the desired effect.

@Frank.

Why would the depositors leave?

The concern was that Anglo would run into funding difficulties if the depositors left. Well, they government have taken care of that problem by taking all the deposits out of the bank.

I’m mystified about how the funding bank is going to work though..

Flying a kite, maybe the intention is to use the anglo deposits to buy irish sov bonds? After all, that would be investing rather then lending.

And seen as the bank will be wholely owned by the minister for finance, I presume he can pretty much do what he wants with the deposits.

@Eoin,

I don;t see how it can have a ‘dirty big IOU’ from the ARB if, as the statement says
“Depositors with the Funding Bank will be completely insulated from the future performance of the rest of the current Anglo Irish Bank loan book.”

Eoin
Where are you getting the “iou from the ARB” as the asset? Would the also perhaps purchase govt bonds? Just trying to see on the fly what they are about. We know FB liabs = deposits and ARB “assets” = loans. Whats matching what?

From the DOF…

Funding Bank
1. The Funding bank will only hold Deposits – all other liabilities will move to the Asset recovery bank.
2. The Funding bank will provide funding to the Asset Recovery Bank which will pay a market rate
3. NAMA bonds will sit on the asset side of the Funding Bank

So mini-NAMA and mini-Post Office plus maxi-uncertainty with revised forecast of costs in October. Why wasn’t the announcement co-ordinated with a statement of costs by Patrick Honohan. Now we have another 8 weeks of uncertainty.

Should NAMA stop Anglo tranche 3 transfers today?

We should see the meta commentary in the Dept of Finance having left it to a blog thread to figure out the details. There’s more to soothing the markets than putting out an oul’ press release.

but how does an iou then insulate the FB from the ARB? Sorry, is that what your assuming or is it stated somewhre? Linky?

@Lorcan

These depositors don’t come with money – that has long gone out the door on dodgy loans. Just a liability now. The bonds would have to be given to the funding bank. Perhaps Eoin is right about the iou from the recovery bank. But I can’t see depositors being particularly reassured.

@ Lucey

not an iou as i initially thought, Funding bank will actually be, eh, funding ARB. Will also have NAMA bonds as assets. Got that via mail, dont know if tinky winky linky available yet.

@Eoin
“2. The Funding bank will provide funding to the Asset Recovery Bank which will pay a market rate”
I don’t see where you are getting this?

If that was the case, presumably we would be moving towards an SLS type operation where banks can park assets (few questions asked as to quality) in return for funding. Only eighteen months after it was suggested as an alternative to NAMA…

But as I say, I don’t see any evidence that this is the case. As far as I can see, the state will be taking the hit on the cost of the deposit book (perhaps in return for the promissory notes? The 25 bn cost of the Anglo wind-down?). As such, the state will presumably start paying lower interest rates as it wants depositors to leave.

Thanks Eoin for being so helpful. Perhaps you might then assist us and DoF in explaining how if the Deposit bank is funding (aka trying to get interest from) the toxic bank, how can it be “completely separated from Anglo’s loan assets “. It doesnt seem to make internal logic but then this is Anglo in Wonderland time…
Snark away but I suspect im not the onlyu person here confused.

@Eoin The press release states that the FB will be a stand-alone, regulated bank, completely separated from Anglo’s loan assets…will not engage in any lending’. Is this consistent with the notion that ‘the FB will provide funding to the ERB’?

Some clarification from the Dept of Finance and Anglo

A couple of points:

Funding Bank
1. The Funding bank will only hold Deposits – all other liabilities will move to the Asset recovery bank.
2. The Funding bank will provide funding to the Asset Recovery Bank which will pay a market rate
3. NAMA bonds will sit on the asset side of the Funding Bank

Asset Recovery Bank
1. All existing (post NAMA) loans will move to the Asset Recovery bank which will be wound down/ sold over time.
2. These loans will be funded by all bond holders as well as loans form the Funding Bank.

Other

* Still very unclear as to how much capital the government will have to put into these entities.
* Both banks maintain licenses which allow them to fund in wholesale markets, hold bonds, promissory notes ,etc. The Fuhnding Bank therefore will not be a draw on the exchequer.
* Minister is holding a briefing at the moment so maybe further clarity post that.

Following Q&A sheet provided by DOF (although some lack of clarity here)

Q 2. Does this proposal represent a Wind up of the bank?

The bank is not being wound up. The Government has decided to adopt a variation of the bank’s split plan as the preferred option to the restructuring of Anglo Irish Bank.

Subject to EU approval and other regulatory consents Anglo Irish Bank will be split into two distinct entities.
· An Asset Recovery bank
· A Funding bank
As set out in the Minister’s Statement the Asset Recovery bank will be mandated to manage the remaining non NAMA loan book to maxise the return to the taxpayer. It will be a regulated bank. The Funding bank will have a narrow focus as specialist deposit / savings bank Both entities will remain regulated licensed entities.

Q 3. Why is the Government adopting this new policy

The decision today does not represent a change in policy. The Government’s objective has always been to find the least cost solution to the difficulties at Anglo Irish Bank and to protect the interests of the Irish taxpayer and the country generally. The approach adapted today represents the culmination of work and analysis of problems at Anglo and the development of a sustainable solution which removes uncertainty from the situation. The Government is satisfied that proposed approach meets these objectives and represents the best way forward.

It is important to be clear from the outset that the Government did not endorse the plan submitted by the bank to the EU Commission at the end of May. At the time the plan was submitted the Minister asked the various responsible State agencies – the NTMA, the Financial Regulator and the Central Bank, as well as his own Department, to assess the plan and provide their views to the Commission. This assessment of the bank’s plan has now been concluded , and the national position has been communicated to the European Commission.

While the Minister acknowledges that the bank’s management and the Board have done their best to structure a credible proposal in relation to the bank’s future nonetheless important developments in the international financial environment since the bank’s plan was submitted for European Commission approval have impacted adversely on the bank’s plan.

The European Commission has also indicated doubt on the acceptability of the bank’s plan from a State aid perspective.

Q. 4 Why did the Government not adapt this policy earlier for example in May when the plan was submitted by the Bank to the Commission.

It was not clear in May what the optimum approach for Anglo was. At the time essential information such as the scale of the NAMA haircut on the transfer assets and the extent of impairment on the non NAMA loan book was not available. At that time Anglo submitted their plan to the European Commission and the Minister asked the various responsible State agencies – the NTMA, the Financial Regulator and the Central Bank, as well as his own Department, to assess the plan in consultation with the Commission.

That assessment has now being carried out. In the course of that assessment the NAMA haircut was clarified and a detailed analysis of the non NAMA loan book has been completed. Further there have also been important developments in the international financial environment since the bank’s plan was submitted for EU Commission approval.

In the light of the advice received from his advisors, and of the changing background in the markets, the Minister has concluded that the plan submitted by the bank does not meet the Government’s objectives for a viable and long-term sustainable solution to the restructuring of the bank aligned with ensuring the continued stability of the Irish banking system overall and this policy has been adopted.

Q.5 What will the final figures for the capital cost?

As indicated the Central Bank will determine the level of capital required in these institutions to meet regulatory standards. The Bank is undertaking this work and will announce their findings in by early October.

Q.6 How will the split be funded – you said in the past it would give a funding need of €30bn to wind it down?

It is anticipated that the Asset Recovery bank will be funded by the Funding bank. Funding will be provided by the Funding Bank from normal sources. As the Recovery Bank reduces in size its funding requirements will also reduce.

Q.7 What did the EU Commission say?

The Minster for Finance met Commissioner Almunia last Monday to discuss the issue. . A formal detailed plan is being prepared for submission to the Commission for approval and implementation in 2011.

Q.8 What is the position of Bond Holders?

There is no change in the position as a result of the announcement today.

Q.9 Why can subordinated bondholders not absorb some of the losses at the bank?
Anglo has already generated €1.6bn in profit through a liability management exercise on certain of the bank’s subordinated bonds whereby the bank bought back subordinated debt at an average level of 32 cent in the euro, which crystallised significant losses for subordinated bondholders and contributed to Anglo’s capital.

The Government will continue to examine appropriate burden sharing arrangements in the detailed plan and in consultation with the European Commission.

Q.10 Why not put all the bad loans in NAMA?

As matters stand Regulations currently in force restricts the transfer of eligible bank assets to loans secured on development land and property under development with a minimum threshold of €5 million in the case of Anglo. While the Regulations could be changed it appears more appropriate to retain the non NAMA assets in the Recovery Bank. To transfer these assets to NAMA would require a review of the scope of NAMA, the structures and the approach to take account of a wide range of diverse assets. . It would also require EU approval to put the entire loan book into NAMA which could delay matters further. NAMA is also a very sizable institution and increasing its size in the context of the economy would not be appropriate. At this point it appears the most appropriate solution to retain the residual loan book in a Recovery bank.

Q.11 How have such large losses been sustained by Anglo?

Anglo’s lending model was primarily focused on lending for land and property development and investment, with such lending typically having been secured on property assets.

With the significant decline in the property market in all of the bank’s geographies, the collateral behind the bank’s loan assets has deteriorated in value. While the bank is continuing to pursue all loans to the full extent, through the courts where necessary, the decline in the likely realisable value of the loans based on the projected loan cash flows and the value of the collateral available to support the loans requires the bank to write down the value of these loan assets on its book.

Such asset write-downs create losses, which in turn generates the capital requirement for the bank which is being met by way of the Promissory Note. While the realisation of losses is clearly very painful, it represents a central part of the process of managing Anglo beyond the difficulties which saw the institution taken into State ownership.

Q 12 Is my money guaranteed at Anglo Irish Bank?

Yes as the statement makes clear there is no change in existing guarantees. Anglo Irish Bank continues to be covered by the Credit Institutions (Financial Support) Scheme which guarantees Anglo deposits and other liabilities until 30 September 2010.

Anglo also joined the Eligible Liabilities Guarantee (ELG) Scheme which guarantees deposits and other debt securities with maturities that do not exceed five years, incurred by participating institution from the date it joins ELG Scheme up to end-September 2010.

Deposits with Anglo Irish Bank up to €100,000 are covered under the Deposit Protection Scheme with no time limit on maturity.

The revised proposal does not alter the protection already given under guarantee schemes and depositors money is protected. No action is required on their behalf.

What if ARB is no longer able to pay a market rate to Funding bank, perhaps because its assets (loans) are written down in the future (I would say this was likely given their past performance on estimating losses).

I think the question then becomes “will depositors in the funding bank be paid a fixed or floating rate of interest”? If fixed then there could be a future problem for taxpayers who will have to make up the interest to depositors following any loan writedowns, should they occur. If floating then FB depositors will just leave because their returns are dependent on the success of ARB assets.

Bottom line is that risk to tax payers has not been removed from teh creation of a funding bank.

@Eoin
Thanks for that.

The double-speak is astonishing at times “it is not a change of plan”, “we never endorsed the Anglo management plan”, “Dukesy has served us well as a fall guy again as well as those foreign chaps”.

So it is to be promissory notes after all. Hoocudanode?

@ Hogans Heroes and Juicey Lucey (steady Karl, just messing)

this is what i’ve received, not my own personal opinions, so im not going to get snarky! Yes, there does appear to be a mismatch between original statement and clarification/FAQ statement. Again, legal eagles may be required to shed some more light on this…

Is Paddy Power giving odds yet on the Mike Aynsley resignation statement timing? Q3 hangs him out to dry. A nationalized institution submitted an unapproved proposal to the EU.

Now I have a really obvious question Eoin…

1. All existing (post NAMA) loans will move to the Asset Recovery bank which will be wound down/ sold over time.

So will those boys be able to pull the same trick as INBS did yesterday?

@ Karl

Cutbacks in all of the Public Service.
At this stage this website should get funding from Gov, or EU or George Soros…

An intelligent poster on politics.ie (generally an oxymoron) asks:

How will the new depositor bank differ from AN POST Banking?

My answer is:
The only difference is the plebian surroundings of An Post compared with the “respectable” surroundings of the few Anglo branches.

Any better explanation?

@Eoin
Agreed, that’s why I put a line space between thanking you for it and getting snarky about it!

Mr. Whelan has talked before about the inability of the DoF to string a coherent sentence together. We seem to be being hit by FUDspeak again.

Al
TodayFM dont pay. A red cent. a plugged nickel. But yeah, its so odd that we have this evolving in real time

WTF were Dukes and Aynsley doing last night.

Their assessment of their future was clearly as grounded in reality as their estimate that the first tranche discount would be 28% instead of the actual 55%.

Ah thats a pity…
But respect for the open society.
One could only imagine what the suits would have tried to get away with n the 1980’s….
Wait, theyre getting away with it now too….
We just have ringside tickets

Subject to the obvious contradictions in the material from the DOF, it does seem that the Bond Holders are now linked to the loan book whereas the depositors are now “separate”.

In theory, were one to force bondholders to share the pain, it could be done without impacting on the depositors. (The main reason stated by the Government for not burning bondholders is that they rank pari passu with depositors).

I note that Lenihan has said that Senior bondholders will be paid in full but the structure does seem to allow for that to change if circumstances dictate. It’s also not clear that the ARB will have a state guarantee.

Fergal – if hte bondholders are to stay with ARB then the seniors there need to be paid. And on BBerg Lenihan is saying “sod off lucey” , sorry “we wont default on seniors”. But if they are linked to a declining and dubious asset…?

Q.10 Why not put all the bad loans in NAMA?

As matters stand Regulations currently in force restricts the transfer of eligible bank assets to loans secured on development land and property under development with a minimum threshold of €5 million in the case of Anglo. [what regulation are they talking about – the €5m threshold doesn’t apply tp INBS and EBS and is not in the NAMA Act or the two Regs or one order. A small portion of NAMA’s actual loans <30% to date are land and development]

While the Regulations could be changed it appears more appropriate to retain the non NAMA assets in the Recovery Bank. To transfer these assets to NAMA would require a review of the scope of NAMA, the structures and the approach to take account of a wide range of diverse assets.
[expand NAMA anyway because the ways things are going the banks are going to be left with a toxic commercial property loanbook after NAMA finishes its work which will be a drag on lending for years to come]

. It would also require EU approval to put the entire loan book into NAMA which could delay matters further. [really, why not stick in a paragraph with the NEW new Anglo restructuring plan which after all won’t be approved for weeks]

NAMA is also a very sizable institution and increasing its size in the context of the economy would not be appropriate. [in other words that’s so why]

At this point it appears the most appropriate solution to retain the residual loan book in a Recovery bank.

I agree that the statement “completely separated from Anglo’s loan assets” seems somewhat eonomical with the truth to say the least.

I am trying to see what has changed. Let us consider an extreme scenario. The guarantee is no longer in place. ARB’s assets are worth nuffin’. Are the depositors in FB better off than if there had been no split? I think so. It would appear that depositors have now been elevated to super senior status. Bondholders and others would now take the first hit of an asset meltdown.

Surely this was the real answer to Q10? With NAMA the taxpayer takes all the hit on further asset shortfalls. With FB/ARB there is burden sharing on any further asset writedowns.

Two questions not on the list supplied by Eoin:

1. Suppose that there is a large withdrawal of deposits from the Funding Bank, can it sell its NAMA bonds for cash and to whom will it sell them? I thought that the NAMA bonds came with a red-letter type clause, not for resale, only for repo. Repo is no good if the deposits are withdrawn since presumably they will not be replaced that easily.

2. Consider the Funding Bank as just a vehicle for off-balance-sheet Irish sovereign borrowing. From this perspective, how expensive is it relative to direct sovereign borrowing?

@Brian

You’re being robbed! They pay me €50 per contribution. Send an invoice for all the past contributions and then let’s have a cocktail party – a masked party obviously to protect the pseudonymous commenters.

@ Brian Lucey

“But if they are linked to a declining and dubious asset…?”

That’s my point really. It makes the distinction a lot clearer and gets the depositors out of the firing line. Even if they don’t envisage defaulting on the bonds now, the structure makes it easier.

This is a wind down whichever way you cut it. Deposits will be backed or “guaranteed” by NAMA bonds. FB and ARB will be shrunk in tandem – so what’s the duration of ARB’s book? I suspect there’s an end date here.

on Drivetime,

The dposit bank is going to issue a bond to the bad bank?

So depositors will no longer rank pari passu with the bond holders; they will be bondholders??

I might have got that analysis slightly wrong but I think I’m nearly there. The question I am grappling with is – how is this different from what we currently have? To focus my mind I try to think through a liquidation of the lot with no guarantees in place.

Under the split bank the depositors have first call on the NAMA bonds and then would share the shortfall in the ARB. Under the combined arrangement the NAMA bonds would need to be shared amongst all the liabilities.

So the pecking order of the depositors has been enhanced but not quite to super senior status.

And of course the option does now seem to open up of dumping the ARB with reduced implications for the deposit guarantee.

A retrospective Resolution Scheme after all. Looks good to me.

Sarah
WHAT!

BW2
“how is this different from what we currently have?” Its in essence , not , as I suggested on drivetime. Its a two-bank version of the same thing we have now

Funding bank and bad bank will be separate, but funding bank will “fund” bad bank via a bond.

This is separate from any arrangement the deposit banks has with its customers — as far as i understand.

Capitalisation of two sides to be determined by FR in next few weeks. It would appear that capital required for funding bank would not be huge, given that it will not be lending.

im guessing they will go for a buy back of the outstanding sub debt at a heavily discounted price although this has not been stated.

@All

So do we need another board of bank directors for the two neu- banks?

This is worse than living in The Matrix ……… it is slow dying in The Matrix ….. Anglo Reloaded …….

By the way – when will AIB be nationalised? What about ICC? Who really took Shergar? When will consumer/business credit start to flow?

This seems to be the first time in accounting history that a balance sheet has been split vertically rather than horizontally!!!

brilliant

Hurrah! Bertie still lives! It’s a ‘smoke and daggers’ solution. Smoke being blown into the eyes of anyone who looks too closely at it; and daggers for the management. In any event who’d want to spend 10 years progressively dismembering a corpse and continuously embalming the decreasing number of body parts that remain?

The Funding Bank will hoover up retail deposits to fund a legacy loan book not new lending. The thing has the capacity to shrink new lending capacity as well as distort the market for savings for years to come.

@ cliff DoF FAQ anglo made a “profit” of €1.6bn on a subbie buy back at 30c – how much of the subbie stuff is left?

Since the last post and my comment therein some more has come to light and while I have a bit more understanding of what they’re doing, the why continues to elude. Is it possible that the Funding Bank could be a vehicle for other deposit books such as INBS? It seems crazy that a new board, management and back office will be required to handle a single deposit book on death watch, although presumably an ultimate sale will be attempted.

@bill
last balance sheet said 2.4 billion euro of subordinated debt — don’t think anything significant has matured since. that’s a mix of dated and undated, all of which will soon be unguaranteed

plus upwards of 4 billion of senior debt put in before the guarantee in September 2008.

@BL

No I think the depositors have definitely moved up the pecking order and the bondholders haven’t as great a hostage value on them. The problem with torching bondholders in the current situation is their pari passu ranking with depositors. This has definitely been diluted.

Eoin, anybody else? How has the price of Anglo seniors/subbies changed with this announcement?

Ok, I don’t think there is any sense to be found in any of this.

Point number 7 in Eoin’s post above sums up the tactic:

“Q.7 What did the EU Commission say?

The Minster for Finance met Commissioner Almunia last Monday to discuss the issue. . A formal detailed plan is being prepared for submission to the Commission for approval and implementation in 2011.”

Basically, it is (i) be seen to do something. (ii) Kick the problem as far down the road as possible.

It seems, on first reading, that the new scheme is a wind down without the disadvantages of a wind down. The ARB will attempt to realise the loan assets without the necessity of a fire sale (which would be the case if a creditor put the bank in to liquidation).

The scheme also avoids another disadvantage of a wind down: namely the crystallisation of liabilities.

Finally as BWII has pointed out by separating the deposit holders with the bond holders the deposit holders seem to be in the clear, but the bondholders remain stuck in the Anglo mire. This gives the possibility of loss sharing although I still can’t see how the govt can revoke guarantees given to bond holders.

In conclusion, it looks like an ingenious response to the problem of Anglo.

The Minister could move Deirdre Purcell and David Begg from the board of CBI to the new board for ARB.

Depositors were guaranteed before today, and they’ll be guaranteed after today, so no change there.

Guaranteed seniors ditto.

No new lending from Anglo and winddown to occur over unspecified period (but no suggestions over very long period either). As such, we basically got the wind down we were looking for, with some fuzzy optics that depositors may not see themselves as part of a wind-down process anymore, and so retention of funding.

Bit more uncertainty on what happens to the unguaranteed seniors and subs. Decent chance the seniors will be paid out close to full (dont discount chance of a buyback though), and subs likely to be wiped to the tune of 75% via tender soonish imo. But at least with a bit more seperation of deposits from loans in theory at least, there has opened at least some potential ability to inflict losses on the capital structure should they wish to. I thinks its been a decentish day for the DoF, far better than anything seen in the last few weeks anyway.

@Brian Lucey

Glad you like it – amazing powers … ‘anything is possible’ (-; ……….

Neo: Right now we’re inside a computer program?
Morpheus: … your appearance now is what we call residual self-image. It is the mental projection of your digital self.
Neo: This….this isn’t real?
Morpheus: What is real. How do you define real? If you’re talking about what you can feel, what you can smell, what you can taste and see, then real is simply electrical signals interpreted by your brain.

….

Neo: I know you’re out there. I can feel you now. I know that you’re afraid. You’re afraid of us. You’re afraid of change. I don’t know the future. I didn’t come here to tell you how this is going to end. I came here to tell you how it’s going to begin. I’m going to hang up this phone and then I’m going to show these people what you don’t want them to see. I’m going to show them a world without you, a world without rules and controls, without borders or boundaries, a world where anything is possible. Where we go from there is a choice I leave to you….

(The Matrix)

@ BWII

CDS on Anglo seniors popped up by about 80bps to nearish 800bps, so its defintely raised the possibility there. Subbies not sure, they probably trade close to the moon anyway. Irish yields and CDS in about 25-30bps.

@ Eoin/BEB

Off topic this. But I note you are in your work clothes at 4.30 but by 5.49 you are at home and in your civies. A bit more detective work and I will be able to identify your good self, I’m getting there.

Back on topic. Yep it looks clever to me. Judging from the brief education I have received from gadge over the past week, it seems to be playing a bit footloose with our legal heritage/constitution but not so much as to bring the wrath of the bond gods down on Ireland Inc.

Who came up with this plan? Dukes et Anglo were pushing for a good/bad bank. I’d assume they were acting in the interests of the shareholder. So why didn’t the shareholder (Lenihan et DoF) order Dukes to stop if it wasn’t what they wanted.

How long was spent developing this plan? Has it been thought through?

@BWII
You think everything is clever 😀

The big mystery to me is what is going to fund FB – there don’t appear to be enough NAMA bonds going to Anglo, so one presumes the promissory notes will have to go too?

Agree with Eoin about bond buybacks at ARB, expect seniors to be included. The wording “no default on seniors” is fairly specific.

@Mark Dowling,

The Govt might claim: Although the deposit holders may have achieved an advantage, it has not been at the expense of the bond holders whose status remains as before.

In practical terms, although the depositors ranked pari passu with the bond holders, the former’s position was always stronger than the bond holders because of their greater ability to withdraw funds.

Is the “no default on seniors” designed to appease the ‘gods of the bond market’ or the governments of the core EZ countries whose banks and pension funds hold senior bonds in Anglo? I think it is the latter. As a percentage of the number of participants in the global bond market (and as a percentage of the managed funds) I reckon holders of senior Anglo bonds wouldn’t bulk very large. Would it be wild speculation to suggest that the bond market might actually cheer serious haircuts for holders of senior Anglo bonds on the basis that other players reckon the saps deserve all they get and that it would enhance the future debt service capability of the Irish economy?

@hoganmahew

Couldn’t FB fund itself through the same mechanism as INBS yesterday – issuing bonds to itself? (So long as they pay less than 6% or so.)

@Hog

“The big mystery to me is what is going to fund FB – there don’t appear to be enough NAMA bonds going to Anglo, so one presumes the promissory notes will have to go too?”

A deposit selling moment? FB is funded by depositors. Its assets are NAMA bonds and funding to ARB. You are correct that there are not enough NAMA bonds to cover all the deposits so the balance will be a loan to ARB. The capital will be in the form of promissory notes, I presume.

@Eoin
“Irish yields and CDS in about 25-30bps.” The IT were reporting earlier that the ECB were heavily buying Irish and other bonds- interestingly this report has since disappeared.

How can a State Guaranteed deposit taking institution aka Anglo Deposit Bank be allowed to compete with all other deposit taking institutions and not fall foul of EU competition law.

Having tried to get to grips with the Anglo announcement, would i be correct in asserting that nothing has really changed over the past 24 hours? We are still left with a bank, albeit split into two entities for largely cosmetic reasons, that will require further significant funding from the Irish taxapyer, to the tune of €35 billion or more. Mr Cowen has just stated on RTE TV News that technical expertise will be applied to the Anglo loan book over the coming weeks to create more certainty about the cost of bailing out Anglo. Why in the name of god, is this only happening now? It has taken almost two years to come to the realisation that such certainty would be desirable.

@Jagdip
On the face of it FB’s lifespan should be the duration of ARB’s legacy good loan book which well short of ten years.

Recall the FG wholesale funding bank idea – could it be FB will morph into the National Solidarity Bank to provide wholesale funding – allowing the other banks cash in their Nama bonds for the real stuff they can use to lend?

@Jagdip

FB is funding both NAMA and the ARB. It’s life will come to an end whenever both of these naughty banks have ceased to exist.

According to Cowen, Dukes/Aynsley have costed their good bank/bad bank plan at 25 billion.
Who costed the deposit bank/asset recovery bank alternative?

Listening to Cowen on 6.01, he claims not to know the cost, that we wont know until October sometime. For once, I believe him.

So yet again, we have a government making major decisions without a clue as to its cost.

Only in Ireland …..

@ Hogan

rough figures (post sept 29), and add a couple of billion in capital for both too.

FBk:
Liabilities = c.56bn deposits (23bn cust, 26bn centr bks, 7bn interbank – assume all stay)
Assets = c.15bn NAMA bonds (36 x 0.45%), ARB bonds of 31bn, promissory note of 10bn

ARbk:
Liabilities = Fbk 31bn, Seniors 14bn, subs 2.5bn
Assets = c.37bn in loans with MV 31bn, 7bn in interbank loans, 8bn in promissory note

Please please please, mess around with the figs, but does that look ball-park-ish? Jagdip, perhaps you could throw your oar in here too!

@ podubhlain

ECB definitely in today. Guestimation and chatter puts their buying somewhere north of 250mm.

We now have

Bad “good” banks – BOI, AIB, Anglo I

A “good” bad bank – NAMA

A bad, bad bank – Anglo II

I think the new structure is one that could force principal losses on the unguaranteed subs, since there is now a legal entity that can be liquidated without impacting the depositors. At a minimum it is a big stick to force a “voluntary” buy back at a steep discount.

However I think any attempt to impose loses on unguaranteed seniors but not do the same to large depositors (over the 100k limit) could well be challenged in court on the basis that when they bought their bonds they believed that “equal” means “equal” and not “some are more equal that others”. There’s enough novelty and legal complexity here to at least keep many lawyers happy.

All the rest looks to be just internal accounting and moving various pools of money between various state-owned entities (Central Bank, Nama, Anglo FB, Anglo ARB etc.). From a taxpayer perspective what matters are the black-box money flows into and out of all these entities considered as a whole – i.e. who pays what. All the rest is secondary.

Thanks Eoin.
that explains tightening of yield. not a reaction to Anglo plan. Wonder why IT killed that part of story.

@bill
i think the eu was clear that any new bank could not be involved in new lending. that has been the indication for a month or two now. how could that happen after how ever many billion of taxpayers’ money went in?

there are also, of course, competitive issues re deposits. will be interesting to see what rules funding bank will operate under in this regard. I suppose one issue was that if the deposit funding was lost to Ireland — and it may be anyway, depending on what happens to the guarantee post December — the ECB would be in again filling the hole.

@Jim : no not on your part – it may answer your question as to why it took two years for the flying pig to figure out it can’t fly. We are no closer to certainty then this time yesterday – at least now the pig can be valued on a gone concern basis. Which appears to be what Cowen is implying with the application of technical expertise.

“Mr Cowen has just stated on RTE TV News that technical expertise will be applied to the Anglo loan book over the coming weeks to create more certainty about the cost of bailing out Anglo. Why in the name of god, is this only happening now? It has taken almost two years to come to the realisation that such certainty would be desirable.”
Did Frank Fahey not tell you that property prices only go up up and away 😆

Surely the future banking system will need one or more midlevel financial institutions to replace Anglo and INBS? Seems daft to me to wind up a ready-to-go bank if an outside institution can be enticed to snap it up once the ARB is in the final stages of windup, especially if it has brought in new deposits above drawdowns from existing funders.

Good evening Ladies and Gentlemen,

Since long I am reading here, thank you Karl and contributors for the efforts and making all this available to the public.

I am not an economist, I am an artist, hence I apologize if some of my thoughts may come across as unprofessional, clearly I am under giants here in economic terms.

What I like to say/questions is this:

Why is it that within 24 months, this government has failed to demand and finalize a full audit of Anglo Irish accounts?

If my understanding is correct, at least from my conversations with DoF, I was told back in April that the loan book is around 70 billion. I understand that this is a bigger task at hand, however, I fail to understand why a full audit would take anything longer than 6-8 months.

To date, these figures are still discussed behind closed doors.

This latest development also triggers the thought in me that all bondholders will be paid.

Personally, I think this government has no credibility left in the markets, let alone in the Irish public, the latter chooses to stay silent, which makes things even worse, the former gave a clear signal, it could not have been any clearer.

At the moment and I am observing this tragedy closely since two years, I can come to no other conclusion that the failure to deliver the final costs since over two years now, it is not a failure at all, it is kept in secret, and on purpose, for political reasons, and clearly not in the best interest of the taxpayer.

The Heist continues!

@Eoin
I don’t think you can shift the deposits from CBs and the deposits from banks to the FB.

The deposits from CBs are asset backed, mostly by promissory notes, but also by loan assets so they will follow those.

The deposits from banks are more problematic. A good chunk of them is collateral for derivatives, so will have to stay where the derivatives are. These are basically held in escrow and under Basel III will not count as capital in any form (from my last reading of it! It is subject to some negotiation!). Others are the result of repo, again asset secured on loans, so will stay with the assets.

Finally, the tone of the statements is that retail/corporate deposits will be moved, but the other classes of deposit will not. This means the ARB will have to retain more assets – NAMA bonds almost certainly, maybe some of the promissory notes?

I need to do some sums on this, will try and do some tonight if no-one else has managed to wade through the Anglo preliminary. For now, though, Supermario Galaxy calls…

Anglo was allegedly paying over 3% for deposits today. If that approximates to its cost of depos (big if) & assume the CBs get paid LIBOR so cost of funds is over 2%

*NAMA bond 1.5% currently
*ARB lets ay it pays Libor plus spread= 3%
*promissory notes any idea of coupon…can they pay a coupon?

How does ARB generate sufficient income to pay FBK?
Why would depositors in FBK stay there, how strong is firewall?

This whole plan is uncosted, not the output of management and is probably workable. It looks like it was drafted on a fag packet in the DOF.

“Mr Cowen has just stated on RTE TV News that technical expertise will be applied to the Anglo loan book over the coming weeks to create more certainty about the cost of bailing out Anglo. Why in the name of god, is this only happening now? It has taken almost two years to come to the realisation that such certainty would be desirable.”

What scares me about this is the fact that NAMA is taking forever to carry out due diligence on the loan assets but Matthew Elderfield will do it by October! Maybe he should run NAMA!

@kieranfromclon

precisely! I would like to remember to the policy raid of Angl Irish Bank in that context. 24th of February 2009 that was, a month after David Drumm bought his property in Chatham/Cape Cod for USD 7.2 million where he seems to reside now ever since.

Why was this task after the raid given to a hopelessly understaffed ODCE with no hope to deliver timely results? Why were not adequate resources allocated to this task?

No one in Ireland is that stupid! Which leaves very little room for explanations….

@ podubhlain

tightening happened after the announcement of Anglo split, ECB buying merely stabilised the yields at the highs.

.
Maybe its time we, the people of Ireland, decided to govern ourselves.
We certainly could do no worse than the bunch of bums that are currently passing themselves off as our leaders.
.
If we want to get the same preferential treatment by the ECB/EU/IMF as was afforded to Greece then we need to admit that maybe Ambrose Evans-Pritchard was right all along, and that the time to riot is now.
Because the endgame is fast approaching and Anglo will surely torpedo this ship of state.

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100007444/it-pays-to-riot-in-europe/

Drafted on a paper napkin on the Government Jet while returning from having his a$$ kicked in Brussels.

Maybe this is daft but how about this.
The ECB becomes the depositor jn the deposit bank (maybe through proxies).
On the strength of these deposits the funding bank issues bonds to the bad bank. So an indirect way for the ECB to bail out the bad bank?
Downside is that this bank could suck deposits from the systemically important banks leading major headaches for them. Hope it is an EU jobby – the other would be a disaster.

Does anybody know how many seperate depositors there are in Anglo?

Each one is insured for €100k…

Therefore liability ia no. of depositors * €100k (max)

Are customers, the central bank and interbank all covered in the same way.

@ Maurice/Eoin

1. Anglo is an irrational comeptitor in the irish deposit market paying over 3% for depso. Will this change with FBK? Probably not

2. BOI net interset margin should be 2% ifi
t is to make a normal ROE to pay a dividend and grow its loan book. With the funding stresses in the market caused by Anglo in part this has fallen to 1.25%. Will this change? If the answer to 1 is no then the answer is no. Therefore BOI and AIB will not generate sufficient capital internally to grow or pay a dividend.

Therefore there are three possible outcomes
*no credit creration in the economy/years of stagnation
*no private sector interest in what remain as zombie banks
*no economic growth=debt deflation=disappointing tax revenue=higher bond spreads.

That said, I am not sure what the alternative is, given the ECB/EU masters clearly do not want to entertain imposing losses on senior debt holders.

@the loan arranger
Barring Tonto riding to the rescue, zombie banks has been the best outcome since the guarantee. Unfortunately, as FT Lex points out, we have banks that are dead, that is, they both require capital from the state (as they have no business model and embedded losses) and will not be in a position to lend into the economy (given the scale of the state capital and the embedded losses).

We will see token amounts set aside for various groups and, of course, large chunks set aside for the NAMA borrowers to refinance their loans and show a profit for NAMA. Other than that, we will have to wait until margins become juicy enough to attract new foreign entrants.

@Hogan,

which will not happen while this structure is around. At least the Dead stay in the grave. Zombies thrash around causing havoc & frightening the tourists.

Maybe it is Kim jong Il that we should call not the IMF.

@LoanArranger
If Anglo don’t pay retail depositors over 3.6% then its likely they will lose these anyway with another institution offering this short term. As for corporates Anglo will have to pay over 3% as of now to retain these.
If legally seperated then it will be the ultimate risk free deposit institution.

@All

New York Times take on the Baad/Baad Bank …

“Its déjà vu all over again — but this is different from Greece,” said Daniel Gros of the Center for European Policy Studies in Brussels. If Ireland’s banks “can’t refinance themselves the numbers get very big very quickly,” he said. Mr. Gros pointed out that loans to depleted Irish banks from the European Central Bank are about 40 percent of the country’s G.D.P., a dynamic that he believes to be unsustainable and will ultimately lead to Ireland seeking assistance from the Europe and the I.M.F.

“I think things are going to get worse,” he continued. “And over time, the E.C.B. will have to refinance a very large part of the Irish banking system.”

http://www.nytimes.com/2010/09/09/business/global/09euro.html

@ P

If Anglo continues to pay over 3% for deposits, AIB/BOI will either have to charge more to compete. This will kill their ability to make profits and to grow their equity base. Therefore their loan books will continue to stagnate at best. Alternatively, to make the required net interest margin, rates charged to consumers & SMEs will have to go up.

@David O’Donnell
Sobering article.
I thought this part should be of great concern to us-
“According to widely read research by Barclays Capital, for a country to borrow at a 6 percent rate of interest is “unbearable” and represents a prelude to a bailout or rescue — especially if it cheaper borrowing is made available from the rescue fund.

In the case of Greece earlier this year, the country quickly began to lose the confidence of the markets once its borrowing costs surpassed 6 percent.”

From Irish Times

“Mr Lenihan stressed the State would not default on Anglo’s senior bondholders. “I do not see default on that type of bond as a realistic option for the Irish state,” he told reporters at a briefing to outline the decision in Dublin this afternoon. That would be “very dangerous for the country”.

‘Some of the bond holders are guaranteed, some of the bond holders are not guaranteed. Those who are not guaranteed will have their position guaranteed in due course.’”

If this is not a misquote, it suggests that the split is not intended as a first step in visiting losses on non-guaranteed senior debt. The split may not therefore be as cunning or ingenious as some posters have speculated.

How can I reassure my elderly parents that their savings are secure in An Post Saving Certs and on deposit in Ulster Bank? They are getting quite distressed. Is there any other options for them for security? Any help would be greatly appreciated.

@Jim
It’s 1993 all over again – except that they didn’t devalue. Guess what happens next?
@All
Think about those hospital dramas where the medics have been working on the patient for too long. It’s obvious to everyone except the guys thumping the chest that the patient is a corpse. Think about the obvious effort – very well-meaning – and the high levels of emotion. You are all applying your undoubted intellect to a dead body.

Would it be wrong to say that the ECB will inevitably have to pay the refinancing of Irish Banks, so why not start with dropping their 26 bln plus 16 bln senior bondholders now?

Simpleton
Wrong film. Think Frankenstein not ER. The govt has put together an institution out of old body parts. One flash of lightening and the beast walks.

@gadge

Indeed. So we’re left with only the discount on the unguaranteed subs.

So after two years we’ve got Nama and now a new bank-specific ‘resolution’ scheme (with total cost for this bank still TBD) and with a proper resolution for the other banks (INBS, AIB etc) still pending. Should be a leading contender in the “Most Complex Solution” category. A true slow-motion trainwreck.

So I reckon there’s about 25 bn in deposits for the FB:
retail 11,656
non-retail 11,500
cash deposits from banks 1,926

To provide assets for those?

The safest would be
NAMA bonds 5,877
Unpledged promissory 8,200
Leaving a shortfall of 11,018?
Made up of a loan? Secured or unsecured?

I am presuming that since there are going to be two banks, both will have to be solvent so their balance sheets will have to, eh, balance.

@gadge
Existing senior bondholders will be offerred the choice of ELG guaranteed swaps for their senior debt, just as the juniors will be. The haircut may not be much.

@loan arranger
Maybe you and Simpleton are both wrong. It’s the Monty Python Dead Parrott Sketch…..or Road Runner still running having gone over the cliff’s edge…..or…….

@gadge
I’m in the business of being a loon, not in looking at government statements, at least not all the time!

A guess.

Should you be paying more attention to John Martin’s comment?

The FB allows the loans to be worked out but separates the depositors from the bondholders?

Do you remember when all this malarky with the banks was supposed to be about ‘getting credit flowing again’? How far we have come.

I keep laughing over how the Brian’s say out of one side of their mouth the Anglo costs will be 25bn and then say they won’t know the final cost for a few weeks. This does not compute.

Love the ‘Anglo Reloaded’ quip earlier. Tres droll. I see it more as ‘Billy Liar’.

If the Good Bank is only taking deposits and not lending out any money where will the interest come from to pay depositors? Will it have to be borrowed at (say) 6% to pay out at 3%? Who will bear the cost of this? Will it be the taxpayer once again?

@John McHale

I figured when i first read the statement that the state basically thought ‘we can take the deposit book which is costing 3.2% (or less) and use that for funding instead of trying to issue bonds in a market that will want north of 5%’

http://www.mortgagebrokers.ie/blog/index.php/2010/09/08/anglo-new-bad-bank-bad-bad-bank-plan/

How can you have a bank that is all liability and no asset? That is a direct transfer from taxpayer to depositor so there HAS To be an asset at some point to defer and cause the maturity transformation conventional banks have or there is no margin, it is a loss only option. That couldn’t be the case, therefore, the most likely asset in ‘deposit bank’ is govt. bonds

@ Sarah Carey: In light of the comments attributed by Irish Times to Brian Lenihan, I think that John Martin and others may be giving the Government too much credit for cunning. Although depositors and bondholders will now be in separate entities, it seems that this is not part of an overall plan to inflict losses on senior bondholders. Moreover, as John Martin and Eoin point much of the senior debt was issued under an irrevocable guarantee. It occurs to me that this is the real legal impediment to imposing losses on the bondholders, and the that depositors and bondholders rank pari passu is a lesser issue. For political reasons, however, Government Ministers prefer to concentrate on the latter: it downplays the guarantee and also suggests that the motivation of the government is to protect “ordinary” deposit holders, rather than faceless bondholders. Eamon O Cuiv was particularly homely on this topic last night on Primetime!

In favour of the government:

– don’t they HAVE to say they’ll pay the bondholders, cos if they don’t it’ll trigger the guarantee?

against: Black is white talk proves politics and not sense is still too high on the priority list
eg. from the Q&A

“Q 2. Does this proposal represent a Wind up of the bank?

The bank is not being wound up.

YES IT IS

Q 3. Why is the Government adopting this new policy

The decision today does not represent a change in policy.

SEE ABOVE

Q. 4 Why did the Government not adapt this policy earlier for example in May when the plan was submitted by the Bank to the Commission.

It was not clear in May what the optimum approach for Anglo was.

It’s been clear since DAY 1.

sigh.

I was just re reading the Regling/Watson preliminary report from early May 2010:

There is need for a more interactive, and at times a more confrontational culture, in the inter-agency discussions that explore risks during fiscal and supervisory policy design.

I might be wrong here, but I am under the impression that the Anglo decision again was decided on in an inner circle shielded from any confrontational culture.

My ears are still ringing from the ‘There is no other way!’ statements when there were clearly alternatives brought to the Ministers attention.

The report continues to identify massive corporate governance failures, and speaks of very serious breaches.

Personally, observing the Irish political stage since the better Part of 12 years now, I would think these failures and breaches are not restricted to corporate entities, but include government departments and semi state bodies equally.

The rigorous position of no default at all costs will prove to be to high a price to be able to maintain social stability and security. The first signs of social breakdown are already on the horizon, suicide rates are going through the roof, criminal statistics equally, this winter will leave people with not enough money to heat their homes, while they are forced to pay 5% PSO Levy on their electricity bill, from which 2.5% is used to support an utterly idiotic Peat-> Electricity production.

Is this what the government advisors consider collateral damage? How much collateral damage will they accept to continue to project a smoke screen that has long been lifted by the markets?

They continue to sacrifice the future of generations for the sake of Investors (by definition risk takers, obviously not anymore!) and a projected smoke screen to fool international markets.

The rescue rings they continue to throw out to the bondholders turn out to be the millstones around the Irish peoples neck, trying to keep their head up in the troubled waters of global economy, but ultimately the millstones are drowning them now.

The voices of the people drowning in the Titanic disaster echoed in the dreams of those who survived for the rest of their lives. I guess, David Drumm and Patrick Neary and a longs list of other actors in this chapter are sleeping rather well these days.

Why wouldn’t they? ….

Sarah Carey
iv lost your email…email me (yes, yes, its not a lonely hearts message board. blame gmail….)

@KW

“10.14 and still no sign of the FAQ on the Department’s website”

two years into the crisis and still no sign of a re capitalised banking system!

Although there was no consensus on how to re capitalise the banks, as far as I remember, there was a consensus, from the get go, that it was of paramount importance that it be done effectively and promptly.

If the delay in recapitalising had allowed us to push losses up the capital structure I could see arguments in favour of this inordinate delay could hold weight.

However, at this stage, it looks like like we can’t see the wood for the trees

Anyone got a breakdown of Anglo’s deposits? Particlualry the corporate ones.

The overal figure is apparently 54bn and €23bn of this is retail.

That leaves us with €31bn. Aynsley did say last week he feared the bank could lose €12bn in corporate deposits if the guarantee wasn’t extended but I can’t really get a good breakdown in their last results.

@ Rob

23bn is “customer deposits” which is both corporate and retail. the 31bn is interbank and central bank, 26.3bn of which i believe is central bank (incl ECB). Most analysts reckon of the 23bn in customer depos, they have lost 4-5bn in recent weeks, hence the decisions this week on the g’tee and the split.

Cheers Eoin, got what I needed but alot of the other terminolgoy was lost on me?

Is it not as simple as:

Assets:
– Loans: €38bn
– Nama Bonds €14bn

Total:€52bn

Liabilities:
– Depsoits €54bn
– Senior + Subs: €14bn

Total: €68bn

Does the promissory notes (or any of the €22.8bn so far) come into this or has it already been used to pay off older debts?

Promissory note (20bnish) counts on the asset side to make up for the previous losses. But the loan assets are also only being carried at 31bn market value. So assets = 31 + 14 + 20 = 75bn, with a little bit further messing around on both sides of the balance sheet for smaller items.

I believe that the Governments “this is the only way or we face armageddon!” approach to dealing with Anglo and to a lesser extent the other banks will continue to work for them unless something drastic changes. Everyone knows there is genuine fear out there at all levels and the government has cleverly used this to push through its approach to dealing with the crisis for the last 2 years. Every time there is a flair up and things get a bit ropey, Eamonn Ryan, Dermot Ahern, Brian Lenihan or even our Taoiseach are trotted out across the airwaves to scare the living crap out of all those people who don’t really know any better. That is basically what a large proportion of our population see of this crisis….our politicans saying “this is the only way, it’s horrible, but there is no alternative, now switch back to corrie and pretend it’s not happening”…. And sadly an awful lot of people are just resigned to that. Anyway, my point is, all the disparate groups and individuals suggesting alternatives should stop operating alone. It’s no use one guy giving his opinion in a newspaper, then another one throwing out his ideas on the radio etc etc…people need to see one credible, alternative course of action for the country regarding the banks + the likely outcomes of that alternative. and they need to see a concerted effort from all those economists and experts together, not separately, to push that message across and make it as widely known to the entire country as the govt’s “we have to do this or we’re all f@cked” approach.

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