Anglo Irish Bank seizure - a gift to Fianna Fáil's developer friends with support of Planet Bertie man Gormley?
Strange times indeed when a bank that was trading at close to €17 on Feb 21, 2007, when the Irish stock index, hit an all-time high and two years later, Anglo Irish Bank closed at 22 euro cent last Thursday - - without reporting a loss.
Wthin hours, the Irish Government announced the seizure of the bank, as once very profitable Irish banks may yet have to take huge hits from the property market crash.
The current Irish coalition government is headed by the dominant political party Fianna Fáil, which has traditionally given primacy to construction interests and facilitated property developers to turn the Celtic Tiger boom, that had its genesis in the location of America's world-class companies in Ireland in the early 1990's, into an out-of-control property bubble.
The State takeover of the commercial property lending Anglo Irish Bank, has raised legitimate fears that Fianna Fáil will lend a hand to its over-stretched property developer friends through the control of the bank.
Irish Economy 2009: The Bulldozer at Bay and Benchmarks for Brutal year - - background on Irish crony capitalism.
In early 2007, Green Party politician John Gormley, warned about the nexus between Fianna Fáil and the property industry.
In his Planet Bertie speech, Gormley warned: "...there's a strange cult called Fianna Fáil, a type of religion without vision or values; and every year in August they go on their annual pilgrimage to one of their sacred sites, the tent at the Galway races (Ireland's Woodstock for Property Developers - - when Fianna Fáil sold influence to the highest bidders), where they pay homage to their gods and the gods bestow them with gifts for doing their bidding. Oh yes, it's a strange place Planet Bertie. So strange and so alien to our sensibilities, that it's a planet that we Greens would like to avoid. For let there be no doubt, we want Fianna Fáil and the PDs out of Government."
On Friday, Gormley as Minister for the Environment, defended the nationalisation of Anglo Irish Bank.
He said it was "too early to determine the cost to the taxpayers of the nationalisation."
"If we had not acted, the costs to the economy would be incalculable and that is why we had to act," he said.
This is absolute cant and bullshit as Gormley hasn't a clue what the public exposure is to the future bad debts of Anglo Irish, which has a loan book of €80 billion.
Gormley is reported to have said that everybody needed to see the bigger picture and he wanted to see the opposition backing for the Government's moves.
"We need to sit down and work in the best interests of the country. Let's put the national interest first. And let's stop the point scoring," he said.
The Planet Bertie man, who jumped on every passing bandwagon in opposition, knows who now butters his bread and the once scourge of Fianna Fáil and property developers, has become their poodle.
The Financial Times Lex column- Jan 16, 2009:
Irish Economy: State bank guarantee tolls the death knell of the Celtic Tiger; Fairytale ends debunking the myths and exposing the reality of foundations built on quicksand
Anglo Irish Bank, Ireland’s most reckless commercial property lender, has at
last been committed to the safety of an institution: the Irish government.
Dublin procrastinated as Anglo Irish gasped its last, the chairman resigned
over governance lapses and risks grew of a dangerous run on the bank. Full
nationalisation fast became the only option to avert a collapse of the Irish
Ireland’s banks got carried away in the heady years of a property and consumer spending boom that is now a sickening memory. The economy could contract 4.5 per cent this year, unemployment is headed for 10 per cent and with the government deficit zooming towards 10 per cent of GDP, there is even talk of a rescue by the International Monetary Fund. The government has been flat-footed from the outset.
In September, it tried to steal a march on other countries, by guaranteeing
all bank deposits and funding, but did nothing to bolster its banks’ capital
position, leaving them looking light when,shortly afterwards, the UK government
sharply raised capital requirements for HBOS, Lloyds TSB and Royal Bank of
Dublin then fatefully procrastinated until December, when it launched a €5.5bn bank recapitalisation plan. Bank of Ireland and Allied Irish Banks were offered €2bn a piece, and told to raise €1bn each in rights issues. Anglo Irish was in line to receive €1.5bn, in exchange for 75 per cent voting control, but the run on deposits has now intervened.
Bank of Ireland and Allied Irish Banks may be marginally safer bets now that the
government has removed the sector’s main systemic risk. Time, then, for Ireland’s cosy coterie of bankers and politicians to resume discussion of their golf handicaps in the club bars. But not for too long: neither bank has a price/earnings ratio of more than one, which speaks volumes about investor confidence in the sector’s prospects.
Anglo Irish Bank says total level of loans to directors stands at €179m - Where were the auditors Ernst & Young?
Anglo Irish Bank to be nationalised; Europe's most successful bank during Irish property bubble becomes its biggest casualty
The New York Times Jan 04 2009: The Irish Economy’s Rise Was Steep, and the Fall Was Fast