Category: Banks & Finance

Pain for everybody except bankers and the ESB

Ok, just so we’re all clear on the situation. The global economy is going down the tubes, wholesale closure of industry and mass layoffs with countless millions of previously wealthy people facing a very bleak future. Some countries, like Ireland and Iceland in danger of complete meltdown. It’s a crisis on a scale never before known to humanity.

Politicians and a whole myriad of experts are agreed that everybody must feel the pain, sacrifices must be made, all bets are off; everybody must put their shoulders to the wheel – except the banks and ESB. Why?

Well the ESB had a previous agreement written in stone by god himself apparently, so that’s impossible to change and the greedy bankers who got us into the mess in the first place must be paid because, apparently, their bonuses are ‘historical.’

Now, where did I leave that sackcloth?

Golden circles and obscure data

Two articles worth reading in the Sunday Independent.

In an analysis of our financial situation Shane Ross tells us of a tiny table of numbers he came across in the Financial Times.

“The table was forbiddingly titled “Bonds — 10 year Government Spreads”. As Charlie McCreevy said about the Lisbon Treaty, “no sane mortal” would read it.

But its message was alarming.

In layman’s language it told where Mother Ireland rated as a credit risk among 21 selected countries.

Go on, guess.

All right, you are bang on. Twenty first. Out of 21 countries listed on Wednesday, we were considered a worse credit risk than the destitute Greece. In Greece there are riots on the streets.”

The second article, by Louise McBride, analyses the Irish golden circle.

It’s an amazing story of the incredibly incestuous crossbreeding within the corporate sector. It is particularly disturbing to note the number of senior civil servants who casually and without any restrictions move into the golden circle.

Financial Regulator – The leopard doesn't change its spots

On 21st Jan last (2nd report), the chairman of the Financial Regulator, Jim Farrell, appeared before the Oireachtas Finance Committee to answer questions on the banking crisis. Here’s what he had to say about the Anglo Irish Bank debacle.

“The action that was taken was in the context of the environment of the time…The Financial Regulator has relied on appropriate management and controls in firms ethical behaviour and true and fair reporting by firms and their auditors as well as on site inspections by supervision actions by the regulator. It is clear that in the case of Anglo Irish Bank this did not happen. We are committed to putting in place measures to try and ensure nothing of this sort can happen again including if necessary requesting government to introduce new legislation.”

This is a standard reflex response employed by politicians and bureaucrats in defence of light touch regulation that has allowed financial institutions to rob countless millions from customers and the State.

As I write, the ‘environment of the time’ that Farrell speaks of is still with us and his promise to introduce new measures to rein in the vermin that infest the Irish financial sector is, at best, dishonest. It is an absolute certainty that no effective action will be taken to deal with these people.

The following day, On Morning Ireland (3rd report, 2nd item) , Jack Fitzpatrick of the Professional Insurance Brokers Association responded to Farrell’s comments.

“We represent almost a thousand member firms in every county in Ireland. Regulation seems to be for the small guy, the regulator already has the power to fine any individual up to €500,000 and any company up to €5 million so the legislation is there. Sanctions have been imposed on small and intermediary some have been put out of business. No sanctions have been applied to banks, nobody in the banks has been fined and we’ve had various things ranging from the NIB tax evasion, overcharging by banks to customers, all that happens is refunds, nobody resigned, nobody was fined.”

Fitzpatrick went on to say that there was no reason why current legislation cannot be used against former Anglo Irish chairman, Sean Fitzpatrick and that there was a far too cosy relationship between the regulator, the Central Bank and the banks.

These comments prompted Jim Farrell to ring Morning Ireland (3rd report, 3rd item) (He didn’t have the courage to go live on air) to dispute Fitzpatrick’s claims that the regulator enjoyed a cosy relationship with the banks. Mr. Farrell said the authority did not have powers to impose fines when the overcharging emerged but it later recovered €167 million on behalf of customers.

This dishonest statement is proof positive that the Financial Regulator has not changed its spots, that it remains a staunch defender of a ruthless and, for the most part, corrupt financial sector.

Farrell’s claim is dishonest because the Financial Regulator has had the power to impose fines since 1st August 2004 under the Central Bank and Financial Services Authority of Ireland Act, 2004.

Since that time there have been numerous instances of overcharging but not a single institution or official has been fined. The effective policy of the regulator towards errant banks still remains – just pay back the monies robbed and carry on.

Copy to:
Financial Regulator
Jim Farrell

Irish logic

“There’s no impropriety in anything we’ve done in that bank.”

This is the view of Sean Quinn regarding his dealings with Anglo Irish banks.

In the same interview he also says he fully accepted that a €288m secret loan from his Quinn Insurance arm to other family companies to fund the stock market gamble on the bank’s shares was in breach of insurance regulations.

So, no impropriety but we did breach insurance regulations – Irish logic.

Who will be the next Financial Regulator?

The Government hasn’t yet announced who will replace Patrick Neary, the incompetent Financial Regulator, who will retire with a lottery sized golden handshake and a massive pension later this week.

While it’s very difficult to predict who the replacement will be I would put money on the present Consumer Director and (I think) acting regulator Mary O’Dea.

The Government might see the appointment of a woman as a ‘radical’ move in addition to the fact that O’Dea is the only senior director that doesn’t have a Central Bank background.

Consumers, however, shouldn’t get too excited if indeed O’Dea is appointed. She’s just as ruthlessly committed to protecting the vermin that infest the financial sector as all previous regulators.

Prime Time carried out a sting operation last May in which they exposed serious mis-selling to the elderly by a number of financial institutions.

According to Ms. O’Dea there was no evidence to suggest there was a widespread problem across the industry but according to the Financial Ombudsman, Joe Meade, the practice is a serious problem.

When O’Dea was asked if the regulator’s conclusion that there wasn’t a serious problem was based on self reporting by the financial companies she said.

“It was based on asking companies at a senior level to examine their files and to look at the details of what they had on a control basis.”

So, the Prime Time undercover sting operation reveals very serious mis-selling and the experiences of the Financial Ombudsman also points to a very serious problem, but the regulator, who politely asks the financial institutions if they’re doing anything wrong, concludes that there’s no serious problem.

That’s the level of ‘regulation’ we can expect if O’Dea is appointed and, to be fair, it will be the same no matter who is appointed to the lucrative position.

Copy to:
Financial Regulator

Ahhh…Poor Seanie

Report in Sunday Independent.

On the nationalization of Irish Anglo Bank. ”

It’s a very sad day, but there’s really nothing else I have to say on that.”

(Well, what else is there to say?)

On his loans.

“Of course. If I borrowed money, I do intend to pay it back.”

(Note the word ‘intend’).

According to friends ‘Seanie’ is:

“Doing his best to bring a degree of normalcy to his family life. It’s been incredibly difficult for them all. Sean is under severe strain, but he is doing his best to put a brave face on it all.

“He hasn’t done anything illegal and a lot of the stuff that has been written and said has really been hurtful for the family,”

(It’s amazing how many people, including Government ministers, overpaid civil servants at the Financial Regulator and friends are absolutely certain that ‘Seanie’ has done nothing illegal).

“But you wouldn’t know how upset he is from looking at him. Only the other day, I was talking to him as he was pottering around in his garden shed, having a cup of tea from a pot he brought out on a tray.”

The hundreds of shareholders who have lost everything because of this man’s dodgy activities would, I’m sure, have a different view as do the 100% of respondents in a recent poll who said Fitzpatrick should face a full investigation by the Garda Fraud Squad.

The Devil, of course, will be skating on ice before that happens.

Please, don't tell us the truth – We're Irish

Marian Finucane (Saturday) is not happy with the BBCs current affairs Newsnight programme .

According to Marian they were very sneery towards our Minister for Finance and our economy. During an interview on Newsnight it was put to Brian Lenihan that the only difference between Ireland and Iceland is one letter and six months.

“Completely untrue, replied the Minister, we have a thriving economy…we have a very strong vibrant economy.”

Lenihan didn’t specify which planet he’s currently living on.

Finucane responded.

“And I suppose you can’t help the Minister defending our own ground. I mean people are quoting the Financial Times (Ireland is a banana republic) and the New York Times (Ireland is the Wild West of EU finance) and various newspapers around the world (Astonished to learn that Fitzpatrick’s dodgy activities are actually legal in Ireland) talking about our crazy banking system.

Now let’s face it, there are a few things within our banking system that we have discovered that are not very far from crazy. But the fact of the matter is that the subprime messing started in the US and it seems to me that banking and bankers all over the world lost the plot. Anyway, there you go, I won’t go long winded on it.”

(Too late Marian).

Finucane’s reaction is typical of most Irish people when faced with the truth -Somebody else is to blame, in this case the subprime scandal in the US.

She can test the veracity of her view that Ireland is no different from any other country by answering a very simple question – What other country accepts serious criminal activity within its financial sector as the norm?

Copy to:
Marian Finucane

Lashing out at the 'Anglo man' culture

Article from Saturday’s Irish Independent

The world of politics is far from dull. But, this week, it turned into a full-blown roller coaster when the Government decided to ram through new legislation to nationalise Anglo Irish Bank.

Predictably, the Opposition was making the most of its chance to shine.

And, in the case of Labour Finance spokeswoman Joan Burton, this meant lashing out at former Taoiseach Bertie Ahern for the nation’s banking ills.

“‘Ansbacher man’ seems to have had a son called ‘Anglo man’, and the principal and first son of ‘Anglo man’ is Mr ‘Seánie’ FitzPatrick,” she told the Dail. “It is interesting that the former Taoiseach never talked about Mr FitzPatrick, but he used that personal name that we read in the writings of people like Padraig Pearse — not just ‘Seán’ but ‘Seánie’,” she added.

“It is cultural,” she said. “It indicates the closeness and togetherness of the family — the family of party, of business, of country.”

Happy property developers living in a banana republic

Property developers became ever more ruthless and greedy as the Celtic Tiger progressed. Many of them branched off into mafia type property management scams. Countless thousands of mortgage holders are being systematically ripped off in this completely unregulated business. The Mafiosi running these scams is well protected by Government inaction.

Another scam engaged in by developers was to construct houses and apartments with tiny rooms thus condemning many people to live in shoeboxes with massive mortgages.

But the most outrageous and depraved scam was the practice of forcing house buyers to sign a contract giving the developer a share of the funds if the owner decided to sell within a specified time.

So, you could have a situation where the developer would receive 10% of the price if the owner sold in the first year, 5% in the second year and so on. This was all perfectly legal and the Government never took any action to stop the practice.

The absolute and uncontrolled greed of these property developers was on my mind as I listened to one of them being interviewed by Eamon Dunphy.

Paddy Kelly, introduced by Dunphy as one of Ireland’s wealthiest property developers was recently presented with a lifetime achievement award in New York by the Ireland US Council.

Here’s some of what this gentleman had to say. (It should be kept in mind that this interview took place on the 29th November before the rot at Anglo Irish Bank was exposed).

Asked about the current crisis enveloping the country Kelly said;

“We’re going to need steady heads to sort our problems and we need to be decent to one another and to help one another and for me compassion is so central to how we live and how we are.”

On the question of over development particularly in Dublin Kelly said. It was stupid but it’s all about Government policy and policy in Ireland today is a bit confused.

It wasn’t the developers fault; the Celtic Tiger came upon us so fast that there was no time for preplanning but, Kelly helpfully added, “I hope we manage the down turn now.

Kelly admitted that he would build anywhere no matter what the consequences once he got planning permission and added “planning was so tedious that it would try the patience of Job.”

To get around such inconvenience Kelly candidly admitted that ‘brown envelopes’ were taken in order to smooth out planning problems. (Here we have a property developer openly adimtting on national radio that bribery occurred with absolute confidence that he will never be questioned by police)

The conversation became even more bizarre when Kelly was quizzed on his loans and banking. I owe hundreds of millions but it’s no great burden he happily admitted.

What’s the last thing you think of before going to sleep, do you think of the bank, asked Dunphy.

“No, no, my life is full of joy and full of the moment. I think of people.”

What about your bank manager?

“Well, I think of the skill of Anglo Irish and the people involved, those people are so creative.”

Dunphy interjected – Anglo Irish Bank? It’s one of the banks endangered I believe.

“All the banks are in danger but you’ll find that as the weeks go on Anglo Irish are in very good shape and you’d be surprised how good the quality is of the people in there…watch Anglo and be optimistic.”

Ah yes, watch Anglo and be optimistic, don’t worry about hundreds of millions in loans, be full of the joys of life, be decent to one another, make compassion central to how you live.

This man is not a priest, he’s not a philosopher, he’s a man living happily in a country where he is supremely confident that the Government will never allow his type to suffer or be at a loss no matter how much it costs ordinary citizens.

Fianna Fail – Protecting friends

Miriam O’Callaghan put it to the Minister for Finance, Brian Lenihan, on Prime Time that his actions regarding Anglo Irish Bank look like he’s just bailing out a lot of greedy developers and builders.

Lenihan replied:

“Developers and builders will be squeezed to the last cent for whatever money they owe the bank, that’s essential to protect the interests of the taxpayer.”

This is just a blatant lie casually slipped off the tongue by a mealy mouthed and irresponsible politician who is doing everything in his power to protect greedy developers at massive cost to Irish taxpayers.

It is already an established fact that developers will default on loans from Anglo Irish Bank to the tune of billions. One commentator made the following estimate.

“At the end of September Anglo had gross assets of €101bn and a total loan book of €72bn.
By nationalising Anglo the Government has nationalised Anglo’s assets and liabilities also. If most of Anglo’s loans turn sour then the national debt, currently €50bn, could almost triple.”

This burden will be a major factor in the destruction of our economy and it is apparently being imposed to protect friends of Fianna Fail.