The Irish Independent carries the story of recorded conversations in 2008 between Anglo Irish executives. The tone of the calls is really shocking, leading to widespread domestic opprobrium. The international reaction has been split. Jamie Smyth in the FT makes the case for a banking inquiry, while Sam Cage at Reuters pushes the party political angle. Listening to the tapes, it’s hard not to get very annoyed. Here from the FT article is an excerpt of the conversation. The bankers are discussing how best to extract the maximum monies from the State.
“The strategy here is you pull them in, you get them to write a big cheque and they have to keep – they have to support their money,” Mr Bowe said in the recorded call, when explaining why the bank had asked Ireland’s Central Bank to provide €7bn in aid when, in fact, he believed Anglo Irish required much more.
“If they saw the enormity of it upfront . . . they might decide they have a choice,” said Mr Bowe. “They might say the cost to the taxpayer is too high.”
They might have indeed.
The Anglo tapes, in one sense, describe nothing new: we already knew bankers were aware of the possible losses at Anglo, and mislead senior policy makers in 2008 as to the extent of the losses. What we didn’t know—and still don’t—is how common this reprehensible behavior was across our banking system.
Anglo is the bad boy of Irish banking, but readers should remember it was bailed out with money borrowed by the State at ECB rates. AIB, which swallowed almost as much capital as Anglo, did so at a much higher relative cost to the taxpayer in terms of cost of capital. Were executives at AIB, Bank of Ireland, and other banks, similarly aware of possible losses in their banks around the same time as these tapes were made? If so, did they deliberately mislead officials when meeting them over a possible bank guarantee? Were any officials within the Department of Finance, or the Department of the Taoiseach, similarly aware of a divergence between what the banks were saying around this time?
These and other questions have not been answered. We have had three reports into what happened in the lead up to the collapse, each giving possible reasons for why the banking collapse happened. Each report has been excellent within its limited terms of reference. Despite these reports, we have not had any satisfactory answers to simple questions revolving around a central theme: who knew what, and when?