Post-2008 Irish banking crisis: Difference between revisions - Wikipedia
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Line 55: == Resignation of the Financial Regulator == Following reports of a communication breakdown at the office of the Financial Services Regulatory Authority, the Chief Executive of the [[Financial Regulator]] Patrick Neary on 9 January 2009 announced his decision to retire as of 31 January that year.<ref>{{cite news|url=http://www.rte.ie/news/2009/0109/nearyp.html|title=Neary to retire as Financial Regulator|date=9 January 2009|access-date=2009-01-10|newspaper=Raidió Teilifís Éireann| archive-url= https://web.archive.org/web/20090111100225/http://www.rte.ie/news/2009/0109/nearyp.html| archive-date= 11 January 2009 | url-status= live}}</ref> Neary's perceived weakness in dealing with [[Anglo Irish Bank]] received heavy criticism, with [[Green Party (Ireland)|Green Party]] Senator [[Dan Boyle (politician)|Dan Boyle]] calling for a strengthening of powers within the ==Warning signs ignored and suppressed== The crisis began through a failure by banks, the government, news Morgan Kelly, a professor of economics at [[University College Dublin]], was particularly concerned about the real estate bubble which was reaching its climax in the summer of 2006. In an article published by the ''[[Irish Times]]'', Kelly noted that the raise in house prices relative to income and rents is a strong indicator of their subsequent decrease, and that Ireland's house prices had risen 30% more than income since the year 2000. He then asserted that Irish real estate prices could possibly fall 40 – 50% when the bubble burst.<ref>{{cite news|last1=Morgan|first1=Kelly|title=How the housing corner stones of our economy could gointo a rapid freefall|url=https://www.irishtimes.com/business/how-the-housing-corner-stones-of-our-economy-could-gointo-a-rapid-freefall-1.1042463|newspaper=The Irish Times|access-date=5 January 2017|archive-date=31 May 2017|archive-url=https://web.archive.org/web/20170531055212/http://www.irishtimes.com/business/how-the-housing-corner-stones-of-our-economy-could-gointo-a-rapid-freefall-1.1042463|url-status=live}}</ref> His second article was rejected by the ''[[Irish Independent]]'' and lingered unpublished at ''[[The Sunday Business Post]]'' until the ''Irish Times'' agreed to run it in September 2007. Kelly predicted the collapse of Irish banks, which had fuelled the rapid rise of real estate by increasingly lowering their lending standards and relying more on 3-month interbank loans than on their deposit base.<ref name="VanityFair">{{cite web|last=Lewis|first=Michael|author-link=Michael Lewis|url=http://www.vanityfair.com/news/2011/03/michael-lewis-ireland-201103|title=When Irish Eyes Are Crying|date=March 2011|publisher=[[Vanity Fair (magazine)|Vanity Fair]]|access-date=2016-03-17|archive-url=https://web.archive.org/web/20160317221306/http://www.vanityfair.com/news/2011/03/michael-lewis-ireland-201103|archive-date=2016-03-17|quote=First Iceland. Then Greece. Now Ireland, which headed for bankruptcy with its own mysterious logic. In 2000, suddenly among the richest people in Europe, the Irish decided to buy their country—from one another. After which their banks and government really screwed them. So where's the rage?"}}</ref> Line 69: ==Recapitalisations of AIB and Bank of Ireland== [[File:Protest against bailout of Anglo Irish Bank.jpg|thumb|Protestors outside [[Anglo Irish Bank|Anglo-Irish Bank]] during protests against the bank bailout in April 2010]] Having guaranteed the six main Irish banks in September 2008, the Minister for Finance, [[Brian Lenihan Jnr|Brian Lenihan]] announced on 21 December 2008 that he would seek to On 11 February 2009, Lenihan announced the provision of two €3.5 billion bailouts to AIB and BoI as part of his government's Bank of Ireland chief executive [[Brian Goggin (banker)|Brian Goggin]] announced his retirement in January 2009,<ref name="Boucher appointed new Bank of Ireland CEO"/> confessing to RTÉ that his bank has made bad lending decisions.<ref name="BoI chief admits lending mistakes made">{{cite news|url=http://www.rte.ie/news/2009/0212/goggin-business.html|title=BoI chief admits lending mistakes made|date=12 February 2009|access-date=2009-02-21|newspaper=Raidió Teilifís Éireann|archive-date=15 May 2012|archive-url=https://web.archive.org/web/20120515100657/http://www.rte.ie/news/2009/0212/goggin-business.html|url-status=live}}</ref> Asked about his expected salary for 2009, Goggin admitted that it would be "less than €2 million".<ref name="Goggin admits Bank of Ireland made mistakes">{{cite news|url=https://www.irishtimes.com/newspaper/breaking/2009/0212/breaking13.htm|title=Goggin admits Bank of Ireland made mistakes|date=12 February 2009|access-date=2009-02-21|newspaper=The Irish Times}}{{Dead link|date=March 2023 |bot=InternetArchiveBot |fix-attempted=yes }}</ref><ref>{{Cite web |url=http://www.rte.ie/news/2009/0212/newsspecial_av.html?2490938,null,230 |title=BoI CEO Brian Goggin tells Christopher McKevitt of his expected reduction in wages |website=[[RTÉ.ie]] |access-date=15 February 2009 |archive-date=28 January 2020 |archive-url=https://web.archive.org/web/20200128010422/https://www.rte.ie/news/2009/0212/newsspecial_av.html?2490938,null,230 |url-status=live }}</ref> Goggin ==Economic Adjustment Programme for Ireland== Line 85: ]] {{main|Economic Adjustment Programme for Ireland}} At the end of September 2010, the 2008 guarantee covering the six bailed Just before the expiry of the guarantee, the covered banks faced a huge set of bond repayments - a result of most lenders only lending to the covered banks within the period of the original blanket guarantee - which resulted in a rapid and massive resort to ECB financing.<ref name="Central Bank consolidated balance sheets covered banks">{{cite web|url=http://www.centralbank.ie/polstats/stats/cmab/Documents/ie_table_a.4.2_covered_institutions_-_aggregate_balance_sheet.xls|title=Table A.4.2 Credit Institutions (Covered Group) - Aggregate Balance Sheet|access-date=5 February 2013|archive-date=6 June 2012|archive-url=https://web.archive.org/web/20120606005403/http://www.centralbank.ie/polstats/stats/cmab/Documents/ie_table_a.4.2_covered_institutions_-_aggregate_balance_sheet.xls|url-status=live}}</ref> Government ownership, and thus responsibility, for the Irish domestic bank sector, reached a high under the guarantee, with Anglo By October 2010 Irish sovereign bond yields were above 7%, making further market borrowing unrealistic at a time when the government deficit was running at €16.7 billion.<ref>{{cite web|publisher=Irish Times|date=28 October 2010|url=https://www.irishtimes.com/newspaper/breaking/2010/1028/breaking15.html|title=Irish bond yields hit new high|archive-url=https://web.archive.org/web/20130119161619/http://www.irishtimes.com/newspaper/breaking/2010/1028/breaking15.html |archive-date=19 January 2013 }}</ref><ref>{{Cite web |url=http://debates.oireachtas.ie/dail/2011/11/08/00081.asp |title=Written Answers - Exchequer Deficits Tuesday, 8 November 2011 |access-date=19 December 2014 |archive-date=19 December 2014 |archive-url=https://web.archive.org/web/20141219211121/http://debates.oireachtas.ie/dail/2011/11/08/00081.asp |url-status=live }}</ref> Although the government initially denied that there were any problems, and cited themselves as "fully funded well into 2011", in November 2010 the government had to seek a €67.5 billion "bailout" from the [[European Union|EU]], other European countries (via the [[European Financial Stability Facility]] fund<ref name="Financial Assistance Facility Agreement">{{cite web|url=http://www.efsf.europa.eu/about/operations/index.htm|title=Financial Assistance Facility Agreement|access-date=12 March 2013|archive-url=https://web.archive.org/web/20130126141852/http://www.efsf.europa.eu/about/operations/index.htm|archive-date=26 January 2013|url-status=dead}}</ref> and bilateral loans) and the [[International Monetary Fund|IMF]] as part of an €85 billion 'programme'. On 28 November 2010, [[European Commission]], [[European Central Bank]] (ECB), and the [[International Monetary Fund]] (IMF), colloquially called the European [[Troika (European Union)|Troika]], agreed with the Irish government in a three-year financial aid The Irish State assigned €17.5 billion to this 'bailout', an amount that was equal to the Total Discretionary Portfolio of the National Pensions Reserve Fund.<ref name="National Pensions Reserve Fund Quarterly Performance Statement">{{cite web|url=http://www.nprf.ie/Performance/performance3Qtr10.htm|title=National Pensions Reserve Fund Quarterly Performance Statement|publisher=National Pensions Reserve Fund|date=30 September 2010|access-date=13 March 2013|url-status=dead|archive-url=https://web.archive.org/web/20141219211036/http://www.nprf.ie/Performance/performance3Qtr10.htm|archive-date=19 December 2014|df=dmy-all}}</ref> The initial interest rates stipulated for the bailout loans were onerous, coming in at around 6% over all the lenders - although these were rapidly adjusted to well below market rates (averaging somewhere around 3% across all lenders). The severity of these initially proposed rates left a lingering shock.<ref>{{cite news | url=https://money.cnn.com/2010/11/28/news/international/ireland_bailout/index.htm | newspaper=CNN | first=Rich | last=Barbieri | title=EU unveils Irish bailout | date=28 November 2010 | access-date=14 August 2011 <!--DASHBot--> | archive-date=24 October 2017 | archive-url=https://web.archive.org/web/20171024132959/http://money.cnn.com/2010/11/28/news/international/ireland_bailout/index.htm | url-status=live }}</ref> Line 99: While the government deficit was financed by the EU/IMF loans during the period of high market rates, the Irish banks also continued to be largely locked out of debt markets, and their liquidity was provided by the ECB and Central bank of Ireland. By August 2011 total liquidity funding for the six banks by the ECB and the Irish Central Bank came to about €150 billion; the largest and healthiest of the six, Bank of Ireland, then had a [[market capitalisation]] of just €2.86 billion.<ref>{{cite web|url=http://www.rte.ie/news/2011/0812/central-business.html|title=Banks borrowed more from Central Bank|publisher=RTE News|date=12 August 2011|archive-url=https://web.archive.org/web/20110818082754/http://www.rte.ie/news/2011/0812/central-business.html |archive-date=18 August 2011 }}</ref> In April 2012 the 99.8% state owned bank, [[Allied Irish Banks]], had paid one and a half billion Euro to unsecured bank [[bondholders]]<ref>{{cite news|url=https://www.irishtimes.com/business/sectors/financial-services/aib-repays-1-5bn-to-unsecured-bondholders-1.499670|title=AIBrepays €1.5bn to unsecured bondholders|newspaper=[[The Irish Times]] |date=12 April 2012}}</ref> for which neither the bank nor the Irish state had no legal liability.<ref>{{cite web|url=http://www.ntma.ie/business-areas/funding-and-debt-management/eligible-liabilities-guarantee-scheme|title=Credit Institutions (Eligible Liabilities Guarantee) Scheme|year=2009|access-date=12 March 2013|archive-url=https://web.archive.org/web/20130216070514/http://www.ntma.ie/business-areas/funding-and-debt-management/eligible-liabilities-guarantee-scheme/|archive-date=16 February 2013|url-status=dead}}</ref><ref>{{cite web|url=http://www.finance.gov.ie/viewdoc.asp?DocID=7049|title=Extension of the Eligible Liabilities Guarantee(ELG) Scheme and introduction of the option to make unguaranteed deposits|date=16 November 2011|url-status=dead|archive-url=https://web.archive.org/web/20130618204754/http://www.finance.gov.ie/viewdoc.asp?DocID=7049|archive-date=18 June 2013|df=dmy-all}}</ref> On 26 February 2013, the Minister for Finance announced the closure of the ELG Scheme to all new liabilities from midnight on 28 March 2013. After this date, no new liabilities will be guaranteed under the ELG Scheme. This does not affect any liabilities already guaranteed as of 28 March 2013. On 15 December 2013, Ireland successfully exited the bailout In December 2014, Ireland's debt management body, the NTMA, repaid €9 billion in IMF loans, by borrowing that €9 billion at cheaper rates.<ref>{{cite web|url=https://www.wsj.com/articles/ireland-completes-early-repayment-of-some-imf-loans-1418919929|title=Ireland Completes Early Repayment of Some IMF Loans|publisher=The Wall Street Journal|date=18 December 2014|archive-url=https://web.archive.org/web/20170710041622/https://www.wsj.com/articles/ireland-completes-early-repayment-of-some-imf-loans-1418919929 |archive-date=10 July 2017 }}</ref> Line 111: ===Background=== In 2015, billionaire [[Denis O'Brien]] successfully applied for an injunction against [[RTÉ]] preventing the state broadcaster from airing a report on how O'Brien was receiving, with the direct permission of the former CEO of the [[Irish Bank Resolution Corporation]] (IBRC)—the former [[Anglo Irish Bank|Anglo-Irish Bank]], a rate of approximately 1.25% when IBRC should have been charging 7.5%. This in turn led to outstanding sums of upwards of €500 million. O'Brien then wrote to special liquidator Kieran Wallace to demand that these same ===Catherine Murphy's involvement=== | |||