Taoiseach Martin: "We did not bail out the banks!"

The entire banking system should have been nationalised in 2008. There should be one state bank, offering loans and deposit arrangements for day to day banking, including mortgages. Interest rates should be pegged to the rate at which govt can borrow.
Default loans should be dealt with sympathetically, but defaulters can be dealt with by the revenue system, which can ensure that debts are repaid.

Commercial loans could be similarly managed, though with a higher risk premium, the interest rates could be slightly higher.

This is not really radical. At the moment the private banking companies, AIB and BoI are , effectively, nationalised and would sink tomorrow morning if the Govt Guarantee was withdrawn.
 
Allpartied said:
This is not really radical. At the moment the private banking companies, AIB and BoI are , effectively, nationalised and would sink tomorrow morning if the Govt Guarantee was withdrawn.
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AIB is no longer fully State-owned. The State sold some of their shares, and now own 71% of the bank.

State's Shareholding in Banks

The Shareholding and Financial Advisory Division (SFAD) is responsible for monitoring the overall strategic direction of the banks, developing and executing plans to optimise the value of the State’s investments.
www.gov.ie www.gov.ie
 
Allpartied said:
This is not really radical. At the moment the private banking companies, AIB and BoI are , effectively, nationalised and would sink tomorrow morning if the Govt Guarantee was withdrawn.
Click to expand...

BoI is no longer State-owned.

The State retains a 14% share.

State's Shareholding in Banks

The Shareholding and Financial Advisory Division (SFAD) is responsible for monitoring the overall strategic direction of the banks, developing and executing plans to optimise the value of the State’s investments.
www.gov.ie www.gov.ie
 
Brendan Burgess said:
The key question is "Who benefited?"

And the answer is...…..
Not the top executives or directors
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I don't think this is correct.

Taking IL&P as an example....

1. Wouldn't the DB pension scheme(s) not have had to be wound up insolvent if the bailout hadn't occurred? [The major beneficiaries of DB pension schemes are the long serving highly paid staff - the typical profile of the then Irish Life senior executive]

2. Wouldn't there not have been the money to finance Denis Casey's multi-million severance package if IL&P had failed?
 
SGWidow said:
Taking IL&P as an example....
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Interesting points and possibly partly correct.

Irish Life was always solvent and still is solvent. It was a separate asset of ptsb.

Not sure what happened Anglo's and Irish Nationwide's pension schemes. I would suspect that they were defined contribution. But I don't know.

I think that the main beneficiaries of the pension schemes were the staff. Clearly the higher paid staff benefited more.

I would guess that the executives got their contractual compensation? The depositors got a retrospective guarantee which had not contractual obligation.

Brendan
 
Brendan Burgess said:
The key question is "Who benefited?"

And the answer is the depositors.

Not the shareholders
Not the borrowers
Not the top executives or directors

Anglo and INBS disappeared so they clearly did not benefit.

Brendan
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Why is this being discussed over ten years later. Has it not been discussed to death at this stage. It's over and done with and the 'ordinary depositors' got to keep their few euros.
 
Brendan Burgess said:
For staff at all levels. Or was there a particular package for the top executives?
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I don't know, but top executives leaned on to resign for their appalling lending and liquidity management decisions can be counted on two hands.

Otherwise, what happens if there is capital provided or lending by government into 100%-state-owned An Post?

By your definition this is not a bailout either because the state is the only shareholder and presumably you can't bail out yourself :)
 
NoRegretsCoyote said:
So saying "We did not bail out the banks" as MM did is just wrong.
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Now you know very well that not a single shareholder received compensation as the result of the recapitalization of the banks and to claim otherwise is not just wrong, it’s a lie. And on that basis there is no point in this conversation.
 
It all depends on how you define as "the banks" - this is a vague and undefined notion

You can use whatever definition you want in order to make your point or to refute another's
 
The notion that depositors were bailed out is wrong. Deposits placed in banks are done so as a means of safe-keeping money. They are not loans, they are not investments, they are deposits - that is why they are called, deposits.

The banks, traditionally, like to attract deposits by offering interest rates that in theory protects the purchasing power of the deposit. The bank guarantees safe keeping of these deposits. To reinforce that guarantee the State Central Bank in this country ran a deposit guarantee scheme that guaranteed deposits up to €20,000 then increasing that to €100,000.
It underpins the whole basis of placing trust in a bank to mind money rather than having to keep your cash under the mattress.

The only thing that was bailed out was the banking sector and its institutions to sustain that function of guaranteeing the deposit.
Otherwise it risked ending the whole concept of assuring safe-keeping your money in a bank. They would be nothing more financial investment houses where your money is at risk.
The banking sector would have lost its function to guarantee deposits and its reputation would lay in tatters.
The price the State paid to keep that function of the banking sector alive was €34bn.

It was a bail-out of the banking sector to underpin its primary function and reputation to guarantee deposits.
 
@WolfeTone

  1. Many deposits were well in excess of the guaranteed amounts of €20k then €100k.
  2. I think Irish Nationwide depositors got off the best of all. As a member-led entity, depositors were at least in a position to challenge the decisions being taken by bank management. The vast majority of them did not, unquestioningly building up deposits in the hope of a payout in the event of a de-mutualisation that never happened.
 
Jim2007 said:
Now you know very well that not a single shareholder received compensation as the result of the recapitalization of the banks and to claim otherwise is not just wrong, it’s a lie. And on that basis there is no point in this conversation.
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It's not really a lie though, is it? It's just a difference of opinion if what is meant by "the banks". If you view "the banks" as purely the sum of the shareholders, then yes, there was no bailout. But I'd guess most people think and mean otherwise.
 
@NoRegretsCoyote

1. I know
2. (i) The entire banking sector, its primary function of guaranteeing the safety of deposits was on the line.
(ii) Who was peddling the payout on demutualisation? The depositors or people charged with guaranteeing the safety of the deposits?
It is simply not practical to expect depositors to have the intricate knowledge and detail of the affairs of the bank and as such challenge in any meaningful way the decisions being taken by the bank management.
 
WolfeTone said:
It is simply not practical to expect depositors to have the intricate knowledge and detail of the affairs of the bank and as such challenge in any meaningful way the decisions being taken by the bank management.
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Indeed, but INBS depositors knew that what they had was something a little more than a deposit that could in due course produce a windfall. Greater reward usually means greater risk.

The Regulator was of course 10x more responsible than the INBS depositors all put together.
 
I heard a guy on BBC Radio 4 referring to the bail out of the banking system. That is a much better description.

But a lot of politicians and commentators say stuff like "We bailed out the big banks and the developers, but we did nothing for the ordinary people"

In fact, it was primarily the ordinary people who benefitted. And other ordinary people such as mortgage holders and taxpayers who have picked up the tab.

Brendan
 
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