Economist frightened and surprised by banks behaviour

The head of Bank of Ireland, Richie Boucher, gave two fingers to the Oireachtas Finance Committee yesterday.

Bankers have been giving the two fingers to politicians and by extension to the people of Ireland for decades with no fear whatsoever that they will be brought to account.

For decades, politicians have been ‘outraged’ by the arrogant and greedy behaviour of bankers but for some odd reason never seem to get around to actually doing anything about the situation.

And it’s not just politicians who seem to be completely powerless in the face of the all powerful banks.

Take Tony Foley for example. Mr. Foley is a seasoned academic; he’s a senior lecturer in economics, no less, at DCU.

But despite his academic credentials, position and experience Mr. Foley effectively admits that he has no idea what’s going on when it comes to bankers in Ireland.

Not only that but Mr. Foley is also frightened, very worried and greatly surprised by the antics of Irish bankers.

Here’s some of what he had to say on The Late Debate (1 Nov) the other night.

AIB is 99% owned by the Government. It frightens me that AIB are talking about raising interest rates by about five or six percent, that they would have to increase their margins hoping to offer investors a return of about 8 to 12% in equity.

And the thing that surprised me greatly was, this is a government owned bank.

Has the Government told them that this is the target equity requirement?

They talked about talking to investors; I didn’t know the Government told them to talk to investors.

They were talking of maybe in two years investors might be willing to put money in.

I wasn’t aware there was a timetable for re-privatisation of AIB.

What do you think is going on Mr. Foley was asked.

I think they’re forgetting that they’re owned by the state and I think they’re behaving as private sector banks.

We don’t want investors now because the Government owns the equity. We want the bank to operate on behalf of the public.

Later on we might be looking for investors if we want to sell them so I don’t even know why they’re talking to investors right now.

As my good deed for the day I’m going to enlighten Mr. Foley, I’m going to try and relieve him of some of that fear, worry and surprise under which he is clearly labouring.

The state does not own AIB; it’s all pretence.

AIB and the State are marking time in the hope that the crisis will work itself out.

The state is marking time in the (vain) hope that AIB and the economy will somehow recover.

When (if) that happens the pretence that the people own the bank can be quietly dropped.

AIB will then return to what it does best, exploiting and ripping off its customers.

The billions owed by the bank, will of course, remain off the books and on the shoulders of citizens for decades to come.

AIB is also marking time until things settle down. In the meantime it’s continuing to operate, with the full backing of the political and administrative system, as a private sector bank.

This is the part that puzzles Mr. Foley and many other ‘experts’.

They simply cannot accept a brutal reality that has been obvious for many decades.

The state/administrative/political system supports the banks no matter what they do. We saw it with the Dirt scandal, with Ansbacher, with NIB, and endless other scandals.

It’s crucial to understand that state authorities knew about and in some cases actively supported these activities as they were happening.

It’s also crucial to understand that white-collar crime is not actually a crime in Ireland; it’s an intrinsic, well-established aspect of the governing process.

That’s why politicians, bankers and other people of power and influence are, and never will be, brought to account.

The situation will only change when enough people realise that our corrupt political/administrative system does not act in the interests of Ireland and its people.

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Tony Foley