Banks & Finance

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Turning corners or a circle of disaster?

June 3, 2010 in Banks & Finance, Corporate, Government by Anthony | No comments

Halleluiah, praise the lord, wonder of wonders, we have – yet again – turned a corner.

I say ‘a’ corner because I’m not sure whether Brian Cowen’s corner is the same as Brian Lenihan’s or indeed the same as the many other corners we constantly seem to be turning.

I’m not an economist, just an angry observer so the following ramble may be a complete misinterpretation of what’s going on.

We have just handed over another two billion to Anglo Irish Bank. The handing over of this money to this bankrupt bank is, quite literally, no different from throwing it into a furnace.

This money immediately becomes part of the national debt so, for many decades to come, Irish citizens will be paying back every cent in successive budgets.

And remember, the Government is standing by with at least another 8 billion to throw into Sean Fitzpatrick’s furnace.

With hardly a murmur of comment the guts of a billion was spent last week to recapitalise (nationalise) EBS.

The cost of just these two events completely wipes out the savings planned in the next budget. The Government is scrapping the bottom of the barrel looking for ways to squeeze more and more out of taxpayers who have little left to give.

The gap between what the state spends and what it takes in is over 18 billion and increasing by about a billion every month. For me, the figures just do not add up.

The Government is getting great praise from abroad for its slash and burn policies and politicians and naive commentators are lapping it up but how much more can the Irish people take?

I believe that if Irish citizens continue to allow themselves be stripped of everything they own they will be reduced to a quality of life similar to that of the 1940/50s.

Even that would be a manageable situation if the country was led by honest, courageous and visionary politicians. But the political system is corrupt and rudderless, there’s billions owed on personal loans and credit cards and at least 70 billion owed as a result of the bank bailout.

It seems to me that for this government’s polices to work Irish citizens will have to accept living in absolute, grinding poverty for generations to come – how likely is that?

I don’t believe we’re turning corners, it’s more like we’re going around in a circle and that circle is sinking rapidly.

But then again I could have slipped into a parallel universe two years ago and am now living under the delusion that catastrophe is staring us in the face.

Hopefully my escape from this delusional world is – just around the corner.

Thieving banks – Past and present

June 1, 2010 in Banks & Finance, Government, Regulatory Agencies by Anthony | 2 comments

Pat Kenny told the following story on Today with Pat Kenny (Wed. 12th May).

I was talking to a former banker last night, he’s out of banking now years and years, and he told me that when he worked for a particular bank before it became part of AIB it was common throughout all banks; to rob the customers regularly.

Now how did they do it? Well they rounded up what the customer owed and they rounded down what they owed the customer, so they were always at it.

Common throughout all banks to rob customers regularly – It’s not often we hear such a candid admission of criminality by a banker, even a retired banker.

We now know, of course, that widespread and systematic theft was, and probably still is, a common and fully accepted business option within the Irish financial sector.

I suspect that I was a victim of this Irish ‘tradition’ when, on 16th June 1992, a mysterious interest charge of £2.03 appeared on my current account.

When I rang the bank and politely asked for an explanation I was curtly told to put my request in writing, the official ended the conversation by sternly warning me to make sure the letter was properly signed.

Remember, this was a time when banks lorded it over the peasantry, before their criminality was exposed.

When the ‘put it in writing’ tactic failed the bank paid back the £2.03 to my account with the usual meaningless apology.

But I wasn’t happy, my suspicions were raised and I wanted to know why the deduction was made in the first place.

Over the following five months I engaged in psychological warfare with the bank by way of letters, phone calls and personal visits to the bank until eventually, in October 1992, the bank admitted that an error had occurred in their Electronic Money Transmission System.

The admission of error by the bank was important to me because up to that point they insisted that I was somehow at fault or an error had been made by my then employer (Dept. of Defence, Navy).

I have no doubt that my persistence wore them down but I found the whole experience very difficult especially when I made personal visits to the bank.

As I queued in line I could see the ‘Jesus, here comes the crank again’ look on the bank officials faces.

Before each visit I had to mentally psyche myself up, I had to mentally convince myself that I was in the right, that I was entitled to an answer to my simple question.

It had also occurred to me that AIB could be engaged in the systematic theft of small amounts of money from a large number of customers which accumulatively could amount to a significant sum of money every month.

We now know that this widespread theft was in fact going on but when I contacted every political party, the Dept. of Finance and the Central Bank to express my suspicions I was, without exception, patronisingly advised to switch my account to another bank.

In my innocence I was completely unaware that the main political parties and the so called regulatory authorities were fully aware of, and tolerated, such criminality within the banking sector.

In 1998, George Lee and Charlie Bird published their book ‘Breaking the Bank’ which detailed widespread theft and fraud by National Irish Bank.

I smiled when I read how bank staff went out of their way to target the accounts of ‘demanding or troublesome’ customers for special treatment.

Depressingly, there is no reason whatsoever to assume that large scale theft and fraud within the Irish financial sector is a thing of the past.

Despite the appointment of Matthew Elderfield as Financial Regulator there has been no change in the culture of secrecy that facilitates such criminality.

Neither is there any sign of the political leadership necessary to bring the thieves to heel.

Copy to:
Financial Regulator

Simple law enforcement; not special juries, are the solution to white collar crime

May 21, 2010 in Banks & Finance, Corporate, Government by Anthony | 2 comments

The Director of Public Prosecutions, James Hamilton, gave a very interesting interview on The Week in politics last Sunday.

He believes that expert juries are needed to tackle the rise in white-collar crime. He also spoke about the difficulties posed by the absence of a whistleblower’s charter.

The following are some of the answers he gave during the interview followed by my comments.

Why have you chosen this time to outline your views on white collar crime?

I think the whole question of financial regulation has become a very topical one and we’re obviously in an era where we’ve moved from the former idea of light regulation into a different mode. I anticipate that in the future we’re going to be seeing more files in the area of white collar crime and therefore it’s an appropriate time to look at whether or not we have the appropriate tools to do that.

The whole area of financial regulation has been topical since, at least 1979, when the criminal politician Haughey gained power and banks and other financial institutions were given a free hand to engage in criminal activity without fear of accountability.

Many countries, especially America, now regret the policy of light touch regulation and, unlike Ireland, are taking strong measures to rectify the situation.

Irish governments have always followed a policy of no regulation whatsoever, light touch regulation was and is irrelevant in the Irish ‘Wild West’ financial sector.

Practically nothing has been done to bring the financial criminals to justice and the little that has been done is nothing more than an attempt to fool the international community that Ireland is a normal, functional state.

There is no requirement for special juries, simple law enforcement will resolve the problem of white collar crime.

Why do you think a whistleblowers charter is now necessary in this country?

Essentially, a decision was made not to have whistleblower legislation back in 2007. The main reasoning behind that decision seems to have been that whistleblower legislation might cut across our system of light regulation and wasn’t appropriate given that that was the type of legislation we had at the time. I think there’s a case for looking again at that.

What? Whistleblower legislation might cut across our system of light regulation? Only a fool would put forward never mind actually believe such drivel.

The reason whistleblower legislation was rejected in 2007 and the reason it is still not even being considered is simple. If such legislation existed, the watertight protective systems set up by politicians and operated by so called regulators would fail thus exposing the criminals operating within the Irish financial sector.

Some may wonder whether our existing laws are up to the job?

Some aspects of it are quite robust. For example, in 2001, we amended our Prevention of Corruption Act and strengthened them in quite a significant way by introducing a presumption that where a payment is made to an official and that includes Ministers, TDs and Senators who makes a decision affecting a citizen that’s there’s a presumption that the money is paid corruptly.

There have been significant prosecutions under that legislation.

Significant prosecutions – who, when? I rang the DPPs office for a list and was met with the standard reply.

Oh no, Mr. Sheridan, that’s privileged information, we couldn’t possibly give that out.

When I pointed out that any such prosecutions were likely to have taken place in a public court accompanied by widespread media and public comment I was told to put my request in writing.

The letter is in the post.

Bankers have nothing to fear

May 20, 2010 in Banks & Finance, The State by Anthony | 1 comment

Letter in today’s Irish Independent.

Bankers allowed make their own rules

IT is with a sense of despair, but not surprise, that I read the top brass of our bailed-out banks continue to reward themselves for failure, and our toothless Government just stands aside as they top up their pensions by multiples of the average industrial wage each year (Irish Independent, May 18). This, apparently, cannot be touched as it’s in their contracts.

As a rank-and-file employee in a leading financial institution for pushing 12 years I can tell you from experience that contracts can, and are, changed by banks.

Although I joined a couple of years too late to avail of the defined benefit scheme that was operating for new employees in the mid-1990s, a number of my colleagues were on it, thereby getting a set percentage of their final salary on retirement.

Two years ago, due to the ‘dire funding position’ of the defined benefit pension pot, all their contracts were changed and they had to start contributing a significant percentage of their salary.

This percentage is subject to (a probably upward only) review. Of course the Government then went and added their own slap in the face with the extra three years to retirement, but that’s another story.

If contracts can be changed for ordinary financial institution employees, there’s no reason why they cannot be changed for the top brass. This all reeks of a ploy to get around the new bank salary cap. At the same time, the top bankers are conveniently avoiding having to take what looks remarkably like a bonus in the form of their now worthless bank shares — instead, they take it as a pension top-up.

I’m not surprised at the bankers, who are feathering their own nests, or at our complicit politicians, who are happy to shift the focus from their own substantial nest eggs, but I despair.

Name and address with editor
Irish Independent

It has to be said again and again. The only reason bankers can feel completely safe in behaving in such an obnoxious manner is because Ireland is an intrinsically corrupt state. Nothing will change until the rotten; beyond reform political system is destroyed.

Senator Ross: Still shocked after all those scandals

May 18, 2010 in Banks & Finance, Corporate, Government by Anthony | 2 comments

Once again Senator Shane Ross is shocked by the activities of greedy bankers.

His shock on this occasion was caused by the news that greedy bankers had hatched yet another sly scheme to get around government restrictions on pay and pensions (Newstalk).

The details of this latest greedy manoeuvre are not very important. It is, after all, just the latest scam hatched by greedy bankers who know they have absolutely nothing to fear from anybody.

What’s really fascinating about these events is how so called financial experts like Shane Ross can remain completely blind to the reality of the situation.

People like Senator Ross continue to believe that there is some kind of division between politicians and bankers; that politicians and regulators are acting in the interests of ordinary citizens and the good of the country.

The Senator seems to believe all this despite overwhelming evidence to the contrary.

Since the foundation of the state no bank or bank official has ever been convicted of a crime. This is despite the fact that they have been robbing their customers and the state with impunity for decades.

It is only in very recent times and only after the total collapse of the economy that some minimum actions have been taken against these people.

Senator Ross apparently believes that the establishment of a Financial Regulator in 2003 was a genuine attempt to bring law and order to the Wild West Irish financial sector when the facts point to the complete opposite.

The Financial Regulator operates under strict secrecy laws that would be seen as extreme in the former Soviet Union.

The Senator probably thinks that such secrecy laws just accidentally appeared on the statute books, he probable thinks that politicians had absolutely nothing to do with the drawing up of these secrecy laws.

These secrecy laws have just one affect – they provide total protection for the widespread criminality within the Irish financial sector, criminality that continues unchallenged to this day.

The Senator told listeners:

People don’t seem to realise that the banks are running rings around the Government.

Wrong Senator, it is patently obvious that politicians and the regulator are willing participants in a system that defends the interests of bankers at the expense of ordinary citizens and the good of the country.

Copy to:
Financial Regulator
Senator Ross

Keeping the money under the mattress

May 12, 2010 in Banks & Finance, The State by Anthony | 1 comment

Quote from an Irish Nationwide shareholder.

We’re all broke, the Government is broke, the country is broke. I have plenty of money myself but I have it under the mattress so I’m wondering where’s the safest place to put it now?

Keep it under the mattress is my advice.

Minister O’Cuiv puzzled by banker’s greed

April 19, 2010 in Banks & Finance, Fianna Fail, Government by Anthony | 3 comments

When the Minister for Social Protection, Éamon Ó Cuív was asked on The Week in Politics about the €1.5 million top-up to Bank of Ireland chief executive Richie Boucher’s pension he replied:

I don’t understand why people like him who made a total mess of the banks and our economy doesn’t voluntary hand back some of what they have.

Could the explanation be that Mr. Boucher is following the example of some serving TDs, ministers and one former Taoiseach, who played no small part in the downfall of our country, continuing to draw down massive pensions in addition to a very generous salary?

Lenihan, making it up as he goes along

April 16, 2010 in Banks & Finance, Government by Anthony | No comments

George Hook of Newstalk Radio asked Minister for Finance Brian Lenihan how it was that in the UK bankers like Fred Goodwin of RBS were not allowed to hold on to lucrative retirement packages while failed Irish bankers walked away with millions.

Lenihan’s response was a classic make it up as you go along explanation.

I don’t know about Fred Goodwin’s case, he mustn’t have had a firm contractual position or they wouldn’t have been able to rescind it.

When the Government took control of the banks Mr. Goodwin didn’t have a finalised package.

A lot of these gentlemen have finalised packages in Ireland which were written into their contracts long before the guarantee… I’m faced with a legal brick wall.

So, Lenihan starts off by saying he knows nothing about Goodwin’s case. He then immediately contradicts himself by stating that Goodwin made himself vulnerable by not having a finalised package.

Irish bankers on the other hand, according to Lenihan, were clever in making sure they had watertight contracts and as a result he was up against a legal brick wall in regard to taking action against them.

The Kelly’s: Like father, like son

April 15, 2010 in Banks & Finance, Corporate by Anthony | No comments

Somebody by the name of Simon Kelly wrote an article recently in the Sunday Tribune thanking Anglo Irish Bank for being there to help the Irish people in the early days of the Celtic Tiger.

According to Kelly thousands of jobs would not have been created if Anglo wasn’t there to support business and grow the economy.

In other words Kelly is saying that the countless billions needed to keep zombie Anglo alive is a fair price to pay for a few thousand jobs.

This is akin to saying – Ok, Hitler had his failings but he created thousands of jobs building the autobahns, or, the people of Haiti should be thankful for the massive death and destruction visited on their country by the earthquake because the disaster resulted in massive international aid.

Here are a few more gems of wisdom from this former developer.

It’s a national phenomenon (the financial crisis) caused by the actions of hundreds of thousands of people, each in their own way causing a boom, and now a bust.

Everybody had skin in the game so stop looking for scapegoats as a way to hide personal guilt.

So I say to Charlie Bird and the like; get off David’s lawn and get out of Sean’s front drive. They have lost everything but they still have to live. The bank failed because we all failed.

If you want to know what caused the crash and the failure of Anglo, have a look in the mirror. We all built the boom and we all caused the bust.

So there you have it, we’re all to blame for what went on in Anglo. Seanie and the others are being scapegoated just so we can all hide our personal guilt for the part we played in destroying the country.

So who is this Simon Kelly? Well, it turns out he’s none other than the son of property developer Paddy Kelly. I wrote about Kelly Snr. after listening to an interview he gave to Eamon Dunphy in November 2009.

The interview occurred before the putrefying stench from Anglo had seeped out and infected the entire nation.

Like his son, Paddy Kelly also blamed others for the financial disaster. It was the fault of the planning process; it was the fault of government policy.

Kelly openly admitted that ‘brown envelopes’ were taken to smooth out planning problems that were so tedious, they would try the patience of Job. He also admitted that he would build anywhere no matter what the consequences once he got planning permission.

When asked about Anglo he said:

Well, I think of the skill of Anglo Irish and the people involved, those people are so creative.

All the banks are in danger but you’ll find that as the weeks go on Anglo Irish are in very good shape and you’d be surprised how good the quality is of the people in there…watch Anglo and be optimistic.

We can see from this interview and the Sunday Tribune article why the Kelly’s are failed property developers but I don’t think the people of Ireland, who will be paying for the activities of the ‘creative’ people in Anglo for decades to come, will appreciate being blamed for the recklessness and greed of property developers and bankers.

Copy to:
Simon Kelly

Time to bury the body of our diseased nation

April 14, 2010 in Banks & Finance, Fianna Fail, Government, IFSRA, The State by Anthony | 1 comment

I’m certainly not going to influence the regulator in any respect. I think that would be bad for the country and I think we really need to learn the lessons of the banking crisis.

The perception that the regulator can be subject to political interference or influence would be very bad for this country. (Brian Lenihan, Minister for Finance).

From 1922 until 2003 Ireland had no financial regulator whatsoever. As a result the Irish financial sector became infested with criminals who acted with impunity under the protection and connivance of a corruption political system.

From 2003 until the appointment of Matthew Elderfield last year we had a so called financial regulator that cooperated with and protected the same criminals under instruction from a corrupt and conniving political system.

Today we have a real financial regulator being subjected to massive pressure from the same corrupt and conniving political system because, for the first time in the history of the state, a financial regulator is making an honest attempt to clean up the mess.

Let me make something crystal clear – Mr. Elderfield will not succeed in his job. The corruption and rot is far too deep, far too widespread throughout Irish society for him to have any hope. We are a diseased nation, terminally infected with the disease of corruption, not even radical surgery can save us.

Lenihan’s words about perceptions and political interference in financial regulation are decades too late. He, his party and the entire political system is a dinosaur way past its extinction date.

We need to accept that as a nation we are a failed entity, a dead nation. We need to bury the diseased body of our corrupt political system and start again.

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