Irish Times - "Is it time to increase protection on savings?"

skrooge said:
They weren't great options and avoiding the mess in the first place with better regulation would have been the better path not taken. But looking back and burning the bond holders feels a little bit like a Brexit moment i.e., short term gain (or rather respite) but at a cost of long term pain.
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Sure. I don't actually have a strong view on whether bailing out the banks was the better call. My point is just that these are two very different calls.
 
Dr Strangelove said:
IIRC some >€100k Anglo depositors in the IBRC liquidation in 2013.
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Yeah. There were 394 depositors in Anglo/IBRC whose deposits did not transfer to AIB. AIB did not take Anglo/IBRC deposits in long-dated term deposits - god knows why - maybe AIB systems could not support. Worse AIB told these depositors that the money would move and then changed their mind and said it would not move. Anyway, of the 394 depositors left, a small number had deposits in excess of 100k - they were told to put in a claim with the NTMA as an unsecured creditor for the amount above 100k - I wonder if they ever got any money back.
 
Lightning said:
maybe AIB systems could not support.
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I had some old Irish Nationwide deposits with IBRC which were taken by one of the retail banks (I can’t remember which) in 2013.

I needed them for a house purchase later in 2013. The process for withdrawing them was very slow and they more or less admitted to me over the phone that the systems had been a problem.

As I said before, the whole EU framework for bank resolution has changed completely since and all deposit taking institutions have to have systems in place to allow for smooth transfer of deposits at resolution.
 
charlie007 said:
So the state gave the money to the banks, who in turn gave it to the depositors.

So who was bailed out again?:D
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I have been banging on about this for year. The banks were not bailed out. The bondholders and depositors were bailed out.

So it's much more correct to say that the Credit Unions were bailed out, not the banks.

Shareholders in the banks lost everything.
 
Sarenco said:
AIB and BOI were both toast in 2008.

And the State effectively went bust trying to save them.
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Is this correct?

The state made a profit on BoI as far as I can recall.

They may have lost a bit on AIB. Actually this would be a good time to do a final account as the state has now more or less disposed of its shares.

The huge loss was Anglo followed by Irish Nationwide. These banks paid higher interest rates to depositors for the higher risk involved and these depositors should not have been bailed out.
 
Option A may not have to require the bank physically closing. The government could nationalise the buildings, employees and systems of the bank. Keeping the bank going under a different name, so effectively business as (near) normal for most customers.

My Father-in-law lost almost all his money when banks in his country went bust. I worked it out as about 150k USD in 1980's money. He would tell me stories about it. He wrote a letter of complaint to the president. Only later to discover people could be disappeared for same. Letting the banks go bust still has a knock on effect. One effect was lots of small banks were formed. People spread their money across all banks, to make best use of the government guarantee limit.
 
Dr Strangelove said:
Now factor in the near-decade of increased cost of state borrowing that resulted.
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lot more to factor Than the high interest rates the state paid to service the money borrowed
You also have to factor in the states policy of setting up Nama
If you go back and look at old post you will see the state went out of its way to increase house prices to help stop defaults on bank loans,
 
Brendan Burgess said:
The huge loss was Anglo followed by Irish Nationwide. These banks paid higher interest rates to depositors for the higher risk involved
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That point was of course not really appreciated back then.
And we all assumed that 'Bank shares were as safe as houses!'

www.independent.ie

Middle-class fuming as life savings vanish

Things are bad, we all know that. Share prices crashing, pension values have been obliterated and many people's savings have either been wiped away or severely damaged by the recent international financial crisis.
www.independent.ie www.independent.ie

Love this bit from the above article.....

In short, property has still been the best place to put your money. Although prices have fallen by between 10-15 per cent on average, and may still fall more, they have not been decimated like stock prices or pension values and are likely to increase again substantially within 12 months.

And I just read this bit....

While every sector is hurting right now, those who bought property must take some consolation that their losses are not as bad as people who put their money into other things, and that the value of their investment is likely to rise substantially in the coming months. Yes, there may be short-term pain, but if you invested in property you will be all right in the end.
 
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The bank deposit protection limit was €15,000 prior to the financial crisis. The government upped to €100,000 as the crisis began to take hold.
Depositors were not 'bailed out', banking institutions were.

If depositors were bailed out by the State they would have received a cheque direct from the government. They didnt get one, instead, the government wrote the cheque to the failing banking institutions, to save those institutions.

But where does the The State get its money? From taxpayers for one, many of whom are depositors. So depositors who are taxpayers provided funds to the State, who provided funds to banks, who provided cover for depositors.

Don't get me started on international money markets and how they get their money to lend to States and banks! :)

In the end, its a circular argument. Had deposits been lost then the very existence of the State may have been at risk. So the State bailed out banks, to bail out depositors, to bail itself out of the prospect of becoming under mob-rule.

We are all in this together.
 
Brendan Burgess said:
The huge loss was Anglo followed by Irish Nationwide. These banks paid higher interest rates to depositors for the higher risk involved and these depositors should not have been bailed out.
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Anglo and Irish Nationwide did pay some of the highest deposit rates. But deposits that were protected under the various schemes, should, and were, reimbursed. I don't think there should be any question that deposit insurance should pay out in these circumstances.
 
charlie007 said:
And we all assumed that 'Bank shares were as safe as houses!'
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I remember back a little more than 20 years ago being sent by work to an introductory course on the principles of investment. The lecturer at one point told us he didn't have a pension but instead invested himself. He brought in an AIB share cert and and BoI share cert. Even as a youngster with no investinf knowledge at all, I knew that was a terrible idea on at least two fronts.
 
Lightning said:
But deposits that were protected under the various schemes, should, and were, reimbursed. I don't think there should be any question that deposit insurance should pay out in these circumstances.
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There was a €20k guarantee and that should have been honoured.

It was raised to €100k which was not right.

Then they made it a blanket guarantee which was completely wrong.
 
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