Is David Drumm Innocent?

Anglo Irish Bank in New York
Anglo Irish Bank in New York (Photo credit: Wikipedia)

David Drumm, former Chief Executive of Anglo Irish Bank, still protests that there was no deliberate misleading of the government. In this interesting interview with Irish Central he claims the bank was not trying to hook the State into open-ended support, despite what the tapes may have suggested. And by suggested I mean “said aloud”. What’s surprising is that he actually does come across as innocent.

And by innocent I mean “having the intellectual capacities of a child”.

He claims that all Anglo ever wanted from the government during the market storm that followed the collapse of Lehman Brothers was a single little shot of €7 billion to keep it liquid – I quote – “assuming the financial markets crisis returned to normal at some point in the near future”.

We do all know of course that this storm was the financial markets returning to normal. The period before that, when banks like his made billions simply by driving up the price of houses and pouring massive piles of credit onto anyone who stood still long enough, that was the abnormality. The cash equivalent of a screaming drunken spree with an open bottle of whiskey in each hand is the normality he is referring to here.

Anglo, he’s saying, just needed a few billion to tide it over until things became unsustainable again. He cannot of course have been stupid enough to believe that was in any way realistic; it was just the line of bullshit that they had to take in a desperate bid to survive. What surprises me is that he’s stupid enough to think we’re stupid enough to think he really believed it.

 

Smoking Tape

AngloSo the “Anglo Tapes” – internal phone recordings made during the last days of Anglo Irish Bank. Do they constitute a smoking gun?

Hoo boy, you betcha. A smoking gun, covered with bloody fingerprints, with a note taped to the barrel saying “For doing the murder with”.

This is the stuff.

I have to admit I was a little dismissive when I first heard of this, much as I couldn’t quite believe all the fuss over the PRISM revelations. (“You mean you believed US intelligence forces didn’t spy on whoever the hell they liked?”) We all knew that Anglo had ripped off the nation. Had, as the Indo bluntly put it, “cost Ireland our sovereignty“. But we also knew it was done with nods and winks and complicity, screened off by tendrils of loyalty and friendship. These people don’t leave evidence.

But that really seems to be what we’ve got here. The tapes record senior – very senior – management explaining a strategy of lying about the severity of the bank’s situation. They knew that if they revealed the full picture, government would see little alternative except to let the bank fold. They cynically calculated that if the State was tricked into giving a few billion of support at first, it would be forced to follow up with more and more in a frantic effort to save its investment. Which is precisely what happened.

They cheated the State in order to try to save their wealth and positions, cheated it of billions and billions. And when I say the State of course, I mean you and I. People who pay tax, people who rely on the State to support and protect them. Everyone in the country, in other words. We were all robbed by this, quite deliberately.

We shouldn’t oversimplify. This doesn’t let the other lenders and speculators off the hook for stoking the property boom, exonerate the politicians in Fianna Fáil (and elements of the media) who were complicit in the bubble, or mean that the euro was not grossly mismanaged. Anglo’s rooking of the public was certainly not the only cause of Ireland’s economic demise. But these men tricked the country into taking on billions and billions in debt. Billions that could have gone to creating jobs or equipping hospitals.

And there are tape recordings of them saying how they did it.

One does not want to prejudice any possible legal proceedings, so to be circumspect… Wait, what was that? Sorry, I thought I heard something. Probably thunder. Though it sounded even more like a long corridor of cell doors clanging shut.

Whose Is The Moral Hazard?

If you’re wondering what the Irish debt crisis – and indeed the Euro crisis as a whole – is all about, you could do worse than read this opinion piece, a passionate but clear denunciation of how we are being exploited from independent TD Stephen Donnelly. I wouldn’t have put as much emphasis on the public pay deal, but that aside he puts it so well that it’s hardly worth my while writing about it.

I’ll quote him extensively instead… (Emphasis mine)

The bonds¹ were bought from Anglo and INBS in 2007, at the height of the property bubble. They offered higher profits than buying Government bonds, as they didn’t come with a Government guarantee. If the people buying these bonds did their homework, they would have noticed that Anglo and INBS were massively exposed to the Irish property market. They will have read the IMF‘s warning of the “possibility of an abrupt unwinding of the housing boom”. They would have known that the higher potential profits offered by Anglo and INBS came with the clear possibility of losses. Indeed, some of the bonds will have been sold on by the original purchasers at a loss. When this happened, the European financial system did not collapse, the ATMs did not stop working. This week their gamble pays off. Yet again the Ferrari showrooms in London, New York and Tokyo will toast the Irish.

A commemorative Ulster Bank note. The other si...
Looking back, perhaps there were signs

In a massive irony, the ATMs did stop working this week – though at Ulster Bank, the largest operator here the government didn’t have to buy. It turned out to be due to a software update cock-up and not a bank run, but you know what? People dealt with it. Screaming crowds didn’t surge down the streets, horses didn’t start eating each other. Yet that was the scenario the banks used to frighten ministers into nationalising the liabilities of their profit-drunk industry. They bluffed us.

Donnelly continues:

This comes at an enormous human cost. Recently, the HSE told the parents of disabled young adults in Wicklow that there was no longer any money to fund rehabilitative training for their children. […] But we’ll find the €1.1bn [to pay these investors], and we’ll pay the €40m every year in interest. As of last Monday, there were 19 young adults in this situation in the Dublin/Mid-Leinster region. The €40m would pay for their training for the next 150 years.

The Government has reduced welfare payments to single parents, cut support to the disabled, removed staff from Deis² schools and introduced regressive charges. At the same time it incurs enormous interest payments to cover the losses of private sector investors who knew they were betting on a risky venture.

And who knew, what is more, that their reckless lending was fuelling a destructive property bubble. In 2007, they were clearly out to grab a quick profit off a boom. To use a term from the housing market that you don’t hear so much anymore, they were out to “flip” our economy.

They flipped it all right. Those flippers flipped it good.

And this week we reward them for it, with a further €1.1 billion. Money that decent non-gambling taxpayers will work for years if not generations to repay, while the vulnerable in our country have their lives stolen. Whose exactly is the moral hazard here?

 

  1. Bonds which our government is paying this week, even though they were owed by private financial  institutions that went bankrupt.
  2. Equal-opportunity.

State Media Silent On Dana Allegations

Picture of RTÉ Studios in Donnybrook
Not Quite Perpendicular?

RTÉ, the Irish state broadcaster, seems to be refusing to report the substance of the allegations against Presidential candidate Dana Rosemary Scallon‘s brother.

This scared me half to death when I heard the news this morning. You see in Ireland we have some quite stunningly repressive libel legislation. How else could so many politicians have gotten away with so much? It did appear that this blog was the first here to relay what was being reported in the US, and when even the state-owned broadcaster didn’t dare repeat the answer to the question the whole country was asking, I had a horrible feeling that I must have overstepped the mark. Just how much would I be liable for? So it was with enormous relief that I saw the Irish Times today.

They at least followed suit after the IrishCentral scoop – so quickly and thoroughly in fact (Colm Keena’s background report is excellent) that I suspect they had the story prepared but didn’t want to be the ones to break it. The Irish Independent meanwhile, supposedly the leading quality broadsheet, coyly states only that there have been accusations of a sexual nature against a member of Dana’s family – nothing she hasn’t said herself. It all adds up to a picture of some pretty craven behaviour on the part of the Irish media.

RTÉ may at least have the excuse that as a national broadcaster they are bound by charter to be scrupulously fair to candidates. But when that reaches the point where they cannot report allegations which are now known publicly – as I write they are still saying only that she is upset by “media coverage about a family member” – it becomes pantomime. What’s more it now favours her unfairly, because their flagrant censorship lends weight to her apparent conviction that she is the victim of media persecution.

Which is ironic, to say the least.