International reaction to Anglo tapes revelations
What media abroad are reporting over release of recordings of failed bank’s executives
In the calculation of blame for financial bad behaviour, a throwaway comment can weigh as heavily as a slew of statistics.
An example is the quip of an Anglo Irish Bank executive that the sum of €7 billion in aid demanded from Ireland’s central bank was “picked out of my arse”. The sound bite gives flawed human context to cold numbers. These include the €30 billion Anglo Irish is eventually expected to cost Irish taxpayers and a €67.5 billion bailout of Ireland by international bodies.
The aid request is alluded to by John Bowe, [then] head of capital markets, in an internal recording from September 2008 obtained and published by the Irish Independent.
The implication is that had Anglo Irish estimated its shortfall accurately, the central bank would have bridled at the cost and allowed the recklessly-overextended lender to fail.
Even as it teetered on the brink, Anglo Irish appears to have gone on bluffing a nation to which it had doled out so much of the finance needed to pump up property prices. Such gamesmanship would contrast unfavourably with the stoicism of a population that shouldered a fiscal retrenchment equivalent to 17.5 per cent of output without rioting.
That shades into self-abnegation, however, in Ireland’s failure to hold a public inquiry into the crash, even after prime minister Brian Cowen, golf buddy of Anglo Irish’s bosses, had stepped down.
Here in the UK, indignant reports into the failure of bankers are like the No 43 bus: miss one and you can be sure another will come along in a few minutes. Ireland’s small, interconnected elite is less inclined to let it all hang out. Voters north of Hadrian’s Wall should ponder the possible parallels in an independent Scotland.
Shane Harrison, in a piece headed ‘Irish shock and anger as tapes reveal bankers’ behaviour’, writes:
Very few people in the Republic of Ireland doubted that the banks were less than honest in their dealings with both the Irish Central Bank and the government.
But to hear how apparently blatantly dishonest they were has shocked many.
Sometimes it is not just what is said it is the tone that matters.
It now seems inevitable that nearly five years after the bank guarantee, now widely regarded as disastrous and which has cost the Irish taxpayer so dearly, some form of public investigation will follow.
The guarantee was introduced by the then Fianna Fail/Green Party coalition government.
Back in September 2008, in the wake of the collapse of Lehman Brothers, panic was in the air.
Banks across the world were reluctant to lend to each other because they did not know how solvent each other was nor the scale of their own debts.
We know that late one night the then Irish prime minister, Brian Cowen, and his finance minister, Brian Lenihan, were persuaded by Irish bankers to guarantee several Irish banks and financial institutions to the tune of an estimated €440 billion ($575 billion, £375 billion), a figure that is several times the country’s economic output.
Some cabinet ministers had to be woken from their slumbers to agree to the measure before the markets opened.
The British and the Germans were among those appalled at the guarantee, believing that cash would flow to the apparent safety of Irish banks.
And it did, but only for a while.
In the end, the reality of the bankrupt nature of the Irish banks and building societies dawned.
However it was too late to save the now-exposed Irish taxpayer, who has now suffered five years of tax rises and spending cuts as a result.
And if there is one financial institution that really annoys people it is Anglo Irish Bank, the one favoured by the property developers.
Headed ‘Anglo Irish bankers ‘tricked’ government into bailout’, business editor Alistair Osborne writes:
Two top executives at the stricken Anglo Irish Bank have been caught on tape allegedly admitting that the lender suckered the Irish government into a €7 billion (£6 billion) bail-out knowing that far more was needed.
The country’s prime minister Enda Kenny yesterday said he understood the “rage” of the Irish people at the recorded talks between two former Anglo executives laughing and joking at the height of the bank’s funding crisis in September 2008.
The partial transcripts, published in the Irish Independent newspaper, appeared to show the bank’s then head of capital markets, John Bowe, admitting that Anglo had deliberately hoodwinked the government over the size of the bailout required.
Speaking to Peter Fitzgerald, Anglo’s former head of retail banking, Mr Bowe appears to describe how the bank cynically lured the government into a €7 billion rescue in full knowledge that the sum would be nowhere near enough to save the lender. The thinking, he suggested, was that once Dublin had been “pulled in”, it would have no choice but to keep picking up the tab.
In the end, the Irish government was forced to pump €30 billion into Anglo and roughly the same amount into Ireland’s two other cash-strapped banks, Bank of Ireland and Allied Irish Bank – rescues that brought the entire Irish economy to its knees.
Headed ‘Irish bankers ‘hoodwinked’ government over bailout, secret recordings show’, Henry McDonald writes:
A top banker with the financial institution that almost bankrupted Ireland boasted that he had picked the figure of €7 billion (£5.9 billion) they told the Irish government was needed to rescue the Anglo Irish Bank “out of his arse”.
Taped phone calls between two senior executives at Anglo Irish have compounded suspicions in the Republic that bankers lured the then Fianna Fáil led government during the crash of September 2008 into a costly financial trap by saving the debt-stricken bank with public money.
In the end the Irish taxpayer was forced to hand over €30bn to save Anglo Irish Bank from collapse and resulted in the state going cap in hand to the International Monetary Fund, the European Central Bank and the EU to save the country from national bankruptcy.
Wall Street Journal
The Irish government is determined to implement new laws to help launch the country’s first wide-ranging inquiry into the causes of its banking debt crisis and help assuage “the rage and the anger” of people deeply affected by it, Irish Prime Minister Enda Kenny said Monday.
Mr. Kenny was speaking after the Irish Independent newspaper published what it said were recordings in September 2008 of a conversation between bank executives John Bowe and Peter Fitzgerald of the now-closed Anglo Irish Bank Corp., in which the bank’s need to tap large amounts of emergency liquidity from the Irish central bank was discussed.
Under the heading ‘Busted: Bankers Caught On Tape, Joking About Bailout, And How They’d Never Pay It Back’, Julia La Roche writes:
Once again, we have more embarrassing conversations between bankers ...
The Irish Independent, a Dublin-based newspaper, has uncovered tapes of an internal phone conversation from September 2008 between two executives at Anglo Irish Bank during its bailout deal and they sound pretty scandalous. The Irish Independent points out that the recordings show they misled the Central Bank.
The executives from the recording have been identified as John Bowe (head of the bank’s capital markets) and Peter Fitzgerald (director of retail banking).
However, Bowe “categorically denied” that he misled the Central Bank and Fitzgerald, who wasn’t involved in discussions with regulators, said he was unaware of any intention to mislead, the report said.
Either way, the newly revealed recordings are still embarrassing.
Headed ‘Irish opposition calls for bank inquiry after tapes leak’, Sam Cage writes:
Ireland’s opposition called on Monday for a full inquiry into the collapse of the country’s financial system in 2008, after a newspaper published recordings of talks between Anglo Irish Bank executives about a bailout.
Rescuing indebted banks helped push Ireland to an €85 billion (£71.9 billion) IMF/EU bailout in 2010 and the topic provokes widespread anger in a country that is still enduring austerity and whose economy is struggling to gain traction.
Headed ‘Kenny Faces Irish Bank Inquiry Calls as Anglo Tapes Released’, Joe Brennan & Finbarr Flynn write:
Irish Prime Minister Enda Kenny faced growing calls for an inquiry into the collapse of Anglo Irish Bank Corp. after the Irish Independent released recordings of talks between executives as the lender sought a bailout.
The partial transcripts from September 2008 indicate the then-executives planned to seek an initial €7 billion ($9.2 billion) from the central bank because a commitment that size would make the authorities unwilling to let the lender later fail, the newspaper reported.
Anglo Irish’s strategy was to “pull them in,” John Bowe, head of capital markets, told consumer banking head Peter Fitzgerald, according to the newspaper. “You get them to write a big cheque and they have to keep, they have to support their money,” the Irish Independent cited him as saying.
The tapes prompted both of the largest opposition political parties to call for an inquiry into the collapse of the financial system, which cost the country its economic sovereignty. Ireland spent about €30 billion rescuing Dublin-based Anglo Irish, almost [half] the €64 billion the State has committed to bail out the banking industry.