Circuit breakers are purposely weaker than the key equipment they protect. Look at the way a quango has been created for every function of government that could possibly result in blame or responsibility falling on a minister.
I don’t know why they couldn’t simply make the recommendation that any loans made to Corporate officers need to be reported in the company reports; not just those that are outstanding.
This simple step would remove the whole B&B’ing crap & clearly show what loans were made.
I think we should just shut down the financial regulator in total and the central bank. No regulation at all would force the standards up while now all the financials can point to “we are regulated by CB and financial regulator” when in fact we have no regulation.
Look at the number of financial scandals in Ireland
Bank nationalisations of the big 3 banks in 2008, Ansbacher, DIRT, Anglo loans, German Hypobanks in IFSC, trader in the US who dropped 700m, loans to developers without any risk management, 100% plus loan to value for residential etc etc
There has been no regulation just a fig leaf to facilitate the governments political objectives.
The Green Party are showing signs of life at last.
The clear implication is that there must be a broader sweep-out at the IFSRA and a new team with a completely different mind-set.
Let’s see if the Greens have the cojones to force Lenihan to stand up to the Mandarins of Merrion and Dame Streets
Wow. Those greens sound serious. They should be in power…
Jihle is correct on an important point
and this is no accident. In fact, there is a double-lock. Firstly, IFRSA is a body to which the FOI Acts do not apply and, secondly, there are specific confidentialty rules in the Central Bank Acts which, under s. 32 of the FOI Act, makes it mandatory to refuse an FOI request.
The effect is that IFRSA itself is not legally bound by the FOI rules and, equally important, even if information from IFRSA is in the hands of a body subject to FOI, such as Department of Finance, the confidentialty rules may override them. Still, my basic point remains, confidentiality was not designed to protect regulators. Lob the FOI requests into Department of Finance, or Taoiseach, and let them take responsibility for what is releasable. The principle of freedom of information should be applied to any document unless it is blocked by some specific rule in other legislation.
When IFRSA was being set up, the FOI Commissioner asked that
The FOI Commissioner also tried to get amendments to
In their 2005 Report, the Commissioner was
In her 2007 Report, “the Commissioner acknowledges in her Report that certain recent developments have been discouraging. For instance, she refers to the disappointing manner in which the Joint Committee on Finance and the Public Service conducted its review of the secrecy provisions under section 32 of the FOI Act. She notes that, from a position of engaged debate, which she felt was largely supportive of many of her recommendations for the removal of certain secrecy provisions, the Joint Committee then went to a vote and split along party lines. Its report to the Oireachtas in September 2006 rejected all of the Commissioner’s recommendations in favour of the relevant Minister without providing any reasons for its decision.” *Translation: the Committee was all tea and sympathy but when it came to the crunch, members from the Government parties stabbed her in the back. *
This was probably seen as an anti-FOI vote than a banking question but the effect is the same: FOI is hamstrung on banking issues. One positive outcome of the current debacle would be an extension of FOI. The regulators would truly hate that!
The only legitimate reasons I can think of for FOI applying to the regulator are Privacy of Individuals & Protection of Whistleblowers.
Which makes me wonder do we even have a Whistleblower protection in Ireland, anyone know ?
There is none. The Prevention of Corruption (Amendment) Bill 2008 is still knocking around the Oireachtas.
Kathleen Barrington is ahead of us with the FOI request but she got even less than I expected i.e. zilch. My gut instinct is that this stonewalling will not work in the present environment. So many powerful people have discovered that the times have changed: Beverly Flynn, Rody Molloy, Dermot Mannion, Patrick Neary, Bishop Magee (he’s just slow in comting to terms with it). The force of public opinion is being felt like never before in Ireland and Seanie Fitzpatrick’s loans are not just misdeeds of the past. We are being asked to invest heavily in his dungheap. We need to see “due diligence”.
Some perspective is merited. Any recent international study has found Ireland to be, relatively speaking, not particularly corrupt.
In relation to corporate liability, there are good reasons to oppose, for example, any legislation of ‘corporate manslaughter’. It’s a highly dubious legal concept.
As for bribery , how many of our companies do significant business in jurisdicitions where bribery is likely to be a feature of day-to-day business?
Precious few, I’d reckon.
AFAIK interest roll-ups get booked as new lending (on the assets side of the bank balance sheet), not income. The downside of that for the bank is that they have to fund the expansion of the balance sheet and hold capital against it. It’s a fair guess to assume this had something to do with the liquidity issues faced (especially) by Irish banks last September (sure, the capital markets were a wreck, but our banks wobbled first). The upside of a rolled-up or restructured loan for the bank is that it gets taken OFF the impaired list b/c it is effectively a new loan, so the clock starts anew giving the bank and borrower a 90 day grace period until it a) starts performing or b) gets listed as impaired again.
This, by the way, is why the market crapped its pants when it saw Anglo’s 500m ‘just in case’ provision last month together with about a 10% expansion of balance sheet assets, i.e. ‘new loans’.
Jon. I agree with the balance sheet treatment that you outline. But I suspect that the interest being capitalised may also be included in the interest income. Lets assume that a bank had 10bn on interest roll-up at a rate of 10% and a 5yr term. After year one, 1bn is added to the loan balance (new lending for which the bank needs to grow the other side of the balance sheet). The key question is when does the bank earn this interest income? At the end of year one or at the end of the loan term? It’s possible that it’s the former. During the boom times it would have been easy to establish this practice in order to smooth earnings. If so, a bank could be declaring interest income from loans that will default.
I don’t know if this is the case but it’s possibly a biggie. It’s not possible to verify this in the financial statements. The closest I saw was an insignificant amount of arrears interest (13m) included in Anglo’s interest income (6bn) in their recent results. This is of relevance as it opens the possibility of an accrual being included in the interest income.
Just to be clear, I don’t know if this is happening. It’s something I’d like to rule out. If it’s happening, it’s a huge story.
Might be worth a straight question (or two - how would it be dealt with and how much is it) at the Anglo EGM…
The Irish Times has confirmation that Neary and Jim Farrell will appear before the Oireachtas Committee today but it misrepresents the findings of the internal IFSRA Committee report by claiming that:
and then saying
What the report actually said is:
Simply put, due to conflicting evidence, the Committee could not establish whether or not the loans had been mentioned to Neary or the Prudential Director at the end of a meeting January and there was no communciation with him after that until December.
I really object to the omission by the IT of the crucial phrase “subsequent to January” from the last sentence of the report’s finding. This changes the whole sense of the finding and absolves Neary of prior knowledge.
In defending Neary, the IT pins the blame on IFRSA’s banking supervision department but the Committee found that
Neary would have us believe that BSD held these meetings with Anglo without mentioning this to him.
The IT can be forgiven if they are confused about ultimate responsibility within IFRSA for this debacle (no-one in IFRSA understands “ultimate responsibility”) but there is no excuse for absolving Neary on the eve of his appearance before the Oireachtas Committee. I hope a member of the Committee can nail this down.
Whether this is spin from Neary/Farrell or merely bad journalism, it is wrong and must be corrected.
Just caught the last bit of Vincent Browns paper review. front page of the Times I think says that the Fitzpatrick loans were for MORE than €87m unfortunately I didnt hear how much more
It just needs one weak link.
On the 1st page of this thread I interpreted the report as saying that all the interviewed Anglo folks spun the same lie, but the committee couldn’t & wouldn’t accept it because it didn’t tally with the few facts they had.
So, it yet again comes down to the people who’ve served us so poorly so far. What are they prepared to do, to prove to us that they are actually determined to fix this ?
All it takes is for a proper investigation to sit the relevant people down, & question them under oath, & explain to them that they have two choices.
Stick to the shit they’ve been peddling so far & suffer the consequences. Or,
Tell the truth & get immunity, as long as they the the complete truth.
If we, as a society, can break down one case, we stand a chance. If we come through this & no-one in a position of trust ever suffers, we’re screwed as a society.
If we have an opposition & they’re reading any of this, make the case of Anglo your manifesto, if you get one of these bastards into Mountjoy, I’ll vote for you for the rest of your career !
Sorry, Fishfoodie, I think you have misinterpreted the findings on this point:
As my subsequent post explains, the problem for the Committee was that the IFSRA staff were flatly contradicting each other about what who was told what at the January meeting.
Neary is still claiming that he wasn’t told about the Anglo loans until December, so it is safe to assume that the Banking Supervision staff (who did know in January) were adamant that he had been told at that meeting.
The Committee’ finding that there was no (further) communication to Neary until December means either (a) the banking supervisory kept Neary in the dark until December or (b) he made it plain to them in January that he wanted to hear no more awkward questions about Seanie.
I foresee potential for possible lawsuits against directors and senior members of certain banks and those allegedly responsible for regulation. There are possibly grounds to pursue legal liabilities of certain parties - a pure nightmare of bank insurers at this time, there again I guess we’re dealing here with issues of ‘dishonesty’?
Well done with your posts on this topic - I agree that someone is telling porkies
From the summary of the Committee’s report, it appears that the CEO (Mr Neary) and the Prudential Director (Mr Horan) maintain that they were not told about Seánie’s petty cash borrowings - obviously, there is nothing in writing which could verify that they were told (or was the shredder in action??)
Where does this leave the Head of Banking Supervision (Ms Burke)? - it was staff from her department who discovers the cosy little arrangement in Nationwide
Is it likely that she did not pass on the bad news up the line? - I think it is highly unlikely/improbable that did not speak to Mr Horan, who then would speak to Mr Neary
How can Ms Burke work with her boss, Mr Horan, when he denies (as does his boss Mr Neary) being told about Seánie’s petty cash loans?? - find it hard to believe that Ms Burke is a happy camper at the moment!
I believe that there will be more changes in the Financial Regulator - though, these changes will be done on the quiet
What do you think Lefournier??
She’s in a tough spot but she came out ahead in this battle. The fact that the “Committee” (who were the Regulatory Authority minus Neary) did not back the CEO was enough to damn him.
I don’t need to tell you, Bill, if the Board doesn’t back the manager, he’s sacked!
It speaks volumes about Con Horan that Mary O’Dea has been moved from the consumer affairs side to take the CEO job (at least temporarily) even though Horan’s experience on the prudential side made him the natural candidate in the current crisis.
After the roasting they all got yesterday in Leinster House, the issue now is whether B. Lenihan will heed his backbenchers and go for a clearout of the Authority. I would guess the mandarins of Merrion St. will argue for minimum changes.