Government to guarantee bank deposits/debt


There is a thread about this on AAM…someone (who looks like he knows what he is talking about) believes that it will be possible to bundle up the toxic debt and sell it on with a guarantee…

the thread is here…


Now we’ve gone and upset the French aswell. Do we have any friends left?


#367 … m-that-ok/


Based on this column, Buiter is at best a hypocrite.


The bit which I have highlighted is what worries me, and presumably Mr Kelly.

What is to stop them selling the “assets” on in a NON-non-recourse manner, as it were?

As in, they sell it, but retain liability if it goes sour, meaning the Gov´t has to honour that liability.

And the guy that benji2006 has quoted above seems to be saying precisely that.

So I am not seeing how we have any protection from this. I think we should, in fact, be checking to see if this is going on as we speak.


And I can’t see any reason that they will not do that. Much of the European debt market is this way. Covered bonds work this way (that is why Roskilde were brought down) in that if the NAV drops below a level you can return them to the originator and get your money back.

It’s either that or they will sell two year money backed by worthless (but state guaranteed) assets and then have another funding crisis in two years time when it all comes due.


:open_mouth: :open_mouth:


This be doubleplusnotgood.

Somebody needs to get onto Finance right away and mention this in very urgent terms. We need to rapidly amend this bill to make such deals invalid in terms of the guarantee.

Can the Minister make a Ministerial Order refusing to honour the guarantee for such loans? Has the Minister the power to refuse guarantees on a case-by-case basis?

What is the legal situation? Presuming we have say 3 to 6 months before these loans go absolutely sour, can we simply change the law withdrawing the guarantees? Or are the purchasers entitled in law to the guarantees that existed when the transaction took place?


Draft it up, put it in plain writing we’ll get it to the Minister, McWilliams and whoever else will make a case.


Sorry, but I don´t even have access to the Irish Times, as I´m out of the country. So I´m not sufficiently informed.

Maybe somebody who´s actually on Irish soil better take the lead on this one.

Or maybe Ireland having to shut down all the hospitals to pay for a bust developer loan just isn´t that big of a deal, and I´m making too much of a fuss of it.


Ilargi on the automatic earth has an interesting point: … -face.html

While I’m not convined by Mr. Buiter’s argument, given that the UK allowing NR to continue to take deposits in the Republic effectively amounted to the same thing, I believe I agree with Ilargi’s argument that there are no Europe-wide mechanisms or guidelines to cope with bank insolvency. In fact, given what has happened in the UK and the US, it is astonishing that no guidelines, however hasty, have been drawn up. This betokens the arrogance of not just the Anglo-Saxon governments, but the continentals aswell. It is a bizarre form of NIMBYism - it could never happen in my back yard.

#375 … -held-ban/

One in five TDs in favour of state rescue held bank shares
Ken Griffin
Richard Bruton: owned shares in Irish banks according to the last register of Dail member interests

Almost 20% of TDs who voted for the government’s bank guarantee scheme, including Fine Gael TD Richard Bruton, recently held shares in Irish banks, according to the last Dáil register of members’ interests.

The guarantee was supported by all the political parties apart from the Labour Party, handing the government an overwhelming majority.

In all, just one TD who owns bank shares, Labour’s Willie Penrose, voted against the plan.

Between Monday’s stock market crash and the guarantee becoming law on Thursday, Irish bank shares rose by an average of 65%, with Anglo Irish Bank shares more than doubling in value. Anyone owning these shares stood to make a large paper gain on the week, although even this rise failed to offset steep declines from earlier this year.

It is impossible to assess the individual gains as TDs are not required to disclose the size of their shareholdings, with prominent figures such as Fianna Fáil’s Seán Haughey and Micheál Kitt, the Green Party’s Mary White and Fine Gael’s Alan Shatter and Michael Noonan declining to provide this information.

Just three TDs – Fine Gael’s James Reilly and John Perry and Fianna Fáil’s Michael Kennedy, disclosed the size of their modest bank holdings, all of which are worth under €10,000 even after this week’s rally.

Irish politicians have been investing in bank shares for a long time.

There are also long-standing links between banks and Fianna Fáil.

The chief executive of the Irish Bankers’ Federation, Pat Farrell, is a former general secretary of Fianna Fáil.

Fianna Fáil is also well known for its connections to property developers, who may end up being beneficiaries of last week’s intervention.

This newspaper revealed in April that there was a record number of donations from property developers to Fianna Fáil TDs last year, with corporate donors including Glenkerrin Homes, PJ Walls and Ascon.

October 5, 2008





So what does this mean for our 100% guarantee?


There is talk from the EU that the amount of capital flow into Irish banks will have to be limited to satisfy competition rules.


This is sort of what the UK did with Northern Rock.

NR aren’t allowed to hold more than 1.5% of the total amount on deposit in the UK. It’s why they effectively closed to new savers last week.

How you’d work that on a European wide basis for an entire countries banks, god only knows.


And here we are 10 years later, 2 banks, an insurance/cement gambling firm lighter. … guarantee/ … -1.3643697
John Fitzgerald … -1.3639829
Patrick Honohan

The P. Honohan piece is quite incisive, I think.

There are many more threads from around that time, but this is the first one that came up in search - reading through the posts you can see the disbelief grow as the enormity of the guarantee became clear.


Was it worth it