Firstly disclosure, I have shares in BOI worth at this stage a weekend in cork (probobley not including spending money!)
Have been reading all these posts and pretty much feel that whatever is going to happen needs to happen soon.
Everybody else seems to be going down the capitalisation route very quickly to shore up the craters in the bankings systems, I dont understand why we are not. Im not debating whether or not its the perfect way to sort out the existing economic problems in this country, but I havent heard a better alternative that can be implemented sooner rather then later.
How long more can we deliberate over what we should do and at what cost will delaying a decision have on our economy?
I was discussing this topic with somebody today and Unless I am extremely mistaken the following is blatently evident and needs to be sorted:
1. Bank Bosses cannot be trusted. They appear to be sending out signals that totally contradict what we already know. Their only interest appears to be not capitalising for the self interests of those with the most to loose (ie. the bigwig corporates who always looks after their own selfish interests).
2.Ireland does not need as many banks as it currently has, some should be forced to merge under current economic circumstances. Worry about competition when the economy is back on track.
3. The government doesnt really know what its going to do or it doesnt know how to tell us. Lack of leadership and transparency has only further scared the average Joe Public (sounds familiar!).
4. Whatever happens the working class will end up footing a majority of the bill.
Personally I feel the whole Banking sector needs to be disected and rebuilt from scratch. Issues about regulation can be sorted when they are rummaging through the remains of whats left after this knightmare. Heads should role regarding the regulation of the Banks but thats for another day . . . Im surprised nobody here has mentioned the Finnish banking system that had to totally rebuild itself in the 1990's after a very similar situation happened to their banking system.
Seems to me like we are being held to randsom by the banks at the moment. Could they be putting pressure on the Govt to agree to certain terms (eg bonus's, certain regulatory concessions etc) before being capitalised or is it a case that our government are just dithering over what to do ?
With regards to the Govt buying up a bank (AIB or BOI preferably), does it not make sense overall? I mean banks invariably make money as they charge us for putting money in, taking money out, leaving money in and make money on our money. This isnt even going into the other services banks make money on and is keeping my point very simple (I know there are more dynamics involved but bear with me).
I could never understand why the government contracted out companies for toll roads, giving them the rights to own the tolls (especially considering the profits that these tollbridges make). I understand the concept behind state sponcored bodies and holding onto industrys that are in the publics interests, but surely that doesnt mean that they cant hold onto companies or industries that make money? Surely there is a competitive friendly way of our government making money out of corporate investments? Getting back to the point, why cant the government capitalise one specific bank or do what Brendan suggested and setup its own bank?
In theory and keeping things on a simpler note, if it is true that Anglo are the ones whom are most exposed (in terms of bad debts and how they loaned money to builders), then why shouldnt they be left with the worst terms of the Government bailout (and/or eventual capitalisation) whether it be by forced merger or no capitalisation. Surely making an example of at least one bank would send out a signal of intent (ie repurcussions for actions) which has been all to invisible up until now. Im not saying we should let them goto the wall but while there is a collective burden to be shared in the banking industry, why does this mean that every bank should get the same "bailout". Risk v Reward ! ! ! Whats fair about the Irish Public having to bail the banks out in the first place, what we want for our money shouldnt be about being fair on all banks but being selective on what suits us most . .
Finally, whats most important is that the government does what is best for the country, for the economy, nobody else. We are hearing of all sorts of taxes being put on cars, health, carparks etc. I dont mind being taxed up the ass once I am living in a fair economy that looks after all interests (not the interest of those at the top of the ladder). Banking has been riding the pigs back with no repurcussions up until the Sht finally hath hit the preverbial fan.
Me personally, While I dont understand all dynamics to the banking industry (and as far as competition acts go) I dont see why the government just doesnt have one bank. A central bank, owned and run by the public. The profits that some of these banks make are a fraction of our govts budget. Would you mind slightly higher bank charges & have no competition if it meant lower taxes and more money in the coffers for the government? But just as important it meant the heads of the bank were answerable to its public. Hey presto, confidence issues in the banking sector gone . .