The Independent reports today that the Regulator will be asked to resign in January.

eoinmn wrote:

The Independent reports today that the Regulator will be asked to resign in January.

He's going to be investigated as hopefully will the books of Anglo. Maybe we won't like what we see in there. What if it's such a black hole into which we'll need to be pouring IMF money in 6 or 12 months time ? The real recap estimate is thought to be at around 12-15 billion not 7 as has been donated to this point. We definitely can't afford another Tribunal unfortunately.

The regulator office is tendering for new staff according to the Tribune yesterday.

Quote :

The Financial Regulator plans to hire IT forensic investigators to help it probe possible contraventions of the Market Abuse Directive by banks, including the possible large-scale deletion of emails and documents. The data may be used in court following the investigations.

"Expressions of interest are particularly sought from parties who have expertise in the search and retrieval and technical analysis of large volumes of documents held electronically, deleted documents, emails and deleted emails," a tender circulated by the authority last Thursday stated.

"Expertise in internet forensics is also relevant. There should be prior experience in handling such data so that it may be used as evidence in court or administrative sanctions procedures. There should be an evident capacity to deal with a variety of operating systems without causing undue disturbance to commercial activities of the firms being inspected..."

http://www.tribune.ie/article/2008/dec/21/regulator-to-probe-deleted-bank-emails/

i.e. they're finally looking for the staff to do the job which they should have been doing for the past ten years. I don't normally like or use this smiley face but ...

The ISEQ is making a rolley-eyes face too.

http://www.ise.ie/app/popup_graph.asp?INDEX_TYPE=

Why three weeks? These people are moving in slow motion.

Slim Buddha wrote:

This whole episode illustrates why the bank gaurantee is not just nonsense but in my view criminal megligence on the part of the government. This is now a zombie bank and needs to go to the wall with some form of minimum protection for depositors. The board should be investigated and charges, if necessary, should be brought. The bank itself must be culled.

I think most of us here agree that the Bank Guarantee was plain stupid. It was meant as a scam, a means to instil confidence without commitment. Great until called, and I wonder if they realised just what the scale of that obligation could be? All that needed to be guaranteed was depositors savings and trading overdrafts agreements for business customers, but even that should have had conditions about preferential rights to assets.

There are issues here for professional bodies. All professional bodies have disciplinary proceedings. I have always thought that some were exceedingly lax. I hope that these bodies use this opportunity to show some teeth and tighten up on what their members can and cannot do.

To give an example, not related to banking, but finance on buildings. It relates to Architects working for developers certifying on behalf of the developer. OK if there is fault then the Architect's insurance suffers loss but somehow I don't think that this sort of behaviour should be allowed at all. It could cause an Architect to be placed in a very difficult positions by a developer who may rely on the certificate to release money to pay the Architect. It also allows abuse by the unscrupulous. In a similar vane I do think the behaviour of Bankers and Accountants may need tightening up in the interest of the professions, which generally are full of good professional people.

would i be correct in saying that while the hiding of loans by seanie may not have been "illegal" for statutory accounts purposes, the directors interests section of the bank's CT1 (corp tax return) perhaps may not have been filled in correctly?

zakalwe wrote:

would i be correct in saying that while the hiding of loans by seanie may not have been "illegal" for statutory accounts purposes, the directors interests section of the bank's CT1 (corp tax return) perhaps may not have been filled in correctly?

Is there an investigation going on into this? Auditor #9 said something today about a job advert for forensic financial investigators ....

cactus flower wrote:

zakalwe wrote:

would i be correct in saying that while the hiding of loans by seanie may not have been "illegal" for statutory accounts purposes, the directors interests section of the bank's CT1 (corp tax return) perhaps may not have been filled in correctly?

Is there an investigation going on into this? Auditor #9 said something today about a job advert for forensic financial investigators ....

It was in either the Tribune or Sindo yesterday. They are looking for forensic IT investigators, to snoop into email systems etc. and find out who knew what when etc.

Slightly off-topic, but related, does anyone know the answer and/or relevant legislation?

Is it legal or illegal, conflict of interest aside, for a bank to lend money to customers to buy shares in the same bank? Are there guidelines laid down?

toxic avenger wrote:

Slightly off-topic, but related, does anyone know the answer and/or relevant legislation?

Is it legal or illegal, conflict of interest aside, for a bank to lend money to customers to buy shares in the same bank? Are there guidelines laid down?

I don't think it's illegal at all, although I don't know of any rules on it. It would be insane though ..

toxic avenger wrote:

Slightly off-topic, but related, does anyone know the answer and/or relevant legislation?

Is it legal or illegal, conflict of interest aside, for a bank to lend money to customers to buy shares in the same bank? Are there guidelines laid down?

There is a general prohibition in Section 60 of the Companies Act 1963 for a company to directly or indirectly provide assistance for the purchase of its own shares. There are both civil and criminal consequences for a breach of this section. However, there are so many exceptions to Section 60 that it is virtually redundant provided people follow the rules. First, any private company can basically disregard the rule provided the company is solvent and it is approved at a meeting of shareholders. Obviously this does not apply to a commercial bank which is publicly listed, but it is important to note as most Irish companies are private companies. The exceptions which apply in respect of all companies (incl public) are contrained in Section 60 (13) of the Act and they include situations where i) the lending of money is in the ordinary course of the company's business ii) where the provision of money by the company is to the benefit of its employees, eg where a company might lend employees money to purchase shares in that company through an employee share option scheme iii) where the provision of money is to a non director in the employment of the company to aide them in purchasing shares (no benefit required).

You will see that what I outline as i) is the core point here. It is not illegal for a bank to lend money for the purchase of its own shares as pursuant to S. 60 (13) Companies Act 1963 a company may lend money for the purchase of its own shares where the lending of money constitutes part of the ordinary course of its business, ie a bank.

Two observations though:
1) There are many other duties which a director owes which have nothing to do with the purchase of shares in the company. For example, they must at all times work in the best interests of the company, they must not make a secret profit by virtue of their position etc etc. It is far more likely that a breach of directors duties will be the issue on which some people will caught out. I say that as a general point, not specific to any particular circumstance.
2) In relation to the precise circumstance, we have no idea, insofar as I am aware, as to what the money loaned to Mr Fitzpatrick was being used for. It would be unfair to speculate unless there is firm evidence forthcoming.

johnfás wrote:

There is a general prohibition in Section 60 of the Companies Act 1963 for a company to directly or indirectly provide assistance for the purchase of its own shares. There are both civil and criminal consequences for a breach of this section. However, there are so many exceptions to Section 60 that it is virtually redundant provided people follow the rules. First, any private company can basically disregard the rule provided the company is solvent and it is approved at a meeting of shareholders. Obviously this does not apply to a commercial bank which is publicly listed, but it is important to note as most Irish companies are private companies. The exceptions which apply in respect of all companies (incl public) are contrained in Section 60 (13) of the Act and they include situations where i) the lending of money is in the ordinary course of the company's business ii) where the provision of money by the company is to the benefit of its employees, eg where a company might lend employees money to purchase shares in that company through an employee share option scheme iii) where the provision of money is to a non director in the employment of the company to aide them in purchasing shares (no benefit required).

You will see that what I outline as i) is the core point here. It is not illegal for a bank to lend money for the purchase of its own shares as pursuant to S. 60 (13) Companies Act 1963 a company may lend money for the purchase of its own shares where the lending of money constitutes part of the ordinary course of its business, ie a bank.

Two observations though:
1) There are many other duties which a director owes which have nothing to do with the purchase of shares in the company. For example, they must at all times work in the best interests of the company, they must not make a secret profit by virtue of their position etc etc. It is far more likely that a breach of directors duties will be the issue on which some people will caught out. I say that as a general point, not specific to any particular circumstance.
2) In relation to the precise circumstance, we have no idea, insofar as I am aware, as to what the money loaned to Mr Fitzpatrick was being used for. It would be unfair to speculate unless there is firm evidence forthcoming.

I'm very grateful, johnfas, that's pretty comprehensive.

One question, do you know whether any leverage guidelines apply, loan to share ratio sort of thing, is that at the individual bank's discretion?

I would imagine that sort of thing is governed by stock exchange regulations or regulations from the financial regulator outside of the Companies Acts. I don't know much about either, I just know about Company Law from an academic point of view and thus the broad outlines within the Companies Acts 1963 - 2006 which wouldn't deal with things like that. There is probably regulations which deal with leverage and stuff in stock exchange guidelines but I wouldn't know what they are. Only interaction I have ever had with the Financial Regulator was when I was working in a solicitors firm last summer and had to find out about their regulations for money lending licences... they were a pain in the neck to deal with.

johnfás wrote:

I would imagine that sort of thing is governed by stock exchange regulations or regulations from the financial regulator outside of the Companies Acts. I don't know much about either, I just know about Company Law from an academic point of view and thus the broad outlines within the Companies Acts 1963 - 2006 which wouldn't deal with things like that. There is probably regulations which deal with leverage and stuff in stock exchange guidelines but I wouldn't know what they are. Only interaction I have ever had with the Financial Regulator was when I was working in a solicitors firm last summer and had to find out about their regulations for money lending licences... they were a pain in the neck to deal with.

Thank you for the info, anyway. I kind of assume that, for the 'ordinary course of business' exception to apply, the loan would have to be considered reasonable, i.e. not recklessly leveraged. I'll see what I can find out...

One would have thought so... pretty much all law has provisos regarding recklessness... however, one must be aware that the time at which the recklessness is measured will be the time at which such a loan is made rather than looking back with hindsight, which is a very valuable thing. In other words, 8 years ago when a loan for 87 million euro was made (we don't know what the loan was for) was that a reckless act in the prevailing circumstance of 8 years ago and on the knowledge available 8 years ago.

johnfás wrote:

One would have thought so... pretty much all law has provisos regarding recklessness... however, one must be aware that the time at which the recklessness is measured will be the time at which such a loan is made rather than looking back with hindsight, which is a very valuable thing. In other words, 8 years ago when a loan for 87 million euro was made (we don't know what the loan was for) was that a reckless act in the prevailing circumstance of 8 years ago and on the knowledge available 8 years ago.

I would argue that, yes, it was, leaving aside the conflict of interest. However, you are quite correct that such things do tend to be relative, and there ought to be a degree of discretionary leeway in the definition of 'reasonable' to account for that, though I think this particular case falls some way outside any such leeway...

I would argue that we don't know... we don't know what the money was loaned for, we don't know what he was doing with it or what he has done with it, we don't know whether he has made a profit or a loss from the money, we don't know how much money he earned or what he repayment schedule was or any of these things. It is a bit premature in my opinion to decide whether the amount loaned was reckless or not.

It isn't premature to say that the exploitation of the loophole was outrageous and that the Financial Regulator should have identified it years ago and recommended to the Government that an amendment to the law be made.

johnfás wrote:

I would argue that we don't know... we don't know what the money was loaned for, we don't know what he was doing with it or what he has done with it, we don't know whether he has made a profit or a loss from the money, we don't know how much money he earned or what he repayment schedule was or any of these things. It is a bit premature in my opinion to decide whether the amount loaned was reckless or not.

It isn't premature to say that the exploitation of the loophole was outrageous and that the Financial Regulator should have identified it years ago and recommended to the Government that an amendment to the law be made.

My quibble with the financial regulator would not be that, it would be the delay and inaction in recent months, since it found out earlier this year, The sheer amount, leaving the reason or need for the loan, is what I would consider reckless, I'm assuming that the leverage would have had to have been pretty high, to say the least, though you are right, I'm only assuming at the moment. What's not in doubt is the conflict of interest. Had he wanted the loan, he should have been obliged by regulation to go elsewhere. Hindsight isn't necessary there, and that I perceive as one major flaw in a massively lax regulatory system.

I note I am on the front page - very flattered indeed.

Another question which arises is what facilities were in place for FitzPatrick apart form the monies which he had drawn down.

For instance, the movement of €85m in loans would have been a major operation if all securities etc had to be assigned and then re-assigned back. On the other hand, if there was a facility available at Anglo to FitzPatrick's order, i.e. he could take or pledge the money as he pleased, then the security issue would be simplified.

One can imagine (and imagination is all it is - this is a step below speclation) the scenario. Banker A get a facility for €x from Institution B. He then uses the facility from Institution B to secure a loan from Institution C thereby avoiding the loan showing up on institution B's books. This is why I say not only loans but loan facilities should be disclosed.

eoinmn wrote:

The Independent reports today that the Regulator will be asked to resign in January.

He should be defenestrated now. He has been a failure in that role. He has let the trust in our financial system collapse on his watch. The greatest crisis in Irish finance will be his legacy. He should be out of that job now and replaced by someone who is actually competent in the position.

Ard-Taoiseach wrote:

eoinmn wrote:

The Independent reports today that the Regulator will be asked to resign in January.

He should be defenestrated now. He has been a failure in that role. He has let the trust in our financial system collapse on his watch. The greatest crisis in Irish finance will be his legacy. He should be out of that job now and replaced by someone who is actually competent in the position.

And the Entire board of Anglo Irish, Aib,B of I, the entire Financial regulators office and the Central Bank Governor - imcompetence and lying all around and we only find out about stuff when the shit hits the fan.

off with their heads the lot of them - only then will we see the real rotten corrupt core of the Irish Financial industry and system.

The US has just fired one of its top Federal Banking Regulators arising out of IndyMac's failure.

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/22/AR2008122201301.html?hpid=topnews

...close ties between regulators and companies played a role in the collapses of several of the largest thrifts, including IndyMac. Regulators allowed companies wide latitude and failed to insist on changes even when problems became apparent.

"The role of the Office of Thrift Supervision, as the name says, is to supervise these banks, not conspire with them. Capitalization requirements are there for a reason, and the failure of IndyMac cost the federal deposit insurance system $8.9 billion," said Sen. Charles Grassley (R-Iowa),...

Did they congregate in a smoky room, these grey-haired men from the Western English Speaking Democracies and conspire to kill the Glass-Steagall Act ? http://www.answers.com/topic/glass-steagall-act

Don't economic mechanisms of a radical nature work better across a broad sweep of countries rather than in one alone ? It spreads the risk - theoretically - and means the participants are playing the same game with the same rules so there is some level playing field.

Edo wrote:

Ard-Taoiseach wrote:

eoinmn wrote:

The Independent reports today that the Regulator will be asked to resign in January.

He should be defenestrated now. He has been a failure in that role. He has let the trust in our financial system collapse on his watch. The greatest crisis in Irish finance will be his legacy. He should be out of that job now and replaced by someone who is actually competent in the position.

And the Entire board of Anglo Irish, Aib,B of I, the entire Financial regulators office and the Central Bank Governor - imcompetence and lying all around and we only find out about stuff when the shit hits the fan.

off with their heads the lot of them - only then will we see the real rotten corrupt core of the Irish Financial industry and system.

We do indeed need to clean house in the Irish banking system. The top management at every bank should be shorn of the reprobates who led their banks into this mess, there should be sackings in the Financial Regulator and there should be a shake-out in the Department of Finance.

Ard-Taoiseach wrote:

Edo wrote:

Ard-Taoiseach wrote:

eoinmn wrote:

The Independent reports today that the Regulator will be asked to resign in January.

He should be defenestrated now. He has been a failure in that role. He has let the trust in our financial system collapse on his watch. The greatest crisis in Irish finance will be his legacy. He should be out of that job now and replaced by someone who is actually competent in the position.

And the Entire board of Anglo Irish, Aib,B of I, the entire Financial regulators office and the Central Bank Governor - imcompetence and lying all around and we only find out about stuff when the shit hits the fan.

off with their heads the lot of them - only then will we see the real rotten corrupt core of the Irish Financial industry and system.

We do indeed need to clean house in the Irish banking system. The top management at every bank should be shorn of the reprobates who led their banks into this mess, there should be sackings in the Financial Regulator and there should be a shake-out in the Department of Finance.

Cowen was Minister for Finance during that time - this is the first head which should roll.

Auditor #9 wrote:

Cowen was Minister for Finance during that time - this is the first head which should roll.

His neck is too hard...you'd never dislodge it.