Ivan Yates: "We bailed out the banks..."

Brendan Burgess

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I get annoyed when I hear this meaningless expression. We bailed out the depositors and the bondholders in the banks. Anyone who had money in Anglo or Irish Nationwide at the time of the crisis would have lost most of it. Anyone with money in AIB, EBS or BoI would have probably lost some of it.

Anglo and Irish Nationwide were not bailed out in any sense of the word. They are both gone.

But what really annoyed me last night was Ivan Yates saying "We bailed out the banks". This is ironic in the extreme. The reason that the taxpayer had to bail out the banks was because people like Ivan Yates were not able to repay the money which they had borrowed.

Brendan
 

hubble

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But what really annoyed me last night was Ivan Yates saying "We bailed out the banks". This is ironic in the extreme. The reason that the taxpayer had to bail out the banks was because people like Ivan Yates were not able to repay the money which they had borrowed.

There are multiple reasons:

1. Lack of supervision or prudential rules by the Central Bank (coupled with inappropriate interest rates)
2. Reckless lending

I would put failure to repay (given 1 & 2) as a distant 3.
 

Gerard123

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There are multiple reasons:

1. Lack of supervision or prudential rules by the Central Bank (coupled with inappropriate interest rates)
2. Reckless lending

I would put failure to repay (given 1 & 2) as a distant 3.
Is this for real? A distant 3?
While i agree that 1 and 2 contributed massively, the failure by borrowers to repay their loans was instrumental. Personal responsibility??
 

Purple

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I would put failure to repay (given 1 & 2) as a distant 3
Unless the banks were giving loans to children the borrowers are responsible for not repaying their loans.
Once you put on your big boy pants and become a grown-up you are responsible for your own actions.
 

odyssey06

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Unless the banks were giving loans to children the borrowers are responsible for not repaying their loans.
Once you put on your big boy pants and become a grown-up you are responsible for your own actions.
That applies to the banks too. For some of the loans they gave out they should probably instead just have gone to Ivan as a bookmaker and put it on the favourite in the 3 o'clock, such was the amount of due diligence that seems to have been done.

It's not good enough for an insurance company to say well, sorry we don't have any money to pay out on claims as we thought all our drivers were honest safe drivers who were never ever have a crash or claim or anything. The banks were as greedy as anybody.
 

Sunny

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Ivan Yates didn't take out a business loan from the Irish taxpayer. He took a commercial loan out from a bank. His business failed and he couldn't pay the money back. Hardly makes him a contributory factor to the failure of the Irish Banking System or makes him illegible to pass comment on banks. Banks very basic primary function is to allocate money from savers to borrowers and to manage the associated risk. The failure of the banks/regulator/central bank/government was that they didn't understand or manage the risk and leverage that was within the system. Blaming the people who borrowed the money is like blaming rape victims for being drunk. Of course there was reckless borrowing and those borrowers have in the most part been made bankrupt (like Ivan Yates) but it wasn't their job to make sure that banks were doing proper due diligence.

And I don't know how you can claim that Anglo Irish and Irish Nationwide were not bailed out in any sense of the word? Just because they are not here anymore doesn't mean they weren't bailed out by the taxpayer. A lot of people didn't lose money in Anglo because of the Irish Taxpayer. Not saying if that is right or wrong but Anglo and Irish Nationwide was bailed out. It was nationalised.
 

IdesofMarch

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I get annoyed when I hear this meaningless expression. We bailed out the depositors and the bondholders in the banks. Anyone who had money in Anglo or Irish Nationwide at the time of the crisis would have lost most of it. Anyone with money in AIB, EBS or BoI would have probably lost some of it.

Anglo and Irish Nationwide were not bailed out in any sense of the word. They are both gone.

But what really annoyed me last night was Ivan Yates saying "We bailed out the banks". This is ironic in the extreme. The reason that the taxpayer had to bail out the banks was because people like Ivan Yates were not able to repay the money which they had borrowed.

Brendan
Balderdash, the reason why the Irish banks were bailed out is due to circumstances that happened on a macro level. Worldwide, banks and finance houses had invested heavily in complex derivative products etc during the boom. These products ended up being a bad bet and most were worthless. Lehman, as a result of this, went bankrupt and the ripple effect (as financial institutions scrambled to cash in on almost worthless products) caused a worldwide recession. Here in the Emerald Isle, the investors and bondholders in Irish banks wanted to be paid, corporate depositors took their cash out (all at the same time) creating a perfect storm and credit crunch. The Government intervened and gave a State Guarantee. To say the banks failed in this Country due to individuals like Ivan Yates not paying on their loans shows a childlike understanding of what was really going on and how banks and financial institutions work.
 

Sunny

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Balderdash, the reason why the Irish banks were bailed out is due to circumstances that happened on a macro level. Worldwide, banks and finance houses had invested heavily in complex derivative products etc during the boom. These products ended up being a bad bet and most were worthless. Lehman, as a result of this, went bankrupt and the ripple effect (as financial institutions scrambled to cash in on almost worthless products) caused a worldwide recession. Here in the Emerald Isle, the investors and bondholders in Irish banks wanted to be paid, corporate depositors took their cash out (all at the same time) creating a perfect storm and credit crunch. The Government intervened and gave a State Guarantee. To say the banks failed in this Country due to individuals like Ivan Yates not paying on their loans shows a childlike understanding of what was really going on and how banks and financial institutions work.
You can't blame Lehman for everything that happened Irish Banks. Lehman/ Bear and whole structured finance crash caused a liquidity crisis. Irish banks had a liquidity and a solvency crisis. I have some sympathy for them on the liquidity side of things as every bank in the world faced the same problems but the solvency issue faced by Anglo and Irish Nationwide was all their own fault. Huge leverage, mis-priced loan books, dysfunctional credit committees, all powerful CEO's etc etc were all self inflicted.....
 

Brendan Burgess

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Just to restate.

Saying "we bailed out the banks" is meaningless. We bailed out the depositors and the bondholders. This is even clearer in the case of Anglo and Irish Nationwide which no longer exist but whose depositors were left unscathed.

If NAMA had bought out Anglo's loans at par value so that Anglo continued to exist and the share price remained very high, then you could certainly argue that the taxpayer bailed out the shareholders in Anglo. But that did not happen.

Brendan
 

IdesofMarch

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It was Lehman's collapse that triggered the global recession, in any recession, capital values decrease, such as property values. (Anglo and INBS business models were basket cases to begin with (Regulator always looked the other way)). Due to Irish property prices (both the residential and commercial, falling off the cliff and the subsequent writedowns on balance sheet) most banks had not got a hope of survival. Within the State's micro economy, commerce declined rapidly so persons or companies who had got loans could not meet their repayment obligations. (It is not that they did not want to.) Shops and business closed exasperating the banks plight. Long term inter bank money costs increased significantly in price so the banks could not give forbearance to businesses without committing seppuku and residential variable mortgage rates increased leading to further default. So who is to blame? Ivan Yates!
 
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Purple

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It was Lehman's collapse that triggered the global recession, in any recession, capital values decrease, such as property values. (Anglo and INBS business models were basket cases to begin with (Regulator always looked the other way)). Due to Irish property prices (both the residential and commercial, falling off the cliff and the subsequent writedowns on balance sheet) most banks had not got a hope of survival. Within the State's micro economy, commerce declined rapidly so persons or companies who had got loans could not meet their repayment obligations. (It is not that they did not want to.) Shops and business closed exasperating the banks plight. Long term inter bank money costs increased significantly in price so the banks could not give forbearance to businesses without committing seppuku and residential variable mortgage rates increased leading to further default. So who is to blame? Ivan Yates!
Is that you Bertie?
 

Purple

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We were over leveraged and exposed to one asset class as a Nation.
Take a look at the money makeover section and individuals in that situation are advised strongly to change their exposure. We trotted on merrily for 10-15 years and blissfully ignored the Dutch, the Germans, the Economist magazine, the ECB and just about every other international body that cared to look at our economy. We kept electing governments who promised to make it worse because of short term gain. Then when we are exposed to an international shock, knowing that we are one of the most open economies in the world, it's a surprise and it's all about Lehman's. Yea, right.
 

IdesofMarch

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We were over leveraged and exposed to one asset class as a Nation.
Take a look at the money makeover section and individuals in that situation are advised strongly to change their exposure. We trotted on merrily for 10-15 years and blissfully ignored the Dutch, the Germans, the Economist magazine, the ECB and just about every other international body that cared to look at our economy. We kept electing governments who promised to make it worse because of short term gain. Then when we are exposed to an international shock, knowing that we are one of the most open economies in the world, it's a surprise and it's all about Lehman's. Yea, right.
Is that you Goebbals, attempting to rewrite history again
 

Delboy

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Ivan Yates didn't take out a business loan from the Irish taxpayer. He took a commercial loan out from a bank. His business failed and he couldn't pay the money back. Hardly makes him a contributory factor to the failure of the Irish Banking System or makes him illegible to pass comment on banks.
The loan he took out was on the back of his family (*mother's) home. When the bank came a-calling, he went a-running...to a pub in Cardiff for 18 months.
 

Sunny

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The loan he took out was on the back of his family (*mother's) home. When the bank came a-calling, he went a-running...to a pub in Cardiff for 18 months.
So? He used collateral for a loan? Wow. He went off to the UK to declare himself bankrupt. I don't blame him. I would have done the same considering the draconian bankruptcy laws at the time. I am not defending Yates but he himself admitted he got completely carried away with the business expansion. But again, the bank made a commercial decision to lend him the money and back him with his expansion plans. The bank saw the family home as valuable collateral because as AIB knew at the time, the price of property never falls. So again who gets the blame? Yates for wanting to expand his business (as unrealistic as that might have been) or the professional financial bankers who examined and approved his plans and lent money on the back of property collateral that they thought would never fall in value.
 

dub_nerd

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We were over leveraged and exposed to one asset class as a Nation.
Is that you, the ghost of Brian Lendahand, still telling the denizens of the underworld that "we all partied"?

Who's "we"? I don't remember ever being overexposed to one asset class. In fact, I don't even remember ever buying anything I couldn't pay for in cash, so I've never used leverage in my life.

I do remember being exposed to the costs of the bailout. So yeah, if corporate and government stupidity were an "asset class", I guess I was exposed to that.

Btw, if we're enumerating who benefitted from the bailout, let's not forget the pensioners and those on welfare. They kept getting paid when GDP shrank 20%. Paying for that accounts for more of our current debt than the banks. In Greece, those payments were cut by 70%. I'm not saying we should have done the same, just adding another perspective.
 

Delboy

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So? He used collateral for a loan? Wow. He went off to the UK to declare himself bankrupt. I don't blame him. I would have done the same considering the draconian bankruptcy laws at the time. I am not defending Yates but he himself admitted he got completely carried away with the business expansion. But again, the bank made a commercial decision to lend him the money and back him with his expansion plans. The bank saw the family home as valuable collateral because as AIB knew at the time, the price of property never falls. So again who gets the blame? Yates for wanting to expand his business (as unrealistic as that might have been) or the professional financial bankers who examined and approved his plans and lent money on the back of property collateral that they thought would never fall in value.
And what happened when the banks tried to enforce their collateral? Thats the point I'm making
 

Purple

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Is that you, the ghost of Brian Lendahand, still telling the denizens of the underworld that "we all partied"?

Who's "we"? I don't remember ever being overexposed to one asset class. In fact, I don't even remember ever buying anything I couldn't pay for in cash, so I've never used leverage in my life.

I do remember being exposed to the costs of the bailout. So yeah, if corporate and government stupidity were an "asset class", I guess I was exposed to that.

Btw, if we're enumerating who benefitted from the bailout, let's not forget the pensioners and those on welfare. They kept getting paid when GDP shrank 20%. Paying for that accounts for more of our current debt than the banks. In Greece, those payments were cut by 70%. I'm not saying we should have done the same, just adding another perspective.
I agree re pensioners and those on welfare. I borrowed for a home but never defaulted and never lived beyond my means. WHen I say I'm referring to us as a nation. We engaged in pro-cyclical economic policies for over a decade, increased spending on welfare and public sector wages and numbers massively and retained tax breaks for construction when the sector was completely overheated. We didn't control the massive leveraging in our banks or their concentration on the construction sector. We saw a massive erosion in our global competitiveness. We kept electing governments who pursued those policies and the only criticism from the opposition was that they weren't spending enough.

Of course there are many of us who were not part of that but it seems that seeing our populist establishment bankrupting our country and then selling out our children's future so that we don't have to pay for it is less important to us than paying your fair share for a public utility is to others.
I don't know about you but I never went on any marches to protest against the boom time policies of our government and the social(ist) partnership politburo that ran the country during that time.
 
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