Dail committee savages Financial Regulator

Duke of Marmalade said:
The Irish taxpayer will pay higher for its national debt but will be reimbursed by the banks.
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There is nothing on earth that will convince me this will happen. Remember AIB. No bank has been fined any significant sum for any of the other misdeeds and why should I believe this is any different.

They haven't even rapped the banks over the knuckles, nor have they reduced their grossly inflated bonus which are based on their 'performance' It's some performance to have allowed 100% mortgages to people who could clearly not afford to repay them and to accommodate people purchasing property at grosly overinflated prices. Isn't that the regulator's job to look after the ordinary people. To look after their interests. But then again I'm incorrect his job is to look after his banking buddies.
 
LDFerguson said:
If you own a site and you're borrowing €X million to build X houses / shops / offices / apartments on it, you won't have any income from the project until the build is complete and you start selling or renting the completed properties. So the lender may offer to defer any requirement for you to make repayments on the loan for a specified period, e.g. two years until you start selling or renting the finished properties. During this period, interest on money drawn down is rolling up onto your loan.

And yes the effect of compunding can be quite scary if you don't manage to shift units or find some other method of paying off some interest for a protracted period.
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So does the deferred interest get included in the 24 billion? Or is it 'called' something else so that the regulator/banks don't have to put it in the books as debt?

And what happens when you don't repay by x date, isn't there then interest on the interest? Or do the banks just keep changing the dates ad infinitum? I don't trust one word of what the regulator says. He's just a patsy.
 
I agree with the majority of you except never mind resignation - Why has'nt he been fired!!!!!!

He is not been made accountable for his mistakes. But sure why would he, he is a civil servant virtualy impossible to fire him.

I see our government has opted to put two people on the BOM's of the banks - more jobs for the boys. Will be interesting to see if they advertise these jobs, who gets them and how much they are paid!!!!!
 
corkfella said:
Sorry Mr.Neary I did not know you personally looked at this website. I cannot believe you are defending this guy, bottom line he did not do his job at all, you say that so far the irish taxpayer is not affected, not true.

we will have to borrow money internationally at a higher rate because the government has given the undertaking to back deposits. An awful lot of people(foolishly I know but nevertheless) took out huge 100% mortgages a product which should never have been allowed on the market by P.N.

The man is incompetent but is still in a job explain that?
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Against AAM guidelines to speculate on contributor's identities.;) I assume PN has better things to do than chat on AAM.

The government have said the banks will pay €1Bn to compensate for the higher cost of international borrowing. Or are you Brian Lenihan and know you are lying?:(

It is highly condescending to say that 100% mortgages are wicked. I was once penniless but in a good job, what I would have given for a 100% mortgage, instead I was at a big disadvantage to my peers with rich daddys. No evidence at all that these 100% mortgages are causing any more stress than traditional mortgages.

I see no resignations amongst US, UK, German or other financial regulators and so far our man is clearly outperforming his foreign counterparts.
 
It is very easy to pick on a scapegoat, call him incompetent and call on them to resign.

It is much harder to check out the facts. Look at what the Regulator actually did do and what they could have done.

Compare that to what all the regulators in other countries did.

And then make a neutral assessment.

I wouldn't go so far as the Duke in calling for Pat Neary to be knighted, but it's too simplistic calling for him to resign.

The Financial Regulator is in a very difficult position. It is not free to speak openly about the solvency of individual banks. This makes it appear that Pat Neary is hiding something or doesn't know what he is doing. This is just not correct.

Brendan
 
I agree that the problem with regulation is not just an Irish problem. The same accusations made here are being made worldwide. However, there is also no doubt that regulation in this country which is all we can worry about has been an utter complete failure. I find it interesting that the Financial Regulator are now advertising looking for bank supervisors to go into banks and look at credit, market and liquidity risks etc for the duration of the government guarantee scheme. Maybe I am missing something but is the Financial Regulator saying that they don't already have qualified staff in this area on their books and they haven't been looking at all these things in the past?
 
there is also no doubt that regulation in this country which is all we can worry about has been an utter complete failure.
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When I see an expression like "obviously" or "there is no doubt", it usually is not obviously and in this case there is plenty of doubt.

Did you read the Duke's post? He doubts it. I doubt it.

Regulation is not management. No one foresaw the extent of the international credit crisis. Early in 2007, the FR did introduce enhanced liquidity reporting ahead of anyone else. They did raise the capital required for high LTV mortgages and for lending to property developers. They did force the banks to stress test their lending and they did rein in the EBS when they ignored that stress testing.

They participated in the design of the bank guarantee scheme which was the first to be introduced and this has been copied by everyone else.

Taxpayers' money has been used to bail out banks in the UK and in America and in other countries. So far, the taxpayer has not had to put any money into Irish banks, although they may well have to in the future.

Sure, they could have done better. But to describe it as "utter complete failure" ignores the positives.

Brendan
 
Brendan said:
No one foresaw the extent of the international credit crisis.
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There's that Mr. noone again. Odysseus would be proud of you Polyphemus. Many people foresaw what was to come. Just none of them were politicians, senior civil servants or bankers in this country.

Early in 2007, the FR did introduce enhanced liquidity reporting ahead of anyone else. They did raise the capital required for high LTV mortgages and for lending to property developers. They did force the banks to stress test their lending and they did rein in the EBS when they ignored that stress testing.
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Um, ECB+1.75%, was it? At a time when ECB rates were at a historical low (even when looking back at Bundesbank rates). A stress test that was easier to pass then the test the banks were currently using - amounting as it did to a higher proportion of takehome pay. Thereby increasing 'affordability' and letting banks lend more? And you call this a good thing?

They participated in the design of the bank guarantee scheme which was the first to be introduced and this has been copied by everyone else.
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No it hasn't - no other country is guaranteeing long-term banking debt.

Sure, they could have done better. But to describe it as "utter complete failure" ignores the positives.
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This is like looking at a keeper who has let in two goals through glaring mistakes and saying that he throws the ball out well so he will have positives to take from the game despite the fact we are only ten minutes into the game...
 
Brendan said:
Sure, they could have done better. But to describe it as "utter complete failure" ignores the positives.

Brendan
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What are the positives? I suppose everyone knows what a tracker mortgage is now. Even ignoring the credit crisis, look at every scandal that has hit the Irish banks in the past few years and look at the reaction of the financial regulator. Can anyone really say it was adequate? When Prime Time had the programme on mis-selling of financial products, what did the financial regulator do? Oh yes, they ASKED the banks to promise in writing that it wasn't happening.

As for the credit crisis, I still want to know why they have to advertise to hire people to supervise banks risks during the period of the guarantee scheme. Is the regulator really saying that he doesn't have these people already?
 
corkfella said:
The man is incompetent but is still in a job explain that?
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If he was fired or allows resign, it would look as if he'd done something wrong. This would make a lie of the line that the government are currently peddling that we're not in a recession of our own making. They still want us to believe that there's no bubble, no problems with Irish developers or banks but that all our ills are caused by the 'credit crunch'.
 
Hi Sunny

look at every scandal that has hit the Irish banks in the past few years and look at the reaction of the financial regulator.
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The FR got refunds of €180m from Irish consumers very quickly.

After the tax issues relating to AIB(?) subsidiaries, the people who had been involved, stepped down immediately. This would not have happened in the Central Bank days.

they ASKED the banks to promise in writing that it wasn't happening.
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This response from the FR was completely unacceptable.

I still want to know why they have to advertise to hire people to supervise banks risks during the period of the guarantee scheme. Is the regulator really saying that he doesn't have these people already?
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Staffing has always been a serious problem for the FR. In fact, I can't see where they are going to get these 20 people from. They can't compete on salaries with what the banks are paying.

They have not done enough inspections of Irish financial institutions. This was a finding from the Comptroller and Auditor General. I think that the Consumer Panel commented on this as well.

The level of supervision required has increased dramatically, so more staff will be needed.

Brendan
 
I think we need to face up to a reality here. Our system of regulation relies on the FR setting the right standards, asking the right questions and crucially getting the right answers. In the Mary O'Dea/Primetime debacle the issue is not that she did wrong but, having got inadequate answers, what was she going to do about it?

In the present situation PN has stated a lot of facts. But let's make no mistake, he got these facts from the banks. The facts state that the regulation has not yet failed - in worst case scenario, they are solvent, but will need to raise more capital.

If the facts have been misrepresented then we have the death knell of the traditional system - banks maximising profit whilst keeping "the right side" of the FR. The new order will be a nationalised banking system run in the public interest. That would include being profitable but not as the overarching objective.
 
Duke of Marmalade said:
The government have said the banks will pay €1Bn to compensate for the higher cost of international borrowing.
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This is not true, the banks are going to get this not from their shareholders or profits but by increasing the cost of banking for all of us. So we pay on the double.
 
Brendan said:
The FR got refunds of €180m from Irish consumers very quickly.

I don't understand this?




Staffing has always been a serious problem for the FR. In fact, I can't see where they are going to get these 20 people from. They can't compete on salaries with what the banks are paying.
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Then maybe the banks should pay the regulator so that he in turn can afford the salaries needed to get the best people.
 
Duke of Marmalade said:
I see no resignations amongst US, UK, German or other financial regulators and so far our man is clearly outperforming his foreign counterparts.
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This is also not true........ from RTE, I can't do links......
The chairman and director general of the French bank Caisse d'Epargne quit yesterday over a €600m derivative trading loss at the height of the global finance crisis.
Chairman Charles Milhaud said in a statement after an emergency supervisory board meeting that he was taking full responsibility for the loss and would not seek leaving payment.
The director general of the mutual bank also resigned and a bank source said its chief financial officer had tendered his resignation.
 
Hi Bronte

Then maybe the banks should pay the regulator so that he in turn can afford the salaries needed to get the best people.
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The financial services industry pays 50% of the FR's budget. We, the taxapers, pay the other 50%.

This is also not true........ from RTE, I can't do links......
The chairman and director general of the French bank Caisse d'Epargne quit yesterday
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The Duke said that no regulators had resigned. There have been resignations and probably dismissals from banks. Caisse d'Epargne is a bank, not a regulator.

This thread is about the performance of the Financial Regulator

Brendan
 
Here are two errors. I will reserve any comment on interpretation and opinion expressed throughout the article:

the regulator and the Department of Finance devised the scheme that resulted in the Irish government being the first to guarantee the liabilities of all banks
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.

It guaranteed the liabilities of three banks and two building societies. Subsequently (in fact very recently) it acceded to demands from the EU competiton commission to allow applications from other banks.

This bold measure has since been followed by most other governments. So the Financial Regulator has not been slow to respond
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I would be happy to concede this is true if somone can cite even one country that also guaranteed "all bank liabilities".
 
Hi Camry

There are some significant factual errors in that article.
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Can you please point out the significance of these errors in the context of the article's main point which is that the FR has been unfairly singled out for blame?

My point is that the Regulator responded promptly. You may have some inside information. For example, the Regulator may well have told the Minister that it would take them three months to produce proposals.

The scheme has not been copied exactly by other regulators, but in practical terms, they followed the lead set by Ireland, but adapting it to their own circumstances.

Neither error is significant in the context of the point of the article.

Brendan
 
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