What a coincidence. Last weekend, we read the details of the plan to give senior Irish bankers buckets of money in salary increases and bonuses. And that’s on top of their already over-generous salaries.
ithin hours, we got news from across the Atlantic: three American banks collapsed.
Big bucks for bankers, and banks collapsing — now, where did we hear that before?
The 2008 financial crash was caused by a combination of dodgy banking and uninhibited banker greed.
We may or may not be having a re-run of 2008, but the banks never stopped being dodgy and the bankers’ greed is as mindless as ever.
Here’s what appears to be happening now.
The week began with those three American banks collapsing. Two of them — SVB and Signature — were very big, with extensive loans to the technology sector. SVB is involved with technology businesses based in Ireland.
When banks collapse, rich people — here, in Europe and in the US — get panicky. They worry their money isn’t safe. They make all kinds of hysterical moves to protect it, which almost always make things worse.
The bankers call this contagion — it’s just plain old panic. A genuine drop in the value of some shares makes all shareholders nervous, and people begin to worry that when the carousel stops they’ll be left holding something that’s worthless.
So they sell their shares — which triggers unease among those in the know. And suddenly an unwarranted fear of a collapse in value becomes a real panic.
By last Wednesday, the fears generated by the American bank collapse had jumped the Atlantic. Which European bank would be the first to be hit?
Naturally all eyes swivelled to look at Credit Suisse. If any European bank was going to go under, the favourite for collapse — oh, wait, hold on, there’s the Credit Suisse share price slipping again . . .
The Swiss bank has long had a bad reputation: fictional profits, manipulation of interest rates, tax fraud, kickbacks. And it has been banker to some of the sleaziest people on the planet.
So, when Credit Suisse shares went south last week, no one was surprised.
Meanwhile, those who had come to believe that 15 years after the collapse of the Irish banking system it was safe enough to invest in our local banks — whoops, there they go again, Irish bank shares overnight losing about a quarter of their value.
Irish bank shares went through the floor, at an estimated loss to shareholders of €1.2bn.
When a bank goes under, it’s bad management. When banks here and there across the international scene get the shivers, it’s bad government.
It means the banks have been allowed too much freedom, which usually results in overdosing on greed. It’s the nature of the beast.
Three facts that make politicians pray fervently by their bedsides each night:
1. The greed of bankers in the US and in Ireland has already caused immense damage to the rest of us as a result of the 2008 crash, for which they were responsible — Oh, God, the politicians murmur, please don’t let that happen again.
2. The Irish senior bankers’ incessant demands for even higher salaries leave politicians wondering if they know something we don’t, and they’re trying to cash in before the bubble bursts.
3. The collapse of banks on the international scene suggests our local troubles may be swept aside by another 2008, in which we find out how inept the bankers are on an international scale.
Meanwhile, here’s Brian Hayes, former Fine Gael minister, now mouthpiece for the Irish Banking and Payments Federation. Brian tells us not to worry, because “the level of capitalisation and liquidity in the Irish banking sector is very strong”.
In theory, that should settle some nerves. But some of us remember bankers and “regulators” assuring us about solid capitalisation and fluid liquidity in 2008, just as the crash began.
Of course, what we need in these circumstances is a Taoiseach who can steady the ship of state. Who’s turn is it this week?
Oh, dear. Seems it’s the Fine Gael guy’s turn to play Taoiseach. And he’s in Washington DC, embarrassing himself — and the country — by making smutty remarks about the sexual antics of a former US president. Leo Varadkar had to apologise to the Yanks.
What age is this guy? Maybe when he makes it all the way through puberty the embarrassing behaviour will decrease.
Somewhere in the middle of all this nonsense, the Taoiseach announced that Irish officials are “not concerned about the stability or health of any of our banks”.
Highly reassuring. Can anyone tell us whether Mr Varadkar was giggling when he said that?
Given our history, it’s unsettling that our leaders are “not concerned” about what the senior bankers might be up to.
We are now — and always will be, I’m afraid — in circumstances that demand we assume those in charge of the Irish banking system are behaving in a crooked, incompetent or reckless manner.
Which reminds me — does anyone know if any banker has yet gone to jail for the “tracker mortgage” heist?
No? Ah, well, no hurry, in your own time, Garda.
By the way, when our Taoiseach was telling us he was “not concerned” about any aspect of banking, was he up to date on the Bank of Ireland share price sliding by something like 7.9pc? Or Allied Irish Bank shares going down 4.7pc?
Ah, sure, not to worry. If the Taoiseach is cool about it, we’re all on a winner, right?
And if he’s not worried about share prices or anything else to do with banking, he’s no doubt cool about the campaign to give the senior bankers a nice big boost in their salaries.
As you’re no doubt aware, after the 2008 banking crash the politicians decided to show the bankers who’s boss. So they put a cap on banking salaries. Senior bankers were capped at €500,000 a year.
Let me be clear — if you want to cap my salary at half-a-million, well, go right ahead. I’m sure you too would make that sacrifice, if it’s offered.
The bankers, however, have been upset about this. Apparently, whenever they meet foreign bankers they feel embarrassed that their peers know the Irish lads are capped at half-a-million shekels a year.
And this rankles. After all, they argue, it’s been 15 whole years since they wrecked the economy — how long are we going to hold a grudge?
It’s not that they’re greedy, they say. It’s just that if you want to hire people with the talent it takes to run a bank, you’ve got to offer real money — not loose change like €500,000 a year.
The message I’m getting from this is that the senior bankers now in place are under-talented nobodies, totally lacking in the ability to run a bank. People who can’t get a job anywhere else, so they’ll settle for a miserable half-a-million.
Which maybe explains why the share prices of Irish banks fell last week.
Since these people are so untalented, I’ve begun to wonder why we bother to pay them half-a-million a year.
Surely we could get losers for a lot less than that?
So, what can we conclude? Internationally, the bankers have been found out, flawed banks have begun to go under.
Here at home, the senior bankers running our banks are — if we’re to believe their own claims — the dregs of the international banking scene. Seems they’re the best we can get for a miserable half-a-million a year. Sleep tight.
