I've listened to radio commentary on the proposed Irish Government 400 billion banking guarantee but there’s not much mention of possible downsides.
I have to admit I'm puzzled?
Q1. As it is tantamount to subsidized insurance for Irish banks only doesn’t that amount to an illegal subsidy. Wont the EU rule accordingly. - What will be the consequence of this?
Q2. How can overseas owned banks now compete? Surely there will be a transfer of business to the Irish banks from the non Irish owned banks?
Q3 As some of the banks sell insurance wont this give them an unfair competitive edge over ordinary insurance companies. Eg – whats to stop banks transferring bad debts or even costs to those categories guaranteed by the Government. What’s to stop it?
Q4. Will the banks now write down their builders loans (25 billion). Will the government compensate for any losses incurred?. Will these losses include all the extravagant charges they would have enjoyed before hand. Will they start reprocessing housing estates and selling on non secure in the knowledge that any price – no matter how low – will be topped up by the government. How does the government decide the true cost of these assets.
Q5. Cant the banks go back to relaxed lending again since the risk is now removed and the only barrier is an ineffective banking watchdog. Wont that stop the house price drop from now on.
Q6. The government is hoping they will not have to payout but surely the losses are already there. The instant bill could be 12.5 billion if the unsold houses realise half of their original inflated value. How much of a hit can the government take on this?
Q7. Isnt it glib to offer this insurance in the vain hope that they will not have to pay out. Isnt that what AIG were doing?
Q8. Is the Irish banking system now effectively part nationalised.?
Q9. If it was so easy then why didn't other countries do it?
Q10. Isn't any hit by the government mena the economy will incur more taxes to pay the bill thus prolonging any economic recovery. How is this going to save us?
I have to admit I'm puzzled?
Q1. As it is tantamount to subsidized insurance for Irish banks only doesn’t that amount to an illegal subsidy. Wont the EU rule accordingly. - What will be the consequence of this?
Q2. How can overseas owned banks now compete? Surely there will be a transfer of business to the Irish banks from the non Irish owned banks?
Q3 As some of the banks sell insurance wont this give them an unfair competitive edge over ordinary insurance companies. Eg – whats to stop banks transferring bad debts or even costs to those categories guaranteed by the Government. What’s to stop it?
Q4. Will the banks now write down their builders loans (25 billion). Will the government compensate for any losses incurred?. Will these losses include all the extravagant charges they would have enjoyed before hand. Will they start reprocessing housing estates and selling on non secure in the knowledge that any price – no matter how low – will be topped up by the government. How does the government decide the true cost of these assets.
Q5. Cant the banks go back to relaxed lending again since the risk is now removed and the only barrier is an ineffective banking watchdog. Wont that stop the house price drop from now on.
Q6. The government is hoping they will not have to payout but surely the losses are already there. The instant bill could be 12.5 billion if the unsold houses realise half of their original inflated value. How much of a hit can the government take on this?
Q7. Isnt it glib to offer this insurance in the vain hope that they will not have to pay out. Isnt that what AIG were doing?
Q8. Is the Irish banking system now effectively part nationalised.?
Q9. If it was so easy then why didn't other countries do it?
Q10. Isn't any hit by the government mena the economy will incur more taxes to pay the bill thus prolonging any economic recovery. How is this going to save us?