Month: September 2010

Cuddly Lenihan

The BBC has been leading its bulletins this morning on the latest statement by Minister Lenihan.  He gave an extensive interview on the influential Today  programme on Radio 4.  Listeners can make their own assessment of its tone by listening to it at http://news.bbc.co.uk/today/hi/today/newsid_9047000/9047087.stm

You might be alarmed to learn that the BBC headlines the interview on its website as “Lenihan: Ireland ‘can’t print money'”.  Is the Minister restarting his midnight visits to Dave McWilliams gaff?

Banking Statement by Minister of Finance

The statement by Brian Lenihan is here.

Anglo Irish Bank Capital Costs and Review of Capital Requirements for Irish Banks

The Central Bank statement is below, while the detailed statement on Anglo-Irish is here and the detailed statement on capital requirements for Irish banks is here.

The Central Bank today (Thursday 30 September) published its assessment of the capital requirements resulting from the recently announced restructuring of Anglo Irish Bank.

In addition, the Central Bank has published the outcome of its review of the capital requirements of those Irish banks subject to the Prudential Capital Assessment Review (PCAR) exercise, in light of the estimated remaining haircuts to be applied by NAMA.

Anglo Irish Bank Restructuring

The Central Bank has assessed the injection of capital needed to meet minimum regulatory requirements under both a base, or central, scenario, taking account of expected losses, and under a severe hypothetical stress scenario.

This assessment has been applied to both the proposed Funding Bank and the Asset Recovery Bank that will be created. The total capital required for both institutions under the base, or expected loss, scenario is €29.3billion.

Under the stress scenario, in the event that unexpected additional losses are incurred, the Central Bank estimates that an additional €5 billion of capital could potentially be required.

Continue reading “Anglo Irish Bank Capital Costs and Review of Capital Requirements for Irish Banks”

The Central Bank Commission

The Minister for Finance has appointed the non-executive members of the new Central Bank Commission. The press release is below:

The Minister for Finance, Mr Brian Lenihan, TD, has today appointed five members to the Central Bank Commission with effect from Friday, 1 October.

As provided for in legislation, the terms of office of the first appointees will vary in length in order to ensure that future vacancies on the Commission will be staggered. The appointees and their terms of office are as follows:

Professor John Fitzgerald (5 years)
Mr. Max Watson (5 years)
Mr. Michael Soden (4 years)
Mr. Des Geraghty (4 years)
Professor Blanaid Clarke (3 years)

They will join the ex-officio members: Professor Patrick Honohan (Governor), Mr. Matthew Elderfield (Head of Financial Regulation), Mr. Tony Grimes (Head of Central Banking) and Mr. Kevin Cardiff (Secretary General of the Department of Finance) on the Central Bank Commission.

The Minister said:
“These appointments to the Central Bank Commission will bring a wealth and diversity of talent and experience to the Commission and represents a very significant step in the reform process.”

Business and Finance Article on Tax

Following on from last weekend’s discussion of tax issues prompted by Garret Fitzgerald’s column here‘s an article I wrote on reforming our tax system for the current edition of Business and Finance (Admittedly, I wrote the piece prior to finding out about the omertà code of silence on writing about low taxation. Hopefully, I won’t get mugged on the way home.)

One point that I raise is whether the proposed Universal Social Contribution (USC) is a good idea. In addition to the question of the fairness of raising tax rates on our poorest workers, this proposal may affect work incentives and contribute to rising structural unemployment. An alternative would be raise the standard rate (yes, I’d prefer a flat tax) or to provide a credit against the USC that can get clawed back as incomes rise.