The Big Bailout of the Eurozone (Another crisis coming? - Seriously)

[Bogball XV]

http://www.irishtimes.com/newspaper/frontpage/2009/0211/1233867932122.html

Christ Almighty what does it take for people to realise that our whole financial sector is rotten to the core?
We're going down the toilet and these b**tards are falsifying accounts and misleading shareholders and nothing happens:(-

I don't think this is a huge issue tbh, I'm sure it was standard practice throughout the sector and the only way to combat this would be for the regulator/legislators to insist that reserves etc are assessed by their average/median value throughout the year rather than by assessing them at a point in time.

[Declan]

I don't think this is a huge issue tbh, I'm sure it was standard practice throughout the sector

So it's alright to deliberately transfer money to give a false value of deposits on the end of year balance sheet

If that was standard practice then the whole system need to be taken apart

[Bogball XV]

I don't think this is a huge issue tbh, I'm sure it was standard practice throughout the sector

So it's alright to deliberately transfer money to give a false value of deposits on the end of year balance sheet

If that was standard practice then the whole system need to be taken apart

Possibly, but certainly the regulation has to be revamped.  Whilst this was probably an attempt to stay within regulatory guidelines, it wasn't actually fooling anyone, I don't think there was a rush to lend anglo money based on their balance sheet and the regulator was apparently informed of this movement and subsequent withdrawal, so the purpose was just a wee bit of window dressing around year end, that the regulator was probably aware of.  I'd be interested to see if similar was happening at the other banks' year ends.

[Declan]

It sure would be interesting to see if that practice was widespread - Didn't fool anyone - without showing my ignorance again it certainly seems to have fooled the auditors 

It now appears that our great leader knew about this two months ago!!!

[Bogball XV]

It sure would be interesting to see if that practice was widespread - Didn't fool anyone - without showing my ignorance again it certainly seems to have fooled the auditors 

It now appears that our great leader knew about this two months ago!!!

fooled and satisfied are different things

[muppet]

BogBall XV how do we know that the cash on the balance sheets of all our banks is not merely the one lump cash of one bank? Since they have different year ends they could just move around that lump so that they all look solvent? And of course it is legal.

[orangeman]

BogBall XV how do we know that the cash on the balance sheets of all our banks is not merely the one lump cash of one bank? Since they have different year ends they could just move around that lump so that they all look solvent? And of course it is legal.

This seems to be have been exactly what was going on. Move it around whenever it was needed to show your crednetials.

[Hardy]

Spot on.

If it's not illegal, it most certainly should be. It's designed to deceive customers and investors and clearly may lead people to part with money they wouldn't part with if they knew the truth. Truth as a concept clearly doesn't exist in the Irish banking system. I have always believed and remember stating here long ago that the Irish banking system was no more than an organised and unregulated cartel of loan sharks. This latest revelation is complete proof of that.

If we don't send someone to jail soon in this country, a la Enron, etc. we can expect to be given the toe of the international banking system's boot when we go looking for loans.

[orangeman]

Spot on.

If it's not illegal, it most certainly should be. It's designed to deceive customers and investors and clearly may lead people to part with money they wouldn't part with if they knew the truth. Truth as a concept clearly doesn't exist in the Irish banking system. I have always believed and remember stating here long ago that the Irish banking system was no more than an organised and unregulated cartel of loan sharks. This latest revelation is complete proof of that.

If we don't send someone to jail soon in this country, a la Enron, etc. we can expect to be given the toe of the international banking system's boot when we go looking for loans.

No point sending them to jail - make them cough up what they've stolen.

[Bogball XV]

BogBall XV how do we know that the cash on the balance sheets of all our banks is not merely the one lump cash of one bank? Since they have different year ends they could just move around that lump so that they all look solvent? And of course it is legal.

We don't!!  But the regulator does, afaik they have to file quarterly with the regulator and since year ends of the big 5 are:
BOI - 31 March
AIB - 31 Dec
ILP - 31 Dec
Anglo - 31 Sept
INBS - 31 Dec

There is certainly the potential for manipulation, why do AIB and BOI have different year ends?  However given that the regulator is supposed to be kept informed of deposits with other banks and so on, one would think that the same money can't be moved around indiscrimately.
In the case in question, I think that Anglo phoned ILP and said we're in serious bother here, if our real numbers go out it'll be bad for all of us, with the new guarantee your money is safe anyway, so please give us a digout and we'll throw you a decent rate of interest.
The regulator (and who else) probably knew all about it, but as deposits were at that stage flowing into irish banks, decided that it would serve no good to make an issue of it.
I don't think investors were fooled at all, for a start nobody was believing a word coming from irish banks, the audit report wasn't released until this month and presumably anglo release results quarterly anyway, so it would have been easily picked up, I think this was a last gasp attempt by anglo to save itself.
In addition auditors are supposed to take steps to monitor activity post balance sheet, but in this case by the time ILP withdrew their money again deposits were presumably flying in from around the world (because of the guarantee) so the reserves had probably improved from balance sheet date regardless of ILP's transaction.
I think the fitzpatrick issue is much more serious to be honest.

[muppet]

BogBall XV how do we know that the cash on the balance sheets of all our banks is not merely the one lump cash of one bank? Since they have different year ends they could just move around that lump so that they all look solvent? And of course it is legal.

We don't!!  But the regulator does, afaik they have to file quarterly with the regulator and since year ends of the big 5 are:
BOI - 31 March
AIB - 31 Dec
ILP - 31 Dec
Anglo - 31 Sept
INBS - 31 Dec

There is certainly the potential for manipulation, why do AIB and BOI have different year ends?  However given that the regulator is supposed to be kept informed of deposits with other banks and so on, one would think that the same money can't be moved around indiscrimately.
In the case in question, I think that Anglo phoned ILP and said we're in serious bother here, if our real numbers go out it'll be bad for all of us, with the new guarantee your money is safe anyway, so please give us a digout and we'll throw you a decent rate of interest.
The regulator (and who else) probably knew all about it, but as deposits were at that stage flowing into irish banks, decided that it would serve no good to make an issue of it.
I don't think investors were fooled at all, for a start nobody was believing a word coming from irish banks, the audit report wasn't released until this month and presumably anglo release results quarterly anyway, so it would have been easily picked up, I think this was a last gasp attempt by anglo to save itself.
In addition auditors are supposed to take steps to monitor activity post balance sheet, but in this case by the time ILP withdrew their money again deposits were presumably flying in from around the world (because of the guarantee) so the reserves had probably improved from balance sheet date regardless of ILP's transaction.
I think the fitzpatrick issue is much more serious to be honest.

BogBall XV given the long night that concluded with the guarantee it now seems that Anglo were gone if:
a) there was no action by the Government
b) if that action was only a guarantee unless another bank gave them a short loan of €4 Billion.

It seems logical to assume that on that long night the Government had to know this as the dogs in the street knew Anglo were floundering (before Fitzpatrick's action became public). If the Government knew this, then the guarantee was a bluff and they sat on their hands for 3 more months before finally nationalising a bank they knew months earlier was failing.

In the meantime the inaction and doubt has dragged down the other banks and it looks as if they all will have to be re-capitalised.

[Bogball XV]

I think that about sums it up Muppet, do you think is there a possibility that the bank guarantee was required before ILP would make their deposit?  Would it be the biggest shock in the world to find out in a month or so that ILP had been 'encouraged' to make this deposit?
If you look back we both pretty much said that the guarantee was a bluff and that Anglo should have been let go, I think there could be more revelations as to why this didn't happen, as there seems to be plenty of innuendo as to who exactly has accounts in there.

[muppet]

I think that about sums it up Muppet, do you think is there a possibility that the bank guarantee was required before ILP would make their deposit?

Nail on the head.

Would it be the biggest shock in the world to find out in a month or so that ILP had been 'encouraged' to make this deposit?

Let's just say you don't hear of competitors giving each other huge digouts do you?

If you look back we both pretty much said that the guarantee was a bluff and that Anglo should have been let go, I think there could be more revelations as to why this didn't happen, as there seems to be plenty of innuendo as to who exactly has accounts in there.

It is slowly being excreted into the public domain though.

[Declan]

Bastards should be locked up -

[Bogball XV]

More revelations today, it's getting worse and worse and I'll revise my assessment, this latest story is worse than the loans and the perps should be severely punished.