Why no one is going to jail for the banking crisis

onq said:
You apologia above is of the same species as suggesting it would be okay for police to fail to contain a riot - because people sometimes riot! It wouldn't.
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If a riot got out of control, would you charge the police with criminal offences just for that reason alone ?
 
FERGUS O'ROU said:
1. I have to say that I take offence at the suggestion that I am offering apologia on behalf of anyone, but in all the circumstances, I'll forgive you (for the moment, at least)
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Given the damage suffered by our economy and electorate, and the fact that you and others appear to be suggesting that no-one in the Banks should be prosecuted I won't be begging for forgiveness for calling it like I see it.
2. The expression "those who perpetrated the current economic crisis" implies that the crisis can truly be said to have been caused by an identifiable person or group of persons. I have my doubts that such is actually the case
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Your expression of doubt is noted but its a naive comment following on the OP's deconstructionist remarks earlier. Pumping cheap money into an economy leads to a boom - ask any of the monetarists, this site is blessed with a lot of them. The sole means to do this were the lending companies, the most prolific of which are well known. This was foreseeable were this done in a competent, qualified manner following good practice. It was not.
3. To call advice "improper" is not the same as calling it "criminal". If the latter meaning is what is really intended, then I have to ask you to specify the crimes. People seem to have considerable difficulty doing so
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The issue is one of degree, not kind. The crime was fraud on a grand scale. Fraudulent misrepresentation of financial products as being appropriate when by any measure they were not.
4. I agree that where a great wrong has been committed, justice must be seen to be done. But, again, what "great wrongs" have been committed ? A great disaster has occurred, but that is not the same thing
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Negligence on a grand scale that has led to suicide and penury for many is not so easily wished away. The great wrong is clear to anyone not using sophistry as a screen through which to filter the world we are currently enduring.
On the contrary, I am quite certain that the tide has not been allowed to go out, as evidenced by Mr. Dukes apparent inability to acquire the necessary access codes to Anglo files. I will be surprised - and this is belief and rank speculation on my part - if we find that moving the odd €80 Million around the accounts was the most interesting of Anglo's activities. Again, fraud and professional negligence are likely to be a part of that disingenuous whole.
Yes, as far as I'm concerned, it is, to such a degree and in the face of such an unparalleled disaster that I am concerned to see someone as well respected as you and Brendan Burgess (we don't always see eye-to-eye, but I respect him) being party to it. The coda to the contrary "I would like it if it did, though" seems misplaced given the previously expressed views.
Here is the great divide that cannot be spanned, never mind crossed. "Bad lending" is the very definition of why the senior bankers should immediately fall on their swords. It went on under their governance and is what directly led to the current crisis, and as far as we know following their insistence on chasing greater market share and thereby raising share price, with the eventual result that most of the middle demographic of Ireland saw their lifes savings and pensions funds whittled away to nothing. The collapse was the coda to a decade of incompetent management of the banks, with the disaster we face the proof of the pudding that they are in an ultimate sense incompetent. These were the people who accepted repackaged sub-prime loans as ASSETS (!) for goodness sake - or SAID they did, which I personally find hard to believe, which started the rot.
8. Anyone who knows better, as I have said on my website, is to be encouraged to initiate a private prosecution, and I am willing to assist them.
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What I find particularly galling about the current debate is that the proof is there, the dead body is on the floor, the casualties are round about amidst a great weeping and gnashing of teeth and your goodself and Brendan and a few others are standing around scratching your heads asking

"Was there a crime committed here?"

Unbelievable.

Part of the litany of bad governance and incompetence of AIB - one of the two "pillars" that are being touted around Europe and what the Irish economy will be built on - is listed here.

http://en.wikipedia.org/wiki/Allied_Irish_Banks#Controversy

This is just a simple list and shows a corporate culture that seems to be built on bad practice.

There is plenty more if people want to go digging for the dirt they'll find it - here is a sample betraying their mental juggling.
In their world view, nothing is "wrong", there is no "crime" its something for the solicitors to deal with

[broken link removed]

Senior AIB official =being questioned by an SC about AIBs re disclosure of AIB's 20% interest in Quarryvale

Q.269 Had AIB's interest had been registered, then the public would have known and
politicians would have known that they had voted on a project in respect of
which Allied Irish Bank held 20 per cent interest, isn't that right?

A. Presumably the information would have been available to them, yes.

Q.270 Presumably there are very good reasons why the Oireachtas has decided that 20
per cent interest in a company should be disclosed on the register of a public
company, isn't that right?

30 A. Presumably they have.

Q.271 And I presume that the shareholders of Allied Irish Bank would have been
anxious to know that their company held 20 per cent interest in the Quarryvale
project?

A. Well maybe they would. I can just say to you that in terms of the -- what
happened here was we took legal advice and it was done with that full legal
advice as being a legitimate exercise. So if there's any implication that it
was under hand well then that's a matter for Fry's.
==========================================================

Fergus, with the greatest of respect to you and Brendan, there is a widespread feeling that the previous government and the banks treated the electorate like mushrooms.
This systemic mistreatment of the electorate and abuse of the institutions of the state has got to stop and the people responsible have to be held accountable.

Personally, with the multitude of items seeming likely to be discovered, I don't see the current delay in prosecution as the likelihood of their being none.
I think the DPP is considering the likely fallout for Irish business if the full extent of the perfidy becomes known and charting a middle course.
 
That's actually an excellent analogy.
 
bullworth said:
It's inescapable logic that those employed to do a specific job failed to do it. Let's start with the regulator and the ex government. If regulators etc were charged with negligence and a dereliction of duty.
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Agreed that jobs were not done but negligence and dereliction of duty are not criminal offences. (Nor am I certain that anything could have totally avoided the disaster).

It may be possible for negligence and dereliction of duty to result in claw back of salary, bonus or pension.
 

1. You have some sane debating points for the proposition that Irish bankers actively engineered the crash ?
2. Who is denying that they acted unprofessionally ?
3. Not being able to act in their own self-interest tends to negate criminality, though, no ?
 

1. The Oireachtas, not the DPP, re-defined the crime of murder
2. The DPP cannot devise new common law charges. The whole idea of the Common Law is that it represents the inherited corpus of principles, not new crimes.
3. To proceed as you suggest would put the power of creating new crimes into the hands of the DPP and/or 12 random people. That does not sound like a sensible system
4. Both of the crimes you suggest are a bit vague. How would a person know that they were committing them ?
5 "Unjust enrichment" begs all sorts of questions, unless it really means theft or fraud, in which case why rename them ?
6. In any case, the situation in which we find ourselves is characterised not by enrichment but by mass impoverishment. The public's "favourite" culprits are actually bankrupt. Another "favourite", Pat Neary, may not be short of a few bob, but I bet he'd prefer to still have a job.Only a very few e.g. P.V. Doyle's heirs can really be said to be winners
 

Forgive me, but a shorter version of the above is:

Onq disagrees and anyone who disagrees with onq is deluded.

More detailed:

1. Pumping cheap money and creating a boom incompetently are not crimes anywhere in the world. If you think that they should be, I'll help you [try to] draft the legislation.
2. "Fraudulent misrepresentation of financial products as being appropriate when by any measure they were not... ", you say. It is indeed easy to say, but not easy to convincingly show. Find me an alleged victim, who is an individual, and we'll see whether that stands up to examination. The courts would be full of victims suing the banks for compensation if it were.
3. More fundamentally, you appear to fail to understand that the banking collapse has really very little to do with excessive lending to "consumers" even as mortgagors, though that did occur. The collapse is really a feature of a developmental property bubble: that is where Anglo's €30bn was lost, for example. The misrepresentation was in the other direction in that market. (That is no excuse for the banks, however.)
4. Who is "washing away" the negligence on a grand scale ? The issue is not whether was such, nor whether it should have consequences for the negligent ones - my answer is affirmative on both counts - but whether it constituted a crime. You continue to avoid that point.
5. Ah, "the computer access codes". I defy you to come up with a clear exposition of that particular story - I suspect that it is pure spin. If there is something to it - which will be surprising given it is never mentioned in any serious discussion of Anglo (it is not in either of the two books on Anglo) - then it may be that some deluded souls who brief media scribblers believe that Anglo has the right to inspect the private e-mail accounts of staff, past and present.
6. We can all speculate until we are blue in the face about what might have happened behind the scenes at any organisation, but to treat such speculation as fact is to abandon seriousness.

I have not finished, but have to leave it there for the day now, as I have a committment to honour.
 
Purple said:
... and they probably bought land and bank shares with the money.
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Perhaps not....I remember reading this article and knowing the game was up!

"The timing of these deals, spearheaded by Bernie Gallagher’s husband John, could not have been better.

In fact, just after closing the sale of Jurys Inns to Quinlan, Gallagher said in a newspaper interview that there was no longer an upside in the Irish property market...."

[broken link removed]
 
Hi Fergus,

In 2006 there was a Prime Time report into how mortgage brokers were in cahoots with estate agents (often operating in the same building). The mortgage broker would determine the maximum mortgage that an applicant could get. This vital information was passed to the estate agent who then knew everything about the applicant and how much money he could push them for. I'm not sure if anything was ever done about this. The investigation if memory serves focussed on Simply Mortgages. Were other brokers investigated by the authorities?

The Data Protection Comissioner has a piece on it but no follow up on any investigation - [broken link removed]

Not being in the legal trade I'm not sure if any crime was committed, but perhaps you could post your thoughts?

Firefly
 
I've read this thread with great interest, and waited a while to post as I wanted to see if one question, repeatedly asked by Fergus and others, would actually get answered: "What crime was actually committed?" So far I have not seen a single person point to something tangible.

People on here and in the media and public are constantly calling for someone to go to jail, and this is pure mob mentality. That is precisely why we live in a republic and not a democracy. Yes, we have democratic elections, but we are ruled by laws, under a republican constitution, and not by people and their opinions and wishes. Even if you held a referendum and more than 50% of voters said that bankers should go to jail that does not mean this would be righteous, correct, legal or appropriate. Imagine if a large enough group of people decided that all architects that drew up plans during the boom should go to jail for their part in the bubble, would that sound like a good plan?

Now I am not saying that banks and their staff should not be investigated for any laws that may have been broken, but I simply do not believe that there was any crime involved in their actions.

The reason I believe that we will not see laws introduced about banks blowing bubbles with cheap money and poor lending policies, is because this would mean following through with prosecutions. And that would mean all banks, including and especially the ECB, would be open to prosecution. All blame is constantly pointed at banks for lending too much, at too low standards, and at too low rates. But this was only made possible by more money being injected into the system. From January 1999 to the summer of 2007 the ECB increased the base money supply by a staggering 247%. So if you were to start prosecuting someone for creating the bubble then you would have to start at the top.
 
"What crime was actually committed?"
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From the dictionary:

"Treason is any attempt to overthrow the government or impair the well-being of a state to which one owes allegiance; "

Most people think of treason as being violent, but it does not have to be.

A lot people who are guilty of treason think there is nothing wrong with what they are doing. They often belong to certain political movements or have political views which are different to their government. They usually genuinely believe that their actions are for the common good. The fact that they are not aware they are doing wrong or are misguided does not mean they are not guilty of the crime.

We know and can prove beyond reasonable doubt that the actions which caused the current climate have, in fact, impaired the well being of the State. Therefore you would think that successfully identifying the individuals who participated in the crisis would be sufficient to guarantee a criminal conviction.
 

@ Fergus,

1. There is a point beyond negligence where anyone who has suffered a wrong has to ask "was this an accident or was this intentional"? Its a reasonable question. I have seen the 1970's oil recession as well as two great boom and bust cycles in my life, the 1992 Office bubble in Dublin and the 2000 Dot Com bubble. People made money in all three. They made money on both the rise and on the fall in the markets. Greed, the usual motive, is present, so your question centres on means and opportunity. I won't digress here.

This is not a theoretical statement. With the opportunities in the market afforded by CDS instruments, you can make money on anything. Assuming you know its going to happen within a certain time. Look at the price of Gold at the moment. So yes, sane argument. "Insane argument" after all, is mere propaganda. Sounds great, doesn't stack up.

2. Is any banker admitting that they acted unprofessionally? Apart from one or two having been shamed into apologizing to their shareholders, have you seen any public demonstrations of acknowledgment of responsibility, never mind atonement, for the disaster we're in? Have you seen any of their outrageous bonuses (bonuses for what, I ask you?)being donated to the St. Vincent de Paul who are looking at upward of €10 Million a year to support formerly well off families now struggling to pay their debts and put food on the table? No, Fergus, you aren't.

These smug fellows are a breed apart in terms of arrogance and ignorance, living off undeserved levsl of salaries that should have been stripped from them the day they were discovered lying to the government about the extent of the damage they had presided over.

And please don't tell me they were bound by a contract to be paid those amounts. Any contract properly written has penalty clauses where an employee has acted criminally or fraudulently. If those clauses didn't exit, that's supporting evidence for a culture of criminality within the organization.

3. Criminals can be shown not to act in their own self interest as a matter or course. Just look at their own career paths. Even where they are successful, they have to flee the country of their birth, where most of their social support structures are. Even where international flight is not required, and depending on the harm they do to their local community, they may be shunned there.

Let's take the most obvious example in recent times. The "armed struggle" in Ireland wasn't finally defeated by political initiatives by Hume and Adams. Adams was looking for a way out. The struggle was lost when their support base realized the long term harm the struggle was doing to community, in terms of growing protection rackets and criminality which were increasingly wrapped in the Green. Without community support, a guerrilla force cannot survive. The little old ladies on the Falls Road defeated the IRA.

The fact that the principal actors are still ensconced in the banks is continuing to do us harm financially.
Why do you think the markets lost faith in us so much that we had to borrow from Europe?
Even Government guarantees couldn't put a gloss over the fact they had misled us.
There is evidence of the continuing flight of capital to foreign banks on AAM.

The middle classes have already rejected their banks.
The Banks refuse to take the necessary action.

Someone will have to do it for them.
 
No one is going to jail because, in all probability, no laws were clearly broken, or if they were, the offences concerned are deemed worthy of no more then a slap on the wrist. We can tie ourselves in knots trying to fit other legislation/common law to what happened but it's questionable if the DPP would try to get a conviction in a lot of cases. There may be trials for some of the "smaller" actions that individual bankers carried out on their own behalf but that will probably be it.

Real culprit here is light touch regulation. We've seen time and time again that if you give people an opportunity to do things with little or no consequences to themselves, then they will take advantage of that and try and exploit it. It happens, not just in banking, but in other areas as well, e.g. light touch regulation of the Church and in schools
 

But we do not take people to court based on dictionary definitions. People are taken to court based on the applicable law and for Ireland I would say that the treason act would have to be applied:
http://www.irishstatutebook.ie/1939/en/act/pub/0010/print.html

I don't think you can argue that an act of war was committed against the state.


I agree with your first point, but our problems do not stem from lack of regulation. The financial industry is the most heavily regulated industry. The reason the financial industry took too much risk was (a) because someone gave them A LOT of cheap money and (b) because they operated under the implicit and explicit guarantees that if something goes wrong they will be bailed out. Governments are still to blame, but not because of their lack of actions prior to the crisis, but because of their actions in this and previous crises.
 
ONQ,
Greed, incompetence, playing the markets and getting “unjustified” salaries and bonuses are not criminal offences.

I’ve asked the question before if any of the main players could be charged with reckless trading. It seems that they can’t but I’ve never got a satisfactory answer as to why not. Other than that I can’t see where a crime has been committed.
 

1. The coda was not misplaced. Your assumption that it was is yet another illustration of your inability to see that there is a difference with what one would like to be the case and what is the fact.

2. You say "Here is the great divide that cannot be spanned, never mind crossed. "Bad lending" is the very definition of why the senior bankers should immediately fall on their swords."

I agree - unless you mean that in a Bertiesque suicide sense. Those responsible should be held to account, but that need not mean jail.

3. "These were the people who accepted repackaged sub-prime loans as ASSETS (!) for goodness sake", you say.

Did they ? Chapter & verse, please.

4. In relation to your "dead body" nonsense, I refer you to my website and the example of the fatal collision.
 

I haven't heard of any criminal cases. I am aware that there are have been, and still are, many cases against brokers for bad advice. I don't know how many have succeeded - quite a few have not though, because the consumer so obviously clearly intended to do "whatever it took" to get a mortgage.
 

1. It is a reasonable question. Get the evidence for the answer you are presuming, and I will pay it some attention.

2. Separate issue. Reasonable point, but I am not going to be distracted into that discussion now - it is irrelevant to the question of whether crimes were committed.

3. There appears to have been poor contract documentation all over the banks. You have a point there, but not as regards criminality. We own AIB: why are our elected representatives not investigating what you suggest ?
 
This thread has become as interminable as my series of blog-posts !

I am going back to try to finish them.

It's been fun but I may not be able to return. You know where to find me.
 
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