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Posts tagged ‘Brian Lenihan Jnr’

Brian Lenihan was coerced into accepting the Troika deal


sent into us to day

This  information just released shows that Brian Lenihan was coerced into accepting the Troika deal……. he did not know what he was doing … there was no script….. The letter mentioned is attached ……

Irish Times, Dublin, 24th. October 2012.

The Department of Finance has released a letter written in November  2010 by the late minister for finance Brian Lenihan in which he  requested financial assistance for Ireland from the EU-ECB-IMF  troika.

In the letter, Mr Lenihan formally applied on behalf of the Irish  authorities for financial assistance “in the context of a joint EU-IMF  programme”.

A copy of Mr Lenihan’s letter was released to journalist Gavin Sheridan of thestory.ie following a freedom of information request to the Department of Finance.

“The external assistance sought is made under the terms of the European  Financial Stabilisation Mechanism, the European Financial Stability  Facility and the IMF assistance programme,” Mr Lenihan wrote in the  letter, dated November 21st, 2010.

“I welcome the statement by the Eurogroup and Ecofin ministers which concurred with the EU Commission  and the ECB that providing assistance to Ireland is warranted to  safeguard financial stability in the EU and in the euro area.

“The Irish authorities will co-operate fully in the preparation of the joint EU-IMF programme of assistance to the Irish State that will now be  required to be developed,” Mr Lenihan wrote.

The Irish Times revealed last month that three letters from the then president of the European Central Bank Jean-Claude Trichet to  Mr Lenihan culminated in an insistence that Ireland should apply for a  bailout or risk the country’s banks being cut off from access to  support.

Mr Trichet made it clear to Mr Lenihan the governing  council of the ECB was becoming fearful that the whole European banking  system was being put at risk by the drain on its resources coming from  the Irish banks.



Trichet says letters to Lenihan should not be published

DAVOS/SWITZERLAND, 29JAN10 - Jean-Claude Trich...

DAVOS/SWITZERLAND, 29JAN10 – Jean-Claude Trichet, President, European Central Bank, Frankfurt, speaks during the session ‘Rethinking Government Assistance’ in the Congress Centre of the Annual Meeting 2010 of the World Economic Forum in Davos, Switzerland, January 29, 2010. Copyright by World Economic Forum. swiss-image.ch/Photo by Remy Steinegger. (Photo credit: Wikipedia)

To day in the Irish independent we learn :FORMER European Central Bank President Jean-Claude Trichet said letters that he wrote to former Finance Minister Brian Lenihan in the run-up to the 2010 bailout should not be made public.

His comments follow a clamour from some Irish politicians and economists who believe the letters sent to Mr Lenihan contained threats that somehow forced him into a bailout. They now want the letters published.

Weekend media reports also suggested the letters contained threats but did not provide any quotations or evidence to back-up the assertions.

Without seeing the letters, it is impossible to know whether the ECB was simply expressing concern about the safety of the tens of billions of euro the bank pumped into the Irish economy or something more sinister. No media outlet, government minister or ECB president has ever published the letters and the Department of Finance and ECB’s freedom of information units have declined to release the letter

full article at source: http://www.independent.ie/business/irish/trichet-says-letters-to-lenihan-should-not-be-published-3220159.html


Jean -Claud Tricher you have a nerve!

Anybody gullible enough to believe that this French civil servant is a friend of Ireland or has the Irish people’s interest at heart must now accept that this Insider unelected official is staunchly representing the interests of French and German Banks!

The ECB has its own interest at heart not Ireland’s!

We must now accept that we never had any real say in Europe and the giveaway slogans used by our own puppet politicians from the established political parties like we must be “at the heart of Europe” or our “European partners” or a union of equal trading nations is all bullshit!We have been shafted saddled with the debts of gangsters and gamblers who have friends in high places in Europe that have come to their rescue and have blackmailed the smaller nations of Europe (Like our own Ireland) into taking on their bad debts in a so called Bailout of Ireland . ! This anti democratic infestation of the European establishment is plain to see as Trichet is calling for the letters concerned in the above article be kept secret from the Irish people who  he has saddled with odious debts from his faceless money men pals.(see Crédit Lyonnais ) http://www.economist.com/node/1527367

Mr Tricked we are a democratic republic and we the people of Ireland have the right to see all correspondence on any and all aspects of the financial enslavement of our people

You are a jump up Pimp who has no mandate to impose your dictatorial ideals on our people ,so get lost somewhere else in Europe:

We the people of Ireland will take only so much crap from unelected self-serving officials like you!

Make no Mistake Tricket , his successor and the ECB are representing the interest of the big banks in Europe by forcing the toxic debts on to the shoulders of the taxpayers of Ireland and other small nations!


By Christopher M. Quigley B.Sc., M.M.I.I., M.A.

Lastweek, on “black Thursday” the Irishgovernment in essence finally nationalized Allied Irish Bank. In response to the horrific national financial picturepainted by Mr. Brian Lenihan, Ireland’s finance minister, Peter Sutherland, former Irish attorney general, hit the media road. Mr.Sutherland’s mantra was similar to that previously presented by his acolyte Mr.Honohan (head of the Irish Central Bank). This mantra stated that though the figures were lamentable they were “manageable.”Now I have had a great deal of respect for Mr. Sutherland but as current events unfold I must respectively question hisjudgment. He points out that Ireland is not in “desperate” shape. He points outthat: “Ireland has funding up to 2011 and has 24 billion Euros in its Sovereign Wealth Fund.”  Thus, in his estimation,Ireland will not go broke until 2013, at least. According to his policy it is“OK” for the government to continue to fully guarantee, and pay as they falldue, “retail” banking bonds. It is my argument that these bonds should have been negotiated down in September of 2008 when the Irish bank guarantee wasfirst issued ( See article: “ A Bank Guarantee Too Far”). Should we adopt the course advised by Mr. Sutherland it is quite conceivable that Ireland will go completely bankrupt around 2013-2014, with no practical strategy for recoveryon offer.

This gruesome fact has even been acknowledged, publically, by nonother than Mr. Bill Clinton former President of the United States of America.

The former attorney general’s approach flies in the face of alternative prudentcouncil and public opinion. This council takes the view similar to that of aged grandparents who have saved all their lives and wish to present a legacy totheir grandchildren. These grandparents want these savings fostered, cherishedand grown. However, Mr. Sutherland wants to treat this treasure as if he were as a spoilt teenager. He seeks to squander it immediately and gamble this resource away on reckless bailing out of bondholders who lent money on risky land deals.Public opinion and international experts have pointed out that these sovereignwealth funds are the base through which Ireland could build its future. These funds could be used to set up a new, free and unencumbered National Irish Commercial Bank. This bank would get Irish credit and Irish commerce moving again. And the maths of this strategy makes sense. Under the new Basle banking agreement banks may lend up to 33 times their unencumbered cash base. This means that thesovereign wealth fund could be used to create credit in the amount of 24Billion multiplied by 33, which equals 792 billion. Almost a trillion Euros.This is the productive legacy the grandparents want for their savings. Not the squandering of hard saved assets wasted on transient speculators. These assets are Ireland’s Phoenix resource. The sovereign wealth fund is a pension fund not a teenage holiday stipend.

If Peter Sutherland’s views continue to be adopted as policy by the Department ofFinance, Ireland without its sovereign wealth fund intact, will be broke and vulnerable. In its inevitable bankruptcy Ireland’s “family silver” will eventually be put on the auction block by the IMF and theECB. Irish banks, airports, power plants, power grids, sea ports, roads, airspace, semi-states, media assets, railways, forests, lakes, water, remaining mineral rights, all will be up for grabs. The only folk with money or credit to fundsuch acquisitions will be the friends, associates and financial alumnae of Mr.Sutherland who, as you may know, is the non-executive chairman of Goldman Sachs International, one of the biggest “vulture” banks in the world.


_________________________________ Christopher M. Quigley B.Sc., M.M.I.I., M.A. QuigleyCompany@gmail.com



An excellent piece of work But I would go further Mr Peter Southerland is nothing more than a carpetbagger and a Goldman Sachs insider . see  http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405 “we need Mr Southerlands imput in the irish financial disaster  like we need the plague”!

Ireland is heading for bankruptcy!

OPINION: Ireland is heading for bankruptcy, which would be catastrophic for a country that trades on its reputation as a safe place to do business,


WITH THE Irish Government on track to owe a quarter of a trillion euro by 2014, a prolonged and chaotic national bankruptcy is becoming inevitable. By the time the dust settles, Ireland’s last remaining asset, its reputation as a safe place from which to conduct business, will have been destroyed.

Ireland is facing economic ruin.

While most people would trace our ruin to to the bank guarantee of September 2008, the real error was in sticking with the guarantee long after it had become clear that the bank losses were insupportable. Brian Lenihan’s original decision to guarantee most of the bonds of Irish banks was a mistake, but a mistake so obvious and so ridiculous that it could easily have been reversed. The ideal time to have reversed the bank guarantee was a few months later when Patrick Honohan was appointed governor of the Central Bank and assumed de facto control of Irish economic policy.

As a respected academic expert on banking crises, Honohan commanded the international authority to have announced that the guarantee had been made in haste and with poor information, and would be replaced by a restructuring where bonds in the banks would be swapped for shares.

Instead, Honohan seemed unperturbed by the possible scale of bank losses, repeatedly insisting that they were “manageable”. Like most Irish economists of his generation, he appeared to believe that Ireland was still the export-driven powerhouse of the 1990s, rather than the credit-fuelled Ponzi scheme it had become since 2000; and the banking crisis no worse than the, largely manufactured, government budget crisis of the late 1980s.

Rising dismay at Honohan’s judgment crystallised into outright scepticism after an extraordinary interview with Bloomberg business news on May 28th last year. Having overseen the Central Bank’s “quite aggressive” stress tests of the Irish banks, he assured them that he would have “the two big banks, fixed by the end of the year. I think it’s quite good news The banks are floating away from dependence on the State and will be free standing”.

Honohan’s miscalculation of the bank losses has turned out to be the costliest mistake ever made by an Irish person. Armed with Honohan’s assurances that the bank losses were manageable, the Irish government confidently rode into the Little Bighorn and repaid the bank bondholders, even those who had not been guaranteed under the original scheme. This suicidal policy culminated in the repayment of most of the outstanding bonds last September.

Disaster followed within weeks. Nobody would lend to Irish banks, so that the maturing bonds were repaid largely by emergency borrowing from the European Central Bank: by November the Irish banks already owed more than €60 billion. Despite aggressive cuts in government spending, the certainty that bank losses would far exceed Honohan’s estimates led financial markets to stop lending to Ireland.

On November 16th, European finance ministers urged Lenihan to accept a bailout to stop the panic spreading to Spain and Portugal, but he refused, arguing that the Irish government was funded until the following summer. Although attacked by the Irish media for this seemingly delusional behaviour, Lenihan, for once, was doing precisely the right thing. Behind Lenihan’s refusal lay the thinly veiled threat that, unless given suitably generous terms, Ireland could hold happily its breath for long enough that Spain and Portugal, who needed to borrow every month, would drown.

At this stage, with Lenihan looking set to exploit his strong negotiating position to seek a bailout of the banks only, Honohan intervened. As well as being Ireland’s chief economic adviser, he also plays for the opposing team as a member of the council of the European Central Bank, whose decisions he is bound to carry out. In Frankfurt for the monthly meeting of the ECB on November 18th, Honohan announced on RTÉ Radio 1’s Morning Ireland that Ireland would need a bailout of “tens of billions”.

Rarely has a finance minister been so deftly sliced off at the ankles by his central bank governor. And so the Honohan Doctrine that bank losses could and should be repaid by Irish taxpayers ran its predictable course with the financial collapse and international bailout of the Irish State.

Ireland’s Last Stand began less shambolically than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”

The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are.

The negotiations went downhill from there. On one side was the European Central Bank, unabashedly representing Ireland’s creditors and insisting on full repayment of bank bonds. On the other was the IMF, arguing that Irish taxpayers would be doing well to balance their government’s books, let alone repay the losses of private banks. And the Irish? On the side of the ECB, naturally.

In the circumstances, the ECB walked away with everything it wanted. The IMF were scathing of the Irish performance, with one staffer describing the eagerness of some Irish negotiators to side with the ECB as displaying strong elements of Stockholm Syndrome.

The bailout represents almost as much of a scandal for the IMF as it does for Ireland. The IMF found itself outmanoeuvred by ECB negotiators, their low opinion of whom they are not at pains to conceal. More importantly, the IMF was forced by the obduracy of Geithner and the spinelessness, or worse, of the Irish to lend their imprimatur, and €30 billion of their capital, to a deal that its negotiators privately admit will end in Irish bankruptcy. Lending to an insolvent state, which has no hope of reducing its debt enough to borrow in markets again, breaches the most fundamental rule of the IMF, and a heated debate continues there over the legality of the Irish deal.

Six months on, and with Irish government debt rated one notch above junk and the run on Irish banks starting to spread to household deposits, it might appear that the Irish bailout of last November has already ended in abject failure. On the contrary, as far as its ECB architects are concerned, the bailout has turned out to be an unqualified success.

The one thing you need to understand about the Irish bailout is that it had nothing to do with repairing Ireland’s finances enough to allow the Irish Government to start borrowing again in the bond markets at reasonable rates: what people ordinarily think of a bailout as doing.

The finances of the Irish Government are like a bucket with a large hole in the form of the banking system. While any half-serious rescue would have focused on plugging this hole, the agreed bailout ostentatiously ignored the banks, except for reiterating the ECB-Honohan view that their losses would be borne by Irish taxpayers. Try to imagine the Bank of England’s insisting that Northern Rock be rescued by Newcastle City Council and you have some idea of how seriously the ECB expects the Irish bailout to work.

Instead, the sole purpose of the Irish bailout was to frighten the Spanish into line with a vivid demonstration that EU rescues are not for the faint-hearted. And the ECB plan, so far anyway, has worked. Given a choice between being strung up like Ireland – an object of international ridicule, paying exorbitant rates on bailout funds, its government ministers answerable to a Hungarian university lecturer – or mending their ways, the Spanish have understandably chosen the latter.

But why was it necessary, or at least expedient, for the EU to force an economic collapse on Ireland to frighten Spain? The answer goes back to a fundamental, and potentially fatal, flaw in the design of the euro zone: the lack of any means of dealing with large, insolvent banks.

Back when the euro was being planned in the mid-1990s, it never occurred to anyone that cautious, stodgy banks like AIB and Bank of Ireland, run by faintly dim former rugby players, could ever borrow tens of billions overseas, and lose it all on dodgy property loans. Had the collapse been limited to Irish banks, some sort of rescue deal might have been cobbled together; but a suspicion lingers that many Spanish banks – which inflated a property bubble almost as exuberant as Ireland’s, but in the world’s ninth largest economy – are hiding losses as large as those that sank their Irish counterparts.

Uniquely in the world, the European Central Bank has no central government standing behind it that can levy taxes. To rescue a banking system as large as Spain’s would require a massive commitment of resources by European countries to a European Monetary Fund: something so politically complex and financially costly that it will only be considered in extremis, to avert the collapse of the euro zone. It is easiest for now for the ECB to keep its fingers crossed that Spain pulls through by itself, encouraged by the example made of the Irish.

Irish insolvency is now less a matter of economics than of arithmetic. If everything goes according to plan, as it always does, Ireland’s government debt will top €190 billion by 2014, with another €45 billion in Nama and €35 billion in bank recapitalisation, for a total of €270 billion, plus whatever losses the Irish Central Bank has made on its emergency lending. Subtracting off the likely value of the banks and Nama assets, Namawinelake (by far the best source on the Irish economy) reckons our final debt will be about €220 billion, and I think it will be closer to €250 billion, but these differences are immaterial: either way we are talking of a Government debt that is more than €120,000 per worker, or 60 per cent larger than GNP.

Economists have a rule of thumb that once its national debt exceeds its national income, a small economy is in danger of default (large economies, like Japan, can go considerably higher). Ireland is so far into the red zone that marginal changes in the bailout terms can make no difference: we are going to be in the Hudson.

The ECB applauded and lent Ireland the money to ensure that the banks that lent to Anglo and Nationwide be repaid, and now finds itself in the situation where, as a consequence, the banks that lent to the Irish Government are at risk of losing most of what they lent. In other words, the Irish banking crisis has become part of the larger European sovereign debt crisis.

Given the political paralysis in the EU, and a European Central Bank that sees its main task as placating the editors of German tabloids, the most likely outcome of the European debt crisis is that, after two years or so to allow French and German banks to build up loss reserves, the insolvent economies will be forced into some sort of bankruptcy.

Make no mistake: while government defaults are almost the normal state of affairs in places like Greece and Argentina, for a country like Ireland that trades on its reputation as a safe place to do business, a bankruptcy would be catastrophic. Sovereign bankruptcies drag on for years as creditors hold out for better terms, or sell to so-called vulture funds that engage in endless litigation overseas to have national assets such as aircraft impounded in the hope that they can make a sufficient nuisance of themselves to be bought off.

Worse still, a bankruptcy can do nothing to repair Ireland’s finances. Given the other commitments of the Irish State (to the banks, Nama, EU, ECB and IMF), for a bankruptcy to return government debt to a sustainable level, the holders of regular government bonds will have to be more or less wiped out. Unfortunately, most Irish government bonds are held by Irish banks and insurance companies.

In other words, we have embarked on a futile game of passing the parcel of insolvency: first from the banks to the Irish State, and next from the State back to the banks and insurance companies. The eventual outcome will likely see Ireland as some sort of EU protectorate, Europe’s answer to Puerto Rico.

Suppose that we did not want to follow our current path towards an ECB-directed bankruptcy and spiralling national ruin, is there anything we could do? While Prof Honohan sportingly threw away our best cards last September, there still is a way out that, while not painless, is considerably less painful than what Europe has in mind for us.

National survival requires that Ireland walk away from the bailout. This in turn requires the Government to do two things: disengage from the banks, and bring its budget into balance immediately.

First the banks. While the ECB does not want to rescue the Irish banks, it cannot let them collapse either and start a wave of panic that sweeps across Europe. So, every time one of you expresses your approval of the Irish banks by moving your savings to a foreign-owned bank, the Irish bank goes and replaces your money with emergency borrowing from the ECB or the Irish Central Bank. Their current borrowings are €160 billion.

The original bailout plan was that the loan portfolios of Irish banks would be sold off to repay these borrowings. However, foreign banks know that many of these loans, mortgages especially, will eventually default, and were not interested. As a result, the ECB finds itself with the Irish banks wedged uncomfortably far up its fundament, and no way of dislodging them.

This allows Ireland to walk away from the banking system by returning the Nama assets to the banks, and withdrawing its promissory notes in the banks. The ECB can then learn the basic economic truth that if you lend €160 billion to insolvent banks backed by an insolvent state, you are no longer a creditor: you are the owner. At some stage the ECB can take out an eraser and, where “Emergency Loan” is written in the accounts of Irish banks, write “Capital” instead. When it chooses to do so is its problem, not ours.

At a stroke, the Irish Government can halve its debt to a survivable €110 billion. The ECB can do nothing to the Irish banks in retaliation without triggering a catastrophic panic in Spain and across the rest of Europe. The only way Europe can respond is by cutting off funding to the Irish Government.

So the second strand of national survival is to bring the Government budget immediately into balance. The reason for governments to run deficits in recessions is to smooth out temporary dips in economic activity. However, our current slump is not temporary: Ireland bet everything that house prices would rise forever, and lost. To borrow so that senior civil servants like me can continue to enjoy salaries twice as much as our European counterparts makes no sense, macroeconomic or otherwise.

Cutting Government borrowing to zero immediately is not painless but it is the only way of disentangling ourselves from the loan sharks who are intent on making an example of us. In contrast, the new Government’s current policy of lying on the ground with a begging bowl and hoping that someone takes pity on us does not make for a particularly strong negotiating position. By bringing our budget immediately into balance, we focus attention on the fact that Ireland’s problems stem almost entirely from the activities of six privately owned banks, while freeing ourselves to walk away from these poisonous institutions. Just as importantly, it sends a signal to the rest of the world that Ireland – which 20 years ago showed how a small country could drag itself out of poverty through the energy and hard work of its inhabitants, but has since fallen among thieves and their political fixers – is back and means business.

Of course, we all know that this will never happen. Irish politicians are too used to being rewarded by Brussels to start fighting against it, even if it is a matter of national survival. It is easier to be led along blindfold until the noose is slipped around our necks and we are kicked through the trapdoor into bankruptcy.

The destruction wrought by the bankruptcy will not just be economic but political. Just as the Lenihan bailout destroyed Fianna Fáil, so the Noonan bankruptcy will destroy Fine Gael and Labour, leaving them as reviled and mistrusted as their predecessors. And that will leave Ireland in the interesting situation where the economic crisis has chewed up and spat out all of the State’s constitutional parties. The last election was reassuringly dull and predictable but the next, after the trauma and chaos of the bankruptcy, will be anything but.

source: http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html?via=rel


I thought I would resurrect this article .It still holds true to-day

This is the real Ireland and the codgers in the Government are stupid enough to ignore this excellent piece of work. Morgan Kelly is the voice of sanity crying in the wilderness ,those of you who want to hear the truth listen to him !

(NAMA) today published its Quarterly Report and Accounts

The National Asset Management Agency (NAMA) has today published its Quarterly Report and Accounts [The Report] for the Third Quarter2010 [1st July to 30th September 2010]. The documents were laid before each House of the Oireachtas by the Minister for Finance earlier today.

see full report here  NAMAPublishesThirdQuarterReportandAccounts


It would appear that NAMA are now dealing in Derivatives

The question is where does NAMA get the expertise to deal with Derivatives?

Have we reneged on the IMF/EU bailout deal?

By namawinelake

(Memorandum of Understanding)

The decision by Minister for Finance, Brian Lenihan this week to postpone the next round of bank recapitalisations to after the general election was momentous and I don’t think the shock waves have been accurately captured yet. And the reaction of what are assumed to be the government-in-waiting must surely be a matter of deep concern for our lenders, as it would seem that there has been unilateral repudiation of a key term of our agreement with the EU/IMF (either a one-month-plus delay or a conditional repudiation). Let’s examine the sequence of events

1. 16th December, 2010 – Agreement with IMF/EU of bailout terms following Irish parliamentary debate and vote and IMF board meeting

2. January Exchequer Statement confirms that we have so far received €10.873bn from the EU/IMF facility (€4,979m from the European Financial Stabilisation Fund and €5,803m from the IMF Extended Fund facility) in Jan 2011. The December 2010 Exchequer Statement shows that there was no drawdown from the facilities last year.

3. 1st February, 2011- Dail is dissolved and it is claimed by Minister Lenihan that he discussed the possibility of postponing the recapitalisations with his colleagues.

4. Wednesday afternoon, 2pm, 9th February, 2011 – IMF produces broadly upbeat staff report on Ireland

5. Wednesday afternoon, 9th February, 2011 – Minister Lenihan issues statement cancelling his intention to recapitalise the banks before the general election – “the Minister has informed the European Commission, the IMF and the ECB” The Central Bank of Ireland responds in detached terms (“notes” cf “welcomes”)

6. Thursday afternoon, 10th February, 2011 – Minister Lenihan issues informal invitation to two main Opposition party finance spokespeople to write to him if they wanted the recapitalisation to take place before the general election.

7. FG finance spokesperson, Michael Noonan issues statement in which he says “if Fine Gael is in government will await the results of the solvency and liquidity review before we recapitalise the banks”. These reviews are due to be completed by Barclays Capital, the Boston Consulting Group and Blackshore by 31st March 2011. Work has been ongoing since January so there is the possibility that the results may be published earlier than 31st March.

 8. Labour party leader, Eamon Gilmore said, according to the Irish Times, “his party would not put any further capital into Bank of Ireland, AIB and EBS building society before renegotiating the bailout with the International Monetary Fund (IMF) and the EU”. I cannot find a statement on the Labour website on this subject.

9. General election on 25th February, 2011 with constitutional statement by An Taoiseach that the next Dail will meet on 9th March, 2011. The likelihood is that the next government will be a coalition and the usual post-election horsetrading may delay the formation of a government. For what it is worth, Paddy Power are offering 1/10 odds-on that the next government will be FG/Labour. I recall Paddy Power not being on the money with the outcome of the British general election in May 2010 but the only fly in the ointment I can see in our election is the uncertain role to be played by independents and small parties as my own sense is there is a palpable hostility/apathy towards FF (mostly)/FG/Labour. The reason for mentioning the likely outcome of the election is that above are the positions of the two main opposition parties likely to be in government, on the recapitalisation. So where does this all leave the agreement with the IMF/EU. We’re taking their money but not honouring commitments on the use of that money. The hope on the IMF/EU’s part must be that this is a temporary hiccup and this agreement term will be honoured in April 2011. I can’t find written statements from the ECB or the IMF or EU reacting to Minister Lenihan’s decision but press reporting suggests muted concern. I can’t help but notice that we have €11bn of the bailout funds plus €126bn from the ECB in our banks and yet we seem to be unashamedly delaying (or something more serious in Labour’s case) a key term of the deal.

Comment :

What about to notion that we haven’t seen the real extent of the problem? Perhaps we are only seeing the tip of the iceberg what if the hole in the banks is three times bigger or even four times bigger can we really believe a word any of the players to date .Brian Lenihan, Patrick Honohan Allen Dukes Brian Cowen and even the ECB with their Bank stress tests, none of their figures have been proven right on the on the contrary they all have been wrong.

For my money I bet the hole is so much bigger and we will have no choice but to default. By the time we have the full figures on the Banks derivative positions in CDS, s ,and OTC,s  we will be in for a nasty shock and Lenihan knows it!

The use of derivatives can result in large losses because of the use of leverage , or borrowing. Derivatives allow investors  to earn large returns from small movements in the underlying asset’s price. However, investors could lose large amounts if the price of the underlying moves against them significantly and boy has the underlying assets prices moved and it is down down down so its not going to be good news comming from the banks .

Deferring the recapitalisation deadline to after the general election. Was it a political stroke?

 By namawinelake 

 Yesterday’s decision announced by Minister for Finance, Brian Lenihan that the next injections of capital into the banks would be deferred to after the general election on 25th February has been attacked as a political stroke by opposition politicians. The decision will effectively push the next injections well into March 2011 because the next Dail is only due to meet on 9th March, 2011 (and that is set in stone by order of the Taoiseach when dissolving the Dail). And given the likely outcome of the election (a FG/Labour coalition) there may be some horsetrading to be still resolved by 9th March. You would expect €7bn, potentially, of state spending to be given a high priority but it could well be later in March when the injections take place.
Was it a political stroke? I think yes, but I don’t think it was primarily aimed at undermining the Opposition. It has been known since early January that the Department of Finance and the NTMA have been seeking an extension to the February 2011 deadline but that they have been rebuffed by the Central Bank of Ireland and the ECB/IMF. The request for the extension is believed to really be about extending to Bank of Ireland every opportunity for private capital raising which might avoid majority state control. And behind that position is the principle that Bank of Ireland, at least, should survive outside state control and be a leading participant in any future banking landscape in Ireland. That position does not coincide with the CBI’s which is more relaxed about BoI being foreign owned and controlled. And that position was reflected in the detached language used in the CBI statement yesterday. But it seems the Minister got his way or at least secured more breathing space for Bank of Ireland. And by throwing his hands in the air with this “mandate” business he was able to save some face.
The obvious question prompted by the Minister’s Damascene conversion to democratic consensus is if the government doesn’t have a mandate to inject €7bn into the banks then what mandate does it have to (1) auction off c€14bn of deposits at Anglo/INBS (2) sell off EBS (3) decide to exclude €4.6bn of associated lending to be transferred to NAMA with sub-€20m land and development loans (4) increase CBI ELA by billions to replace fleeing deposits (5) repay hundreds of millions to bondholders – surely these current decisions should have been (or in some cases should be) deferred for consideration by the incoming administration?
We are expecting a statement later today from Bank of Ireland regarding the debt-swap of the so-called Canadian bonds (€300m at par value where BoI has offered a debt-swap which would see a 56% haircut or €168m capital accretion if there is 100% take-up). I expect we will see some initiatives in the coming days from BoI to privately (that is, outside state control) fund the remaining ~€1.4bn capital requirement. It will be riveting to see how the forthcoming payment of preference share dividends is made to the NPRF.

source: http://wp.me/pNlCf-12i

NAMA report and accounts for Q3, 2010 – is there a political reason for the delay in their publication?

By namawinelake

Money and Banking Statistics: December 2010
Well one thing is for sure, the period between NAMA delivering its quarterly report and accounts to the Department of Finance and the DoF publishing said documents is growing larger with the passage of each quarter as illustrated below:
QuarterCovering period toDelivered to DoFPublished
131st March, 201030th June, 201013th July, 2010
230th June, 201030th Sept, 20102nd November, 2010
330th Sept, 201031st Dec, 2010Still waiting………

There was a detailed entry on here at the start of January, 2011 examining the likely features of the Q3, 2010 report and accounts. From an incumbent party political viewpoint, the sensitive issue with these accounts will be the fact that NAMA has lost some €2bn+ since its incorporation. How? NAMA purchased loans by reference to a valuation date of 30th November, 2009 and although some markets have improved since then, the home market where the assets underpinning two thirds of NAMA’s loans are located has tanked. Also NAMA paid a Long Term Economic Value of an average of 10% above the value of the asset. Now it is true that 5% of NAMA consideration for loans is in the form of subordinated debt which will only be honoured if NAMA breaks even and it is also true that the NAMA Act provides for a levy on the banks proportionate to the value of loans absorbed (so Anglo and INBS will need cough up more than 50% of any ultimate loss which is of course ridiculous but practically speaking it is also ridiculous for AIB and EBS which are effectively State-owned, Bank of Ireland faces a challenging future). Taking all of this into account
So it may be the case that the Department of Finance (prop: Brian Lenihan, minister) may try to delay the publication of the accounts which remember are already four months out of date as they relate to the quarter ending 30th September, 2010. And remember also, the role of the DoF is not to change the accounts so arguably they should be generally published simultaneously with their delivery to the DoF. And even if the accounts are published, they are unlikely to show a loss because NAMA is unlikely to revalue tens of billions of euros of loans each quarter. But I think it will be perfectly reasonable to ask NAMA for a ballpark of the loss in value of the loans compared with their acquisition value (the answer should be €2bn +).


PLANS to tax bankers’ bonuses at 90pc have been shelved

By Emmet Oliver Deputy Business Editor

Tuesday January 25 2011

PLANS to tax bankers’ bonuses at 90pc have been shelved, the Irish Independent has learned.

The measure to hit bank bonuses will not now be enshrined in the Finance Bill as it is rammed through the Oireachtas in the coming days.

Last week Minister for Finance Brian Lenihan promised that curbs on bank bonuses would be added to the “later stages” of the Finance Bill 2011, but with time to debate the bill now so short, this plan has been scrapped, leaving the whole area of banker’s bonuses up in the air.

More than 2,000 AIB staff are still due to be paid bonuses for work done in 2008, but the bank is holding off on payment pending final instructions from the government of the day.

Mr Lenihan was going to tax the bonuses at 90pc, wiping out most of their value, but this plan was legally complex and has now been scrapped.


It means the controversial issue of bank bonuses, due to be paid at AIB, has been handed over to the next government.

AIB in the meantime will not be paying them, but it is facing fresh legal challenge from some members of AIB Capital Markets, where most of the bonuses arise.

The tax implications of civil partnerships, also expected to be included in the Finance Bill, have also been jettisoned for time reasons.

Meanwhile, there are considerable clouds over other elements of bank policy as the current government bows out. The NAMA (Amendment) Bill is also not going to make it through the Oireachtas in the current session, throwing a major spanner in the works for Irish banks.

This bill would have allowed NAMA to take over property loans valued at less than €20m and help the banks to shrink their balance sheets, making them more attractive to outside investors. Ireland has signed up to a range of milestones with the IMF and EU in relation to banks and one of the key ones is to order the recapitalisation of AIB, Bank of Ireland and EBS by the end of February. This now looks like an ambitious target.

Mr Lenihan is also awaiting answers from Bank of Ireland on its bonus structure and payments.

Recently its chief executive Richie Boucher admitted the bank provided incorrect information and since then it has had to correct the record.

– Emmet Oliver Deputy Business Editor

Irish Independent

 source :namawinelake  URL: http://wp.me/pNlCf-Yy

Emmet Oliver in today’s Irish Independent is claiming that the NAMA (Amendment) Bill which only three days in the Taoiseach’s resignation speech was highlighted as one of the two vital pieces of remaining legislation (alongside the Finance Bill) that needed be enacted before the dissolution of the current Dail, will not now be enacted in the current Dail. With a late February 2011 election expected and the merry dance that usually accompanies the post-election formation of a coalition (Ireland hasn’t had a one-party majority government since 1977-1981), it is likely to be late March or April 2011 that the Amendment will be enacted.
As regards the contents of the NAMA (Amendment) Bill, I am only aware of the Chief Whip’s announcements on 11th January 2011 which indicated that the Amendment was to enable NAMA to absorb sub-€20m exposures at AIB and Bank of Ireland. This looked odd to me as there is no mention of thresholds in the NAMA legislation (NAMA itself can absorb any eligible loans which are not defined by quantum, though it said in September 2009 that it would apply a minimum threshold of €5m to Anglo, AIB and BoI which was increased in September 2010 to €20m for AIB and BoI before being reduced to €0 for AIB and BoI after the IMF intervention in November 2010).
The suspicion on here was that the amendment was intended to significantly change NAMA’s remit, for example by forcing the agency to absorb other categories of lending (vanilla commercial property and mortgage lending perhaps which is excluded from NAMA’s remit which is primarily aimed at “land and development”). Interestingly the Independent today is now claiming that the delay with enacting the Amendment may jeopardise the banks’ recapitalisation plans.

Did Brian Lenihan get mugged in Belfast yesterday?

 Yesterday was a weird old day for political parties on both sides of the border. The DUP was coping with some hackers that had changed the appearance of their website and replaced the home page with a photo of Peter Robinson alongside the caption “Is mise Peadar Robinson agus tugaim tacaiocht don Acht na Gaelige” (“I am Peter Robinson and I support an Irish Language Act”). And on the other side of the border, embattled Taoiseach Brian Cowen was fighting for his political life following revelations of hitherto undeclared meetings with the now-pariahs from Anglo Irish Bank.

The weekly Fianna Fail parliamentary party meeting was scheduled for midday but was moved to 3pm which allowed deputies to be whipped into line and also allowed Minister for Finance, Brian Lenihan to return from his regular meeting with the North’s Finance and Personnel Minister, the DUP’s Sammy Wilson at Stormont. The Belfast Telegraph today reports comments made by Sammy Wilson after the meeting and Minister Wilson claims that he received assurances from Minister Lenihan that there would be no fire sales of assets by NAMA in the North.

The North of course is suffering a property recession not too dissimilar to the Republic’s and the outlook for commercial and residential property is choppy – an Ulster Bank/RICS report today paints a gloomy outlook for both prices and transactions and although there are few commercial property reports on the North I take the assessment to be that prices are at risk. There is also the overarching threat to the North’s economy in the shape of budget cuts from Westminster. And although Minister Wilson doesn’t record Minister Lenihan’s response it seems that he also stressed his concerns for employment in the North’s banking sector (AIB’s disposal of its UK arm could result in redundancies at local Northern Ireland subsidiary First Trust bank and Irish banks operating in the North are generally retrenching) and credit availability (the North doesn’t have the equivalent of our Credit Review Office which examines lending decisions/rejections at our five NAMA Participating Institutions – AIB, Anglo, BoI, EBS and INBS). NAMA will have €4-5bn of loans under its control relating to significant commercial and residential property assets in the North. NAMA has a target of disposing of 40% of its loans in the next three years (either through redemption of the loans, selling the loans on to third parties or through liquidation of underlying assets).

With the outlook for property in the Republic every bit as bad as the North, I’m not sure that NAMA can keep to its commitment to avoid fire sales even if they are not billed as such. And it wasn’t for nothing that the controversial Credit Institutions (Stabilisation) Act was rushed through the Oireachtas before Christmas and that Act allows Minister Lenihan to restructure banks and intervene in their operations on an unprecedented scale, both north and south of the border. So Sammy might have wrung concessions from Minister Lenihan yesterday but economic needs may overtake non-binding commitments and as yesterday’s political intrigues this side of the border demonstrated, it might be that Minister Lenihan won’t be in the driving seat in a few months anyway.

source : http://wp.me/pNlCf-W5


Don’t be surprised to find that NAMA will have to hold Fire sales as the word from our masters in Europe is they are getting pissed off with NAMA’s stonewalling on that issue

The Germans want NAMA to start getting rid of some of its massive property as it is costing a lot to maintain and loosing value every day!

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