Evidence that Irish Banks & Government acted in concert to fuel Reckless Lending

Two years prior to the commencement of the Banking Crisis, the Irish Government was subjected to an intensive lobbying campaign by the Irish banking industry to change legislation in order to allow banks to borrow from new sources to lend on to customers. Irish banks, including the now disgraced Anglo Irish Bank and AIB, and large international banks including Depfa, which was nationalised in Germany, successfully lobbied the then finance minister Brian Cowen to amend the law. The 2007 amendment to the Asset Covered Securities Act 2001 widened the scope of the “covered bond market” in Ireland, through which banks sold bonds, or IOUs, that were backed by mortgages at the banks. Allegedly, the main aim of the campaign, orchestrated by the Irish Bankers Federation (IBF), was to prevent the loss of jobs and business in the Irish financial services industry to countries with more wide-ranging legislation governing bonds. The legislative changes, introduced at the peak of the boom, allowed banks to use commercial property loans as collateral for the bonds for the first time, enabling them to borrow more in the markets. This enabled Anglo, a commercial property lender, to access new sources of borrowings to fund the bank. Heavy borrowing in the global markets was one of the causes of the banking crisis and ultimately led to the ill-advised Government bank guarantee and the EU-IMF bailout. Letters released to The Irish Times, in early 2006 under the Freedom of Information Act show the intensity of the lobbying and the access the banks had to Mr Cowen. Offering his views on the legislation, the then chief executive of...

Varoufakis, the Greeks and the Irish

• High stakes in Athens for the next 2-weeks. the Syriza party-led Greek Government has a lot of right on its side , and they are showing signs of not overplaying their hand. They will prevail – instead of the Teachers & Civil Servants, (here in Government) Greece now has University Professors & other eminent experts as negotiators & strategists. They should be saluted, the War Debt point is very salient. • This week John Fitzgerald of the ESRI., ‘owned-up’ to his failure to foresee the Irish crisis unfolding. For an eminent Economist, how could he have been so blind ? He wasn’t so blind in my opinion, he merely wasn’t prepared to put his head over the parapet at the key times in 2006 –> 2008 ( unlike Professor Morgan Kelly, UCD). • ESRI is partly Government-financed ( there is a quid-pro-quo impact on ESRI commentaries here). Mr Fitzgerald’s self-confessed short-sightedness is a ‘Defence-of-convenience’. On 22nd April we’ll hear something similar from Messrs Ahern & Cowen, when they are hauled before the Committee of the Oireachtas Banking Inquiry. AIB wanted higher-level stress-testing in 2005  (than those tests of the Financial Regulator – which were light-weight ) – however this was choreography at the time, designed to ‘look-good’. AIB Bank & the then Government still had control of the ‘reporting’ outcome of the alleged higher-level stress tests. In an Interview this week by the Guardian,  Greek Finance Minister Yanis Varoufakis accidental economist, mentioned something he picked up long ago. “I was told, once, by a leftwing scholar that as a Marxist you have to do two things: always be optimistic...

Irish bank guarantee of 7-years ago was “the most destructive own goal in history”.

In February 2015, we are paying an eminent US expert on bank fraud to state that the Irish bank guarantee of 7-years ago was “the most destructive own goal in history”. It was reported, earlier today (6th February 2015) in www.theJournal.ie that Professor William Black, from the University of Missouri-Kansas City, said that the lack of “reliable facts” from regulators and banks in the lead up to the 30 September 2008 resulted in a blanket guarantee being issued. The inquiry also heard the European Commission’s Mario Nava this afternoon. Earlier, responding to questions from the Oireachtais banking Inquiry, Black said he could not understand the decision to guarantee subordinated debt (junior bondholders), saying later that “you would never ever bailout subordinated debt”. Black said the guarantee decision turned a banking crisis into a fiscal crisis “that was clearly gonna crush Ireland”. In soccer parlance, he said, this was “the most destructive own goal in history”. Not Irish history, but Global economic history. At various stages during his evidence, Black described the decision to issue a blanket bank guarantee as “insane” and said it “sunk an entire nation”. Supporters of the late Mr Lenehan try to claim that he was over-ruled on the night that the calamitous Guarantee was signed. Professor Black said that the assurances that the financial regulator gave about Irish banks being solvent prior to the guarantee was “preposterous” given what it knew. “Your regulators did an enormous disservice to the nation,” he said. rational Irish people will require every one of these individuals to be be called to account & appropriately penalised for their outrageous performance....

Ulster Bank is endeavouring to finalise the securitisation of the latest tranche of its Irish non-performing commercial property Loan Book, of €1.7bn – termed ‘Project Aran’.

Project Aran is euphemistically named after the rugged and tranquil islands constituting the Barony of Aran at the mouth of Galway Bay. It is estimated that Project Aran’s underlying property lending is split c.76% Republic of Ireland, c.21% Northern Ireland, and c.3% the rest of the UK.In addition, there is understood to be progressing bids by underlying borrowers who are seeking to re-purchase their debt. It has also been reported that Ulster Bank’s legacy Irish and UK commercial real estate loan exposure was transferred into RBS’ newly-created internal ‘bad bank’, RBS Capital Resolution (RCR), at the turn of the year. Project Aran’s €1.7bn-sized NPL priced between €500m and €600m in the first round, reflecting a circa 65% to 70% discount. A blended discount at the same range on the enlarged €6.0bn Project Aran would imply a purchase price of between €1.8bn and €2.1bn, although there is no certainly at this stage the pricing would be consistent. The sale of Project Aran to Lone Star, Cerberus or CarVal’s consortium would ‘dispose’ of the bulk of Ulster Bank’s remaining commercial property lending exposure. It was reported four months ago, in October 2014, that the High Court granted an ex parte interim injunction preventing the sale of Ulster Bank’s Pool E loan tranche in Project Achill, after the borrower requested a hearing to establish whether the interest rate swap mis-selling claim must be settled first. Vierai Ltd and European Property Fund plc, two wholly-owned companies of Michael and Rick Larkin, secured the freezing order the sale of the €87m loan tranche. The legal action was initiated in mid-June 2014, with the two...

Goldman Sachs in Ireland , the UK and the US.

In mid-2010 Goldman Sachs was a senior adviser to the NTMA on the recapitalisation of the Irish Banks, following their poor performance in stress-tests. Goldman Sachs is supposed to be monitored by the Federal Reserve Board – one of the most powerful and secretive institutions in the US. In 2012 a recently-hired employee at the FSB, Carmen Segarra was so alarmed by what she witnessed inside the Fed she obtained a tiny camera and began making secret recordings. At this time the FRB in New York was trying to portray itself as a strong regulator, flowing from the banking meltdown of 2008. As part of its efforts to reform, the FRB commissioned a highly confidential report, written by Columbia Professor David Beim, that sought to identify why the US Regulator (FRB) failed in the years leading up to the 2008 crisis. http://www.theguardian.com/commentisfree/2014/oct/05/carmen-segarra-whistleblower-wall-street-federal-reserve 2-years ago, in 2013 Goldman Sachs Group announced that it was surrendering its Banking Licence back to the Financial Regulator, regulatory requirements were too onerous for this Global Banking Group. Even though this Group handed back its Banking Licence, it still managed to pay over a dividend of $50 Million to its parent firm. 2-months ago, in November 2014. Mark Carney the Bank of England Governor was commenting on the $4.3 Billion fines that had been imposed on Banks for the proven manipulation of Foreign Exchange markets. Mr Carney stated that Bankers’ salaries and their bonuses should be threatened if the offending Banks flout the new rules. These new rules restricted Bankers’ bonuses to 100% of their salaries, or alternatively to 200%  (if shareholder approval ratified same)....