Make the depositors who were bailed out contribute to the retrospective guarantee?

Brendan Burgess

Founder
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45,232
The people who benefited most from the extension of the deposit guarantee were the depositors in the guaranteed banks.

So charge all those depositors on the night of the guarantee 10% of their deposit in excess of €20,000.

Charge those in Anglo and Irish Nationwide an additional 40% as they would have lost everything.

It wouldn't apply to deposits in Credit Unions, although Credit Union deposits in Irish banks would be subject to the same deduction.
 

Firefly

Registered User
Messages
3,298
I think that would work in the first instance...the following day though I know I'd be at my bank making a withdrawal.
 

canicemcavoy

Registered User
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601
Best idea to create a run on banks I've ever heard. Rabobank couldn't come up with a better advert.
 

Square Mile

Registered User
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92
Morning

Small point. A week before the general bank guarantee, the limit for the ordinary deposit guarantee was raised from 20k to 100k per depositor. This was applied to 100% of each individual deposit in the banks covered by the scheme.

SM
 

Howitzer

Registered User
Messages
1,459
The people who benefited most from the extension of the deposit guarantee were the depositors in the guaranteed banks.

So charge all those depositors on the night of the guarantee 10% of their deposit in excess of €20,000.

Charge those in Anglo and Irish Nationwide an additional 40% as they would have lost everything.

It wouldn't apply to deposits in Credit Unions, although Credit Union deposits in Irish banks would be subject to the same deduction.
Err, shouldn't you apply these haircuts to the bondholders of these institutes first before you apply them to the depositors? That's what would have happened if those banks had failed.

And, just for accuracy, at the time of the bank guarantee deposits were already guaranteed up to 100K per account per institute.
 

jpd

Registered User
Messages
2,593
This sounds like confiscation or to put it bluntly, stealing by the state.

And retrospectively, to boot!

Nowhere in the contract (ie terms & conditions) did it mention any of the above, so does this mean you are suggesting that these contracts should be deemed null and void - if so, why not mortgage contracts?
 

Chris

Registered User
Messages
1,323
Yup, guaranteed bank run for all amounts over the €20k. This is certainly what I would do if I had any money left in the country.

But how about actually charging a rate for the deposit guarantee to banks, based on actuarial calculations. Get several insurance companies to make calculations what they would have to charge for such an insurance policy, then charge it to the banks. My prediction would be that the charge would be so high that banks would not be able to feasibly pay it and/or charge their customers for it, thereby exposing more of the need to let bankrupt organisations to be liquidated.
 

Odea

Registered User
Messages
467
At first I thought that this was an April 1st joke but on second thoughts if the government were to deduct 1% as a charge from my deposit interest toward an insurance policy that would guarantee all of my savings then it might not be a bad idea. Having said that, the next time I go abroad I am definitely making enquiries as to how I open a bank account.
 

Chris

Registered User
Messages
1,323
At first I thought that this was an April 1st joke but on second thoughts if the government were to deduct 1% as a charge from my deposit interest toward an insurance policy that would guarantee all of my savings then it might not be a bad idea. Having said that, the next time I go abroad I am definitely making enquiries as to how I open a bank account.

I don't think the suggestion was to take a percentage of your interest, but a percentage of your capital. As already stated this would be legalised theft, but, in my opinion, nothing is beyond the realms of desparate politicians.
 

noel_c

Registered User
Messages
83
What would this do to loan-to-deposit ratios in Irish banks?

Wonder how all those pensioners would feel about paying for a guarantee that is basically meangingless and that the government can never deliver on. Would you choose to go with a health or car insurer if you knew that they could never pay out?

With speculation like this it's no wonder so many people are posting about moving their money anywhere but Ireland. Ironically this makes it more likely the guarantee will get invoked.
 

fender

Registered User
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135
Brendan, I always thoughts your posts had credibility - until now. You sound like Michael O'Leary trying to stir things up.

How did the depositors gain anything? The banks gained as the money remained in Ireland instead of moving abroad. Are you seriously trying to suggest if somebody had 50k in a bank that the Government can just take 3k? These are the people who did NOT borrow during the so called Celtic Tiger. Not everybody who have deposits gained through property price increases - some people were simply careful.

Am I missing something here? Please explain.
 

Gulliver

Registered User
Messages
479
The people who benefited most from the extension of the deposit guarantee were the depositors in the guaranteed banks.

Brendan
In fact, so far, the people who benefitted most were the government, who charged the banks a levy for the guarantee. I, as a depositor on a guaranteed bank have not benefitted in any way - except that without some guarantee, I might have required high doses of Vallium to get to sleep.
 

canicemcavoy

Registered User
Messages
601
Yes, it's weird to be told by Brendan that I somehow "benefited" by, well, putting my money in a bank and expecting them to look after it. By the way, Brendan, you are the one who claimed in 2008 that banks were "well regulated and sound", and now 2 years later are suggesting that people pay up for this privilege. How about first of all taxing those who _did_ profit from the bubble and made fortune on property, before you start demanding that the ordinary saver is punished?
 

pascal12

Registered User
Messages
33
[FONT=&quot]Already moving monies abroad, stupid ideas like that can only hasten the exit of badly needed capital for the banks that will then have to buy the money at higher interest rates from investors outside the state passing it to borrowers of course.[/FONT]
 

mmclo

Registered User
Messages
271
But the bank gauruntee is pure fiction, where will the state get 10 or 20 bn in cash for depositors in a collapsed bank?
 

aristotle

Registered User
Messages
835
No banks will collapse, thanks to EU\ECB. Without them the banks would have collapsed 2 years ago.
 

Chris

Registered User
Messages
1,323
Wonder how all those pensioners would feel about paying for a guarantee that is basically meangingless and that the government can never deliver on. Would you choose to go with a health or car insurer if you knew that they could never pay out?
More importantly, an insurance company would not be allowed to operate if its actuarial calculations were off and reserves were too low. I fully agree with you, the guarantee could never actually be made, not even for some of the smaller banks.

Brendan
In fact, so far, the people who benefitted most were the government, who charged the banks a levy for the guarantee. I, as a depositor on a guaranteed bank have not benefitted in any way - except that without some guarantee, I might have required high doses of Vallium to get to sleep.
You did benefit, as you would have had great difficulty getting your money. Saying that, I do not agree with the guarantee due to the moral hazard and the total and utter impossibility of it ever working. There is a reason why banks cannot borrow money on the open market despite the guarantee, nobody believes that it is worth the paper it is written on.
 
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