# 8bn for the banks



## cisco (6 Feb 2009)

The banks are going to get 8bn
I cant help thinking this money would be better off being spent on 
building schools and the like to keep people working.
Even helping employers to keep staff, until we get over this.


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## Holtend82 (6 Feb 2009)

You are right and wrong Cisco, i would love to spend the €8b on capital projects, like roads, schools and other buildings. I am also completly outraged that Mr Cowen cut capital spending by €300m. With projects cheaper to complete they should be aiming to get more done. 
But the banks really need this recapitalisation. Look at the panic that was caused when "northern rock" got into trouble, everybody withdrawing all their savings etc. With this injection of funds to the banks, they will be better able to release funds to people who need it, ie people looking to buy homes etc. Maybe with independent people sitting on their boards(providing the re-capitalisation takes place) they might be more responcable about who they lend to and for what.


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## mercman (6 Feb 2009)

One of the main ways this downturn is going to be overcome, is to literally refinance the banks. I do not believe that the Government really wants to do this, but has to to maintain the country, the businesses, the Banks and to keep the country itself afloat. I agree with the OP, it could be better spent, but the lies that the Bank's told us all up to recently are unbelievable. Every single member of the senior Management of the Irish Banks should be given a P45. If this happens, the public would then know that the Government are now in charge and we can all look forward.


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## z103 (6 Feb 2009)

Maybe the government should have allowed all the banks to collapse. Yes, there would probably have been riots as companies collapsed and people lost their savings. 

However, it would have been over within a year. New banks would be created and people could start again.
We also wouldn't have wasted billions. As is it, companies are collapsing anyway, and people are losing pensions.


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## limerick123 (6 Feb 2009)

let all the banks collapse? what a silly comment. do you have any idea of the consquences of that are


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## mercman (6 Feb 2009)

leghorn said:


> We also wouldn't have wasted billions.



Problem is this country would have ended up like Iceland ---but worse. Every other European country has had to feed their country's Banks with money. The Bank's created the problem and all and sundry are been asked and told to listen to their spoof and lies and the persons telling us all this, the SM of same are carrying on regardless. An Taoiseach, cut their wages now before the lunatics really start running the asylum.


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## mercman (6 Feb 2009)

And before others write that they are private companies, make it a precondition before a cent is handed over.


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## z103 (6 Feb 2009)

> let all the banks collapse? what a silly comment. do you have any idea of the consquences of that are


It happened during the great depression. Thousands of banks collapsed.

So what would be the consequences?
- Companies would collapse.
- People would lose their savings.

How is this different to what's happening now? People are losing pensions, and companies are collapsing. It's just more drawn out and billions are being wasted in futile attempts to stop it. The banks may still collapse anyway! This money could have been used for Ireland's reconstruction.

Sometimes it's better to just bite the bullet.


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## NorthDrum (6 Feb 2009)

Leghorn, I think you are only saying what most of the people in Ireland are thinking. None of us want these guys bailed out, but the unfortunate fact of the matter is that it is the lessor of two evils (at least thats what most leaders of most countries appear to believe).

Under capitalist ideals, they should of been let go to the wall. But how would our country do business with each other? How would we do business outside of Ireland? How would we exchange money, people going down to the ATMs with no money coming out . . 

These are just basic questions to something that would provide far more dynamic problems along the way, in truth they didnt even scratch the surface.

Personally I think when we do eventually get things back on track (which will take years) the government should move towards cordoning off the importance banks play in modern society. Perhaps some sort of central public banking system in each country should be considered so that we could in fact let banks collapse if they make the same mistakes again.


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## JohnBoy (6 Feb 2009)

cisco said:


> The banks are going to get 8bn
> I cant help thinking this money would be better off being spent on
> building schools and the like to keep people working.
> Even helping employers to keep staff, until we get over this.


 
The bank are getting €8bn now. I for one believe that this will not be enough. We have somewhere around €360bn of property debt out there. We will probably face loan losses in excess of the UK property crash of the early 1990s so if you are a taxpayer, you had better keep your cheque book handy.


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## z103 (6 Feb 2009)

We mightn't have any choice but to let the banks collapse.
What do we do when the cupboard is bare, and there's not enough money to prop them up any more?


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## csirl (6 Feb 2009)

> Under capitalist ideals, they should of been let go to the wall. But how would our country do business with each other? How would we do business outside of Ireland? How would we exchange money, people going down to the ATMs with no money coming out . .


 
All it takes is for a couple of banks to survive for business to be able to continue, so what would the difficulty be with letting the 4 worst of the 6 majors go under? I dont see why all the banks need to be saved?


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## csirl (6 Feb 2009)

On the 8bn

You could employ 200,000 people for a year on this money or 100,000 for 2 years.

Would the collapse of most of our banks result result in 200,000 more people on the dole? Thats the big question - this needs to be answered before we know if it is the correct course of action.

Remember that a lot more people will be on the dole anyway due to the global downturn - so saying that the unemployment claimants will rise by 200k is not sufficient to answer the question. It has to be 200k MORE people than as a result of the global downturn.

I'm not convinced that the loss of most of our banks would put 200k extra people on the dole, so I'm not convinced that this will work.

To be honest, the approach being taken is akin to giving a drug addict a handout to buy more drugs rather than putting him thru cold turkey to get him off the drugs. May be ok in the short term, but will ultimately end in disaster.


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## LennyBriscoe (6 Feb 2009)

csirl said:


> On the 8bn
> 
> You could employ 200,000 people for a year on this money or 100,000 for 2 years.
> 
> ...


 
So are you suggesting that we let the markets decide, ie. let the banks fail. Have you seen whats happening in Iceland? At least they would have their fishing grounds!

Its against the grain I know, but as a poster said earlier its the lesser of 2 evils.


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## Holtend82 (6 Feb 2009)

Csirl, think about it in a broader term, how many people are employed by the banks ? How many businesses depend on the banks ? How many businesses would shut down right away if banks went bust in the morning ?! Imagine the public perception if all the major banks went bust along with peoples savings and the government did nothing ? They would be a civil rising !!


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## csirl (6 Feb 2009)

Holtend82 said:


> Csirl, think about it in a broader term, how many people are employed by the banks ? How many businesses depend on the banks ? How many businesses would shut down right away if banks went bust in the morning ?! Imagine the public perception if all the major banks went bust along with peoples savings and the government did nothing ? They would be a civil rising !!


 
They dont employ 200k people.

The banks arent lending money anytime soon - any bailout money will be used to cover existing liabilities - so letting them go bust isnt going to hurt businesses who require loans. All it takes is for 1 or 2 banks to survive for business to continue.....and these dont have to be Irish banks.

Peoples savings are guaranteed, so that argument is a red herring.

Yes, it will be inconvenient for people having to switch banks and maybe having to travel further to get to the nearest branch, but its not the end of the world. People will survive. 

Why havent we learned from other people mistakes? The UK bailed out their banks and are back to square one - made absolutely no difference except for postponing the inevitable.


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## csirl (6 Feb 2009)

As an alternative, why doesnt the Government start a new bank with the €8bn?

Could you imagine the competitive advantage this bank would have over all others in the EU? 

No toxic loans, no subprime mortgages................

It would attract depositors from all over the world !!!


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## callybags (6 Feb 2009)

"The banks arent lending money anytime soon -  "

From my anecdotal observations I think the banks are lending for both mortgages and to small businesses. I think the whinging from the likes of ISME is because that is what they do. No matter how good things were they always had a gripe so I tend not to pay too much attention anymore.


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## lemur (6 Feb 2009)

I dont see why the fat cat directors of Irish banks should not be made to hand back their earnings (especially bonuses) for the last 5 yrs or so. They failed in their fiduciary responsibility  to shareholders (and everyone else).


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## callybags (6 Feb 2009)

lemur said:


> I dont see why the fat cat directors of Irish banks should not be made to hand back their earnings (especially bonuses) for the last 5 yrs or so. They failed in their fiduciary responsibility to shareholders (and everyone else).


 
They were re-elected to the board every year by those same shareholders


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## lemur (6 Feb 2009)

The one good thing to come out of this meltdown (unfortunately there will be a lot more bad things) is that it will break up a lot of the cosy cartels out there among bankers, builders, politicians, social partners etc 

Hopefully, it will allow real 'value-add' people to emerge who earn a honest living rather than just been good at forming alliances with other scamsters.


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## Joe Hill (6 Feb 2009)

callybags said:


> They were re-elected to the board every year by those same shareholders


 
You've put your finger on something here I suspect. Who are the shareholders in AIB, BoI and IL&P? What proportion of the shares in each of these companies are owned or controlled by AIB Investment Managers and Ark Life/Hibernian, BOI Asset Managers and New Ireland, Irish Life Investment Managers and Irish Life Assurance? One often hears the allegation that the Irish banks operate as a cartel, perhaps what we really have is a set of companies with interlocking business relationships and shareholdings (similar to the idea of the Japanese keiretsu). As the representative body for the main shareholders in the banks The Irish Association of Investment Managers (IAIM) should have been far more active in requiring appropriate corporate governance and prudent business practices. However given that the IAIM is dominated by bank subsidiaries this was never going to happen.


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## Joody1 (6 Feb 2009)

Only 2 countries guaranteed unlimited amounts of savers deposits  one was Ireland the the other was Portugal, I think.  Why was it necessary to guarantee unlimited amounts of savings and not say 250k that would be more reasonable.


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## PaddyW (9 Feb 2009)

Eugene Sheehy has said he won't step down. AIB and Bank of Ireland are reportedly saying they cannot scrap bonuses to executives for contractual reasons.


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## mercman (9 Feb 2009)

Well if that's official, people should talk with their feet. So those that got us into the mess are unwilling to help get us out of the same mess. Wonderful !! Surely there are enough Banks for the Public to deal with, rather than these two.


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## dockingtrade (10 Feb 2009)

PaddyW said:


> Eugene Sheehy has said he won't step down. AIB and Bank of Ireland are reportedly saying they cannot scrap bonuses to executives for contractual reasons.


 
would gross neligence void the contract?
would having to be recapitalized void the contract?
carry put the job to a certain level not being reached?
can they be fines back the bonuses?


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## mumof642 (11 Feb 2009)

Does anyone know what this recaptialisation by the government might do for the BoI shares?


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## baldyman27 (11 Feb 2009)

We can't discuss individual bank shares on AAM mumof642, read the posting guidelines.


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## mercman (11 Feb 2009)

mumof642 said:


> Does anyone know what this recaptialisation by the government might do for the BoI shares?



Safe to say they will go like a lead balloon


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## Duke of Marmalade (12 Feb 2009)

I notice that the prefs are non cumulative. Davy's is forecasting losses at AIB and BoI for 2009 and 2010, so that means there will be no 8% payments in these years and nor will these missed dividends be payable in future.


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## Smart_Saver (12 Feb 2009)

Can anyone answer CSIRLs point? Specifically what would happen if we did let the Banks go got the wall and set up another independent Bank. 
There seems also to be a certain element of we would end up like Iceland etc. prevailing. This cannot happen as we are tied into the Euro so therefore our currency is guaranteed.


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## Smart_Saver (12 Feb 2009)

Two other points on the above. Just watchg the news on TV3 and the re-capitalisation has officially been voted through. 
Q. is though what happens if Internatioal markets don't believe this will be enough? Possibility it seems is the banks may/will go to the Wall anyway. 
Also then if that scenario happens how are our guaranteed deposits going to be paid for. I don't see any more money in the Kitty.


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## lemur (12 Feb 2009)

The banks are toast. What about all of that dead commercial real estate that has yet to be written off.  I suspect their books are still 'mark to make-believe'. If they were marked to market, its Argentina/Iceland time. 

Govt guarantee - anyone like to tell me where the money for this would come from if queues started to form outside the Irish banks?


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## lemur (12 Feb 2009)

All the more amazing these guys have awarded their staff and presumably themselves a pay rise. Talk about fiddling while Rome is burning. Unbelievable.


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## DonDub (12 Feb 2009)

lemur said:


> I dont see why the fat cat directors of Irish banks should not be made to hand back their earnings (especially bonuses) for the last 5 yrs or so. They failed in their fiduciary responsibility to shareholders (and everyone else).


 
Because those in Irelands Golden Circle don't 'do resignation', don't hand back anything. They are masters at taking. They (and their friends) have peddled a myth for years - that they have to be paid at enormous levels  to prevent them being poached by major international banks. As if......I don't (and never did) see headhunters stalking the land trying to tempt our 'fantastic' bankers away; if anything, our top bankers represent at best, a case study in mind-boggling greed and incompetence......


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## lemur (12 Feb 2009)

DonDub said:


> Because those in Irelands Golden Circle don't 'do resignation', don't hand back anything. They are masters at taking. They (and their friends) have peddled a myth for years - that they have to be paid at enormous levels  to prevent them being poached by major international banks. As if......I don't (and never did) see headhunters stalking the land trying to tempt our 'fantastic' bankers away; if anything, our top bankers represent at best, a case study in mind-boggling greed and incompetence......



Yes and even worse ... look at the pay-off Neary just got - at tax payer expense- sickening. The FAS guy too. 

Then we get calls for higher taxes by various parties! What a hoot! Paying taxes for these scamsters.


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## lemur (12 Feb 2009)

Some interesting figures on RTE tonight on the banks commercial property exposure. 

Gona need a lot more than $8b boys.... most of that stuff is going to pennies on the dollar. Banks are toast. Its over.


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## lemur (12 Feb 2009)

Impressed with Lenihan and the way he is handling this crisis. He has been handed one hell of a ****. Unlucky for him.


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## DonDub (12 Feb 2009)

lemur said:


> Impressed with Lenihan and the way he is handling this crisis. He has been handed one hell of a ****. Unlucky for him.


 
Lemur, sorry but I thought through the tears that I was shedding for Brian Goggins (per his statement that he expects to 'earn' only €1.9million this year) that you were impressed with Brian Lenihan's performance - surely you meant depressed. He and Cowen are consstantly behind the curve - is it unreasonable to expect our 'leaders' to get it right first time. After all, isn't that why they sought election to high office - because they have the 'right stuff'. I mean, what other reason could they possibly have?


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## Damian85 (12 Feb 2009)

I agree DonDub. Lenihan is trained in law, not in finance. He is unlucky to be handed this mess, but we need to ask does he have the experience and qualification? No one can question his effort and determination. However, this position at the moment requires someone with excellent banking knowledge, technical accounting expertise, and foresight ability to deal with a crisis that has very little precedence to go by. 

Perhaps we should take the American approach and headhunt the private sector to fill these roles instead of relying on politicians to fill these roles. Then again, look at the mess they are in also.....


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## lemur (12 Feb 2009)

Not impressed with Cowen. He's been trying to duck under the skirts of the 'social partners' since he took office. Can't see him lasting as the crisis deepens this year. 

Still impressed with Lenihan. I think he is doing well considering the difficult situation he has been handled. 

Headhunt - the private sector. Forget it, all appointments in Ireland are political. Anybody not part of that political class would be quickly marginalised.


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## thedaras (13 Feb 2009)

Quote Damian85) However, this position at the moment requires someone with excellent banking knowledge, technical accounting expertise, and foresight ability to deal with a crisis that has very little precedence to go by. End Quote Damian85

hate to sound cynical ,but I think the banks require someone like that too...


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## PaddyW (17 Feb 2009)

Perhaps we should have a meritocracy in this country.


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## mydosh (17 Feb 2009)

Good debate folks! I'm really annoyed with having to re-finance the banks. 

Why wasn't a good bank created from the deposits of AIB and BoI, IL&P etc....? Is that possible for the government to take over all banks (seeing their share price is so low) and groups all deposits into a single fund i.e. good bank? Of course my lack of knowledge doesn't allow me to understand what would happen with the accumulated bad debt....at a guess I reckon it would be written off? So the government would be in a win win situation i.e. save deposits, write off bad debts which in turn would protect their builder friends?

BTW, cowen & linehan are the wrong people. Don't get me wrong I'm not a politically minded nor do I have any serious party aleigens BUT linehan is a solicitor with no financial background and remember cowen along with haughy (sorry I mean ahern...fraduan slip) were the very people who presided over this shambles of a government for the previous 4 - 5 years. Surely if the people are calling for a clear out of the fraudulent/incapable within the banking institutions then we the people should be doing the same at government!!


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## dockingtrade (17 Feb 2009)

from listening gto all kinds of experts and commentators etc non seem to be saying the 8bn will work.
There are 3 main thoughts that i can see.

1. let them fail.
2. its not enough.
3. make a good bank and a bad bank.

No one seems to be in agreement with the 8bn, so why are they doing it. Surely they must ask themselves why is no one going for the 8bn. 
there is for and against everything, levies, cuts, lisbon etc but there is no one in favour of the 8bn (im not talking about re-cap, just the amount).


why are they doing it?


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