Irish Bank reconstruction with Peter Mathews

Many thanks to @bankermathews and all that attended today.

Audio only:

Irish Banks: A hollistic reconstruction mp3.

The Chat:

deeter >> (All): is anybody else finding the volume low? have headset/sound up to max
DreadedEstate >> (All): no it is ok for me
David Cochrane >> (All): fine for me too (hey folks)
Ken Curtin >> (All): i agree peter’s volume is very low
online >> (All): ok here.. turn up your headsets
Tim Nelligan >> (All): Volume a little low here, too, folks.
deeter >> (All): have it up max,
online >> (All): try your sound card karl
deeter >> (All): have sound, just not much, was in system settings, nothing left to increase vol w/
Miriam Cotton >> (All): Strange repetetive message/noise irritating
dlong >> (All): To turn off the chat sound untick the chat sound tick box.
LorcanRK >> (All): Afternoon all..
DreadedEstate >> (All): Afternoon
Daniel Sullivan >> (All): How do.
stephenkinsella >> (All): Peter, at some point could you comment on the consequences for the macroeconomy of the breakup of Anglo as simply a ‘very slow wind down’?
Miriam Cotton >> (All): Isnt ‘very slow wind down just a euphemism for doing what it was planned to do all along.  NAMA Mór and NAMA Beag as DMCW has called it…?
DreadedEstate >> (All): They key point in all this is how much bondholders of whatever hue get back
Ken Curtin >> (All): leaving the aib sale in poland makes sense in a utopian world, but we are far from a utopian world at the moment
deeter >> (All): stephen kinsella: i feel emasculated in the presence of your bookcase compared to mine.
LorcanRK >> (All): @Karl, that’s just fancy wallpaper..
DreadedEstate >> (All): lol
Miriam Cotton >> (All): :-O
Daniel Sullivan >> (All): It is remarkable that we (the state) can be expected to find money from the bond market for the state to ‘invest’ in the banks but we can’t ask the existing bond holders to put in more money themselves.
online >> (All): you should be ok Stephen
Ken Curtin >> (All): that sounds lovely peter, but if it were that easy should we not have done that already, does it not make more sense that those options were examined with access to data you don’t have access to and ruled out on that basis
DreadedEstate >> (All): Like what Ken?
Daniel Sullivan >> (All): Or perhaps those providing advice to the state had conflicts of interest? Or those taking the decisions hadn’t the background to understand the raw data itself?
Ken Curtin >> (All): only NTMA and dept of finance have seen the full picture of what really is going on in the banks the rest of us are only working on the basis of has been published in the public domain
Miriam Cotton >> (All): That’s bullshit Ken. Sorry.  You can’t cite preventin of access to data as any sort of excuse.  Rather the governments actions are made more questionable/suspect BECAUSE of refusal to give access to the data.  Anyway.  ICELAND.  Shown us all how it should be done.
Ken Curtin >> (All): Miriam ICELAND has gone to hell in a handbasket because of the way they handled their situation, there’s was an example in how not to do it
DreadedEstate >> (All): Well wouldn’t it be illegal not to release such information to the market
DreadedEstate >> (All): @Ken. Iceland’s borrowing costs are lower than ours and considered less likely to default
Miriam Cotton >> (All): What’s the form here – is Peter speaking for a specified length of time? Would like to hear from the others too.  Apols if the question is previous.
Ken Curtin >> (All): Miriam it appears today’s format is a monologue last time i was on with dan boyle it was interactive with dan  responding to other participants
DreadedEstate >> (All): Sound gone?
online >> (All): sound is fine
DreadedEstate >> (All): yeah
Ken Curtin >> (All): are there elements to anglo, which combined with some of the other bits and pieces out there that could form a real 3rd banking force, that we often hear about ?
Miriam Cotton >> (All): Brilliant: ’20-year torpor of soggy mess’ is Lenihan’s plan for Anglo – unknowable cost
LorcanRK >> (All): Peter, you’ve been in front of the madrins a few times. What is your feeling on the attitude among government to this problem? The policy seems to be what the american’s call ‘Extend and pretend’
deeter >> (All): delay and pray… apparently the same policy works well for gangrene… or do I have my wires crossed?
LorcanRK >> (All): we’re certainly mixing metaphors anyway Karl.
deeter >> (All): to be fair, I think postwar is different than post economic crisis
online >> (All): karl lock your audio
Miriam Cotton >> (All): Well said Stephen – Peter – what do you think the next budget should do?
DreadedEstate >> (All): Sounds like PWC checked that the IFRS provisions were sufficient not what the likely losses would be
Cathal Furey >> (All): Critical thinking!!
Eoin OConnor >> (All): How much would an Irish re-capitalisation cost us long term? Would it lead to a reinflated bubble…..?
Daniel Sullivan >> (All): That’s supposdely the theory behind permanancy in the civil service but we don’t get that quality of advice.
Michael Walsh >> (All): Who’s making the decisions though? The Banks? The Government? The ECB?
Michael Walsh >> (All): How do we avoid going Japanese?
DreadedEstate >> (All): @Karl, Couldn’t it be done on just the non-guaranteed debt
stephenkinsella >> (All): Michael, you mean a persistent deflation for a decade?
liam >> (All): I don’t see the link between Bank bondholders and Soverign debt: surely these are different products?
Del >> (All): The fact is that it should never have been up to the State to wind down Anglo, they should have been left to look after the wind-down themselves. The initial problem was nationalising the debt of these toxic institutions, the problem now is this illogical infatuation with keeping bad banks capitalised! It is a waste of capital. We should be encouraging new banking enterprises in the country to be created, and letting the ones who ran themselves into the ground (and those who invested in them) go bang!Question for the panel – what is the benefit – to the taxpayer – of ensuring that these banks are kept capitalised ?
Michael Walsh >> (All): Zombie banks, supported through institutional corruption.
deeter >> (All): liam: they are linked when the sovereign guarantees them
stephenkinsella >> (All): ah yes. Japan still haven’t solved that one, to be fair.
Daniel Sullivan >> (All): My macro question is where did the money lent out go to? It was paid out to someone to buy assets but we’ve no idea who has it.
stephenkinsella >> (All): @del, that’s the 64bn question.
DreadedEstate >> (All): Isn’t the guarantee gone for a chunk of bonds in 12 days Karl
LorcanRK >> (All): I have to hit the road, thanks a million Peter, always great to hear from you – even if you never seem to have much good news.. 🙂
online >> (All): michael lock your audio
deeter >> (All): @daniel it is the difference between the past valuations and current valutaions, it exists as a debt for the consumer and an asset for the lender, but the various lenders have taken huge writedowns/losses etc.
stephenkinsella >> (All): Sorry folks, have to go and teach. Thanks very much for your time Peter, hope we can do this again soon.
Owen >> (All): Peter, how do you view Wilbur Ross’ public flirtation with EBS? I personally can’t get my head around his comments on debt writedown. Surely his only intention is to turn a profit on the deal in a relatively short timeframe…so how would debt writedown work towards this goal?
online >> (All): thanks Stephen
deeter >> (All): @Dreaded yes, but there is a heirarchy, equity, pref shares, mezzanine, sub ord 1, sub ord2, lower tier 1, lt2, then senior, normally you hit them all, nobody gets special treatment
deeter >> (All): @dreaded hit them in that order I should have said
Daniel Sullivan >> (All): I see that but the problem is that perhaps some of those individuals who were paid for the assets also borrowed for other assets via other corporate vehciles. so that they have ended up with cash held by company A while Company B has the loan and the bank (ultimately the staste) takes the losses
Eoin OConnor >> (All): I’ve tried to draw comparisons between NAMA and the Encumbered Estates Acts 1849. Both I presume and assume to be total failures.
DreadedEstate >> (All): @Karl, I think the guarantee creates a new order
deeter >> (All): @daniel so, if Co. A is paid for assets, then they leverage up via Co. B but Co. A is saved? not sure I follow what you mean.
DreadedEstate >> (All): Practically all bondholders would get the same but the government making good on the guaranteed debts
deeter >> (All): @dreaded  I thought it kept senior and LT 1&2 safe but mezz and subord are now vulnerable?
liam >> (All): So whre are the shareholders in all of this? DO they have no right to prosecute for wanto destruction of shareholder value?
DreadedEstate >> (All): Only guaranteed senior and deposits would be safe IMO
deeter >> (All): @Liam technically the shareholders should no longer exist (in standard capitalism), but the state took shares so writedowns now would write that investment off
liam >> (All): thx deeter, sorry of questions are a bit simple…
liam >> (All): *if
Eoin OConnor >> (All): @Liam. Yes possibly under Section 6 of the Criminal Justice (Theft and Fraud Offences) Act, 2001.
Miriam Cotton >> (All): Agree with Michael Walsh – bankermathews has a lot of public support and interest in what he is saying
deeter >> (All): @Daniel if they have cross secured assets then they can be taken as security for the loan. But unless negligence is proved you generally can’t go after the assets of other companies unconnected to the deal.
deeter >> (All): @liam the only stupid ones are the ones ya don’t ask!
liam >> (All): 🙂
deeter >> (All): @dreaded the point is that there are still g’teed bond holders, when in fact only depositors should ever be g’teed
rosaleen fitzgerald >> (All): Peter, missed start. Are you confident Alan Dukes can do the business? Has he now got a personal stake in seeing it succeed and so his objectivity is compromised?
deeter >> (All): @daniel: I have seen these deals done, you normally had a few backers and then a pumped valuation making the loan (bank asset) look like it stacked up as being much lower than the value (land/site/developer liability), so it was basically making an unsecure deal look very secure from a lending perspective
deeter >> (All): brilliant chat peter! Thanks a million!
online >> (All): cathal lock down your audio
DreadedEstate >> (All): As I said previously the key understatment of the losses is the IFRS provisions against reality
liam >> (All): thanks guys, i missed most of it but interesting.  Kepp at it
Eoin OConnor >> (All): Mr. Matthews,thanks for that only caught half of it though(boo)
deeter >> (All): sorry peter, that was me texting, thought you’d have it off!
Miriam Cotton >> (All): Great question Cathal
Owen >> (All): Thanks Peter. Keep up the good work.
Del >> (All): Where should the €10bn come from! That’s the fundamental question. Nobody would invest 10bn in these toxic banks bar the Irish state at the taxpayers expense!
liam >> (All): I disagree, there is no debate, only fatalism.. 😦
deeter >> (All): in short, we really got f”!£k3d
Del >> (All): Why would we the taxpayers want equity in any of them !?! Haha
online >> (All): well folks thats the reason your all here – *debate* 🙂
online >> (All): you’re
DreadedEstate >> (All): thanks all
liam >> (All): good job peter
Miriam Cotton >> (All): You’ve given a fantastic account of things Peter.
Daniel Sullivan >> (All): Thanks
Ken Curtin >> (All): thanks
Del >> (All): Thanks Peter, thanks guys
Tim Nelligan >> (All): Not boring al all… far from.
Sean >> (All): Great stuff, thanks Peter.
Michael Walsh >> (All): Cheers! Thanks all!
Paul MacDonnell >> (All): Thanks….good stuff.
rosaleen fitzgerald >> (All): Thanks Peter, do it again.
Eoin OConnor >> (All): Thanks to Peter and Irish Debates this is a good platform…..
Miriam Cotton >> (All): Gurdgieve Lucey Mathews – will look forward to it
Tim Nelligan >> (All): Bye all. thanks.
David Cochrane >> (All): good show Joe

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