Saturday 25 October 2014

Matina Devlin: Behind the banter and bravado, this was an enormous fraud on us all

Matina Devlin

Published 25/06/2013 | 05:00

Emigration is at famine levels because Anglo bankers lied. Workers are on the dole because Anglo bankers lied. Homeowners can't pay their mortgages because Anglo bankers lied. Public service cutbacks, especially in health and education, are causing suffering because Anglo bankers lied. And Ireland lost its economic sovereignty because Anglo bankers lied.

Not just recklessness, but deception on the part of bankers protecting their broken bank – and their own skins by extension – brought Ireland to the verge of ruin.

An independent republic was reduced to a satellite state by the world's worst bank – and citizens are still picking their way around the crater left behind after Anglo crashed and burned.

Recession was inevitable: job losses and shrunken services were on the way, even if Anglo bankers had been honest about their problems. But the truth would have prevented austerity on today's disaster scale.

It would have forestalled €30bn being funnelled into a financial institution which should have been left to collapse. And which would have been cut away, like the diseased limb it was, had its mangled core been exposed.

The truth would have stopped the next generation's future being sacrificed to prop up a hopeless case.

The Irish people had a hunch we were cheated long before any of us listened to the Anglo Tapes. We know it for a fact now. Sadly, we are not disillusioned by how readily the regulators were conned. Nor are we surprised at bankers using citizens as sitting ducks.

We are angry, but it's a strangely muted wrath. It's not fuelling action. The streets are not choked with protesters – hordes of citizens are not pounding at the doors of Leinster House, nor picketing the Central Bank.

Scratch the surface of our rage and resignation is visible. Perhaps the daily struggle to survive occupies people's energies. Or maybe the anger is smothered by a belief that nothing we do can make a difference: that cultural change cannot be effected.

The recording – in which two bankers cheerily chat about the Central Bank being manipulated into funding vast losses – captures in a few sentences why Irish citizens are broke and desperate. Hustlers scammed our gatekeepers, yet nobody has been held accountable.

For almost five years the tapes have lain there, ready to detonate. How odd they should only surface now, when it's too late to reverse the wealth-stripping of citizens that was activated by the bank guarantee.

Strange, too, why a conversation between back-office, spreadsheet bankers is the one made public, rather than any phone calls involving David Drumm – there must be some fraught examples there. Anglo's former chief executive relocated to the US in jig-speed, shortly before nationalisation, and refuses to return to Ireland to face garda questioning.

And what about the pillar banks? It would be fascinating to take a trawl through their phone records, and scrutinise how they shape up in their dealings with the Government and regulatory authorities.

But the Anglo tapes are what we have to work with. They lay bare the way citizens were treated like an ATM machine. No pretence is made of borrowings ever being repaid – the two executives chortle at the notion of taxpayers ever seeing the colour of their money again.

In fact, far from needing €7bn as a short-term loan, Anglo was losing €1.5bn a day by the time the recording was made in mid-September 2008, following Lehman Brothers' liquidation.

While the conversation is loathsome, even upon repeated listening, almost harder to accept is how easily the nation's fate was determined. Why did regulators even bother listening to their back-of-an-envelope €7bn guesstimate?

Regulation was toothless, leaving us as lambs to the slaughter. Yet even now we hear calls for light-touch regulation, most recently from IFSC chairman John Bruton.

Beyond a shadow of doubt, if those tapes had emerged in the immediate aftermath of the bank guarantee, the present would be shaped differently; austerity would be less onerous. The Government could have revised the guarantee on the basis it had been duped.

Behind the banter and bravado, it seems hard to believe that Anglo executives didn't realise an enormous fraud was being perpetrated on the State.

The word 'strategy' was used, and "the cost to the taxpayer" by one of the men on tape, John Bowe.

He and Peter Fitzgerald, the other party to the conversation, weren't even among the bank's most senior staff. Even as Armageddon loomed, they continued to insist that Anglo's difficulties were down to liquidity rather than insolvency. Just a little cash-flow hiccup.

Let's remember who called it right, and ask ourselves why official Ireland's reaction seesawed between ignoring and mocking him. One week after the bankers were recorded, UCD Professor of Economics Morgan Kelly told 'Prime Time' that Irish banks had made a lot of large loans to developers and were saddled with bad debts. He questioned whether all of the banks needed saving.

"It's not liquidity is the problem for these guys, it's bad loans," he said. "They're huffing and puffing and pretending it's not going on." Even as the guarantee was announced, he predicted the banks would make "terrific losses" on those bad loans.

Anglo's nationalisation followed, and Irish citizens took its losses on the chin: a sucker punch which floored us.

Now, could someone please explain why anyone pays the slightest attention to bankers when they push for people struggling with mortgage repayments to be evicted from their homes?

Irish Independent

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