I fear alot of people reading this post will begin a mass withdrawal of their savings from Irish banks before the upcoming draconian budget.
Make the depositors who were bailed out contribute to the retrospective guarantee?
- Thread starter Brendan Burgess
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I fear alot of people reading this post will begin a mass withdrawal of their savings from Irish banks before the upcoming draconian budget.
Brendan Burgess
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Hi Marietta
This point has been made repeatedly and I have already dealt with it. But I will deal with it again.
My proposal is that those who had deposits in September 2008 would have to contribute towards the cost of the benefit they receive. They would owe this money whether or not they have money in an Irish bank account now. If they have money now, and take it out, they would still owe it.
Compare this with what some other commentators have suggested. That we should renege on our guarantee. I am not suggesting that people who put fresh money on deposit during the period of the guarantee should have their guarantee withdrawn. I am suggesting that we should honour the €20,000 "guarantee" which existed in Sept 2008 which was the the basis on which people put their money on deposit in the first place.
If my proposal was adopted, the government's borrowings would be substantially reduced and so the Irish government's guarantee would be more valuable, and not less valuable.
Brendan
This point has been made repeatedly and I have already dealt with it. But I will deal with it again.
My proposal is that those who had deposits in September 2008 would have to contribute towards the cost of the benefit they receive. They would owe this money whether or not they have money in an Irish bank account now. If they have money now, and take it out, they would still owe it.
Compare this with what some other commentators have suggested. That we should renege on our guarantee. I am not suggesting that people who put fresh money on deposit during the period of the guarantee should have their guarantee withdrawn. I am suggesting that we should honour the €20,000 "guarantee" which existed in Sept 2008 which was the the basis on which people put their money on deposit in the first place.
If my proposal was adopted, the government's borrowings would be substantially reduced and so the Irish government's guarantee would be more valuable, and not less valuable.
Brendan
canicemcavoy
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So if someone had a €100,000 for a house deposit in an Irish bank on September 2008, and used it to buy a house since, they now owe a lump sum of €10,000, even if they're currently unemployed and in negative equity.
Are you really serious? Have you brought up this idea at the mortgage debt expert group?
The idea itself is poorly thought out never mind completly wrong. It is a bit worrying if these are the types of ideas that are being discussed.
You have had Anglo and other Irish Banks advertising their deposit rates since the bank gaurantee in 2008 and now to potentially having depositors retrospectively pay for some sort of bank gaurantee is a ludicrous idea.
You have had Anglo and other Irish Banks advertising their deposit rates since the bank gaurantee in 2008 and now to potentially having depositors retrospectively pay for some sort of bank gaurantee is a ludicrous idea.
canicemcavoy
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Presumably you would still owe the money, and you would be chased for this debt, while at the same time, we extend forgiveness to those in mortgage arrears. What a laugh, but then this country has exceeded all satirical expectations.
H
hopeless
Guest
Brendan,
What about the people who moved money into Irish banks since the introduction of the banking guarantee? However rightly or wrongly it now appears, at the time Irish banks suddenly became the safest place in the world and I have no doubt that many investors took advantage of the guarantee. I seem to remember European politicians complaining that they weren't told about the Irish guarantee and it threatened to create a run of their banks. Would these depositors also be charged?
Also, is there any precedent for retroactively applying taxes/charges/levies? What if the depositor can no longer pay the charge?
What about the people who moved money into Irish banks since the introduction of the banking guarantee? However rightly or wrongly it now appears, at the time Irish banks suddenly became the safest place in the world and I have no doubt that many investors took advantage of the guarantee. I seem to remember European politicians complaining that they weren't told about the Irish guarantee and it threatened to create a run of their banks. Would these depositors also be charged?
Also, is there any precedent for retroactively applying taxes/charges/levies? What if the depositor can no longer pay the charge?
Ah, but that would only get you a share of the meagre interest being paid.
Brendan wants to grab a chunk of the money you shouldn't have had there anyway because it should have all been invested in property and bank shares.
J
JoeB
Guest
Thanks for the advice.
I supose I have some small amounts elsewhere.. a few K in the credit union, and a little in a current account, non interest paying. I'm also exposed to Irish property through an inhertitance.
I agree that gold could halve in value, or double in value... with the risks go the rewards... so overall I am making a concious decision to take a risk. Gold was 24K a kilo back in Feb 2010 when I moved the money,.. it's now 33K a kilo, and could go to 10K / kilo, or 60K / kilo... who knows?
I think there's risks in Irish banks.. regardless of the guarantees. Not worth it for 3% or 3.5% in my view. Over 9%, like our bond yields, would be more like it....
Taxing deposits is a non runner in my view, and would likely be illegal. Canice raises great points, what about house deposits which are now spent? What about companies and charities, would these also be hit? What about people who had savings they no longer have? How would it even be determined how much money people had in Sept 2008?.. would it be self assessed?, God, it couldn't be, could it?
Why don't we just try to run our country like the Germans?.. .with no useless rhetoric or non-regulation.. just sound and safe policies with no cronyism or protected sectors.. no waste etc. But I do despair that that will ever happen.. I think our government is a joke, and they've done nothing to change that view. Has any politicion ever suggested that we have far too much representation in the Dail?, and to cut wages and benefits in half? If not then they're all useless.
And the whole pensions thing.. double pensions.. pensions paying while the person is 50 years old and currently in a job.. this is a complete joke. If that's what the government thinks of us then I have no problem stating that I think they're all idiots... (would use stronger words if allowed)
canicemcavoy
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Well, every cloud has a silver lining, and the fact that ideas like these are now mainstream in government advice circles finally prompted me to get off my derriere and finally get all my deposits out of Irish banks. See, thanks I guess.
I think lots people with deposits in irish bank will be follolwing you.....
What a crazy suggestion to put to posters. He cannot be serious, can he???
Can somebody confirm these figures, original guarantee was E400bn, 10% = E40bn which would be enough to tide the country over for a couple of years. Aside from ripping the banks' balance sheets apart, do you think the E40bn gained from the raid would outweigh what will be lost in credibility, stability and ultimately inflows into the country. Our company lost a contract this week over in Norway because they have no faith in the Irish banking system. Banking and politics (to a far lesser degree!) are based on trust (otherwise banks' liquidty ratios would be 100% not 7%), we have to start rebuilding that trust not annihilating it, as this move would.
galwegian44
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Absolutely ludicrous Brendan, even after digesting it for a few hours to see if there is any merit.
First of all the deposit guarantee that Brendan is saying should be levied retrospectively was a confidence trick. Who truly believes that the government would pay the guarantee if the banks failed and the country went bankrupt. It was a measure used to instil confidence and nothing else….I’m not prepared to pay for that as a depositor. At no point did I think I would get my deposit back, despite the government guarantee....and still don't!
Secondly, if indeed there was backing for the guarantee then if applied retrospectively there would be a run on the banks and a large portion of the deposits would be withdrawn...including mine - not workable.
Thirdly, it's almost impossible to apply rules to this retrospectively; you mention Anglo and IN as the main culprits....AIB are fast on the way to joining them. Can we go back and squeeze another percentage out of AIB depositors next year when we get evidence that AIB were nearly as bad as Anglo et al?
Lastly, there was no opt-in/opt-out clause involved; the guarantee was given carte blanche regardless of the depositors choice. If it was an opt-out clause then I would have been covered as I wouldn't have bothered responding; for opt-in I wouldn't have been covered. The guarantee is worthless and I for one would have a major problem handing over money for such a worthless claim.
Outside of the possible merits that you see in such a suggestion, hasn't the ordinary punter been screwed enough already without such a draconian measure. Let's focus on the waste we have in this country and use our collective abilities to improve our situations without gouging the people who are holding this country together. Right now as we speak there are public year-end activities in full swing to ensure that all public budgets are consumed lest 2011 budgets are cut accordingly (notwithstanding the cuts from the depression). It won't be efficient and we will probably get little value from it but it's happening.
Good luck to the depositors who managed to save their money for a rainy day but beware the gougers who are trying to put their greasy mitts into your wallet!!
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Duke of Marmalade
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I presume this includes Sept '08 depositors who have long since withdrawn their deposits, foreign depositors, bondholders, both those who are still there and those who are no longer there and both domestic and foreign, interbank loans, ECB liqudity support etc. all of which arguably benefitted from the "blanket" guarantee.
Hard to see this working in any practical or fair sense.
Hard to see this working in any practical or fair sense.
Seems a totally ridiculous ill-thought out idea. To avil of the guarantee depositors would have had to be advised in advance of the new charge and then decide if they wanted to pay/avail of it or not. No depositors were aware of the detail of the guarantee until it was fait acompli.
Pure and simple begrudgery Brendan. Nothing intellectual there at all. Your suggestion is offensive, and immoral. It encouarages begrudgery and this
incessant blame game, find a scapegoat mentality that pervades Irish society at the moment.
It is a bit encouraging to see that you get few if any replies supporting your idea. If you post it on Bock the Robber you might find a few people agreeing with you.
I am voting with my feet so you can take it that I am done with your site
perhaps you could remove me from your list of subscribers.
incessant blame game, find a scapegoat mentality that pervades Irish society at the moment.
It is a bit encouraging to see that you get few if any replies supporting your idea. If you post it on Bock the Robber you might find a few people agreeing with you.
I am voting with my feet so you can take it that I am done with your site
perhaps you could remove me from your list of subscribers.
......that has now been lost. So let's make everyone miserable.
The banks gave me 2% interest on my savings. Nobody was getting rich on 2%.They were effectively keeping my money for safekeeping in a shoebox in their safe as far as I was concerned. Nothing more. I didn't ask them to gamble my money.
If this idea were to take hold I will invest in a strong shoebox, drive to Switzerland or somewhere and rent space in a strongroom.
I don't see how you've dealt with it. If the government retrospectively applies a tax to any subset of Irish deposit holders it will set a precedent. Who in their right mind would keep their money on deposit with BOI or AIB if there is a risk that in future the government will confiscate their savings? There would be a flight of capital by all Irish deposit holders, not only those in Anglo.
A call for a 5% tax on deposits was discussed on Vincent Browne on Monday. All the panelists agreed that it would be a disaster as there wouldn't be a cent left in Irish banks the day after it was introduced. The call itself was made by developer Niall Mellon whose assets went into NAMA early this year. Nice of him to tell taxpayers how they can fill the hole left by his mistakes.