Anglo Tapes: Would Anglo have been bailed out if the full facts were known?

Taxpayer lured into bailing out Anglo Irish Bank under false pretences.

Astonishing and eye opening revelations in this mornings Irish Independent publication of transcripts of internal phone conversations in Anglo Irish Bank, shows a series of lies and manipulation in the banks headquarters in the lead up to the doomed banking bailout.  The officials in the recordings make it quite clear, that there was no possible way to save the bank from failure, during the height of the financial crisis in September 2008.  John Bowe who is one the Anglo senior bank officials quoted in the tapings put the crisis in perspective, “It has to happen, because if it doesn’t happen we’re going to hit a wall in the next week….We’re already in breach, you know.”  Minister, Eamon Gilmore today said it was quite shocking and that a banking inquiry into the goings on in before the bailout was necessary, Sinn Feins, Pearse Doherty called for the tapes to be referred to the Gardai and the Director of Corporate Enforcement and said it was, “a concerted effort by executives in Anglo Irish Bank to defraud the Irish State”.  

 Senior managers who were at the time of the tapings, in negotiations with the Central Bank, laughed and joked at how they were luring the state into giving the bank, billions of euro, at the taxpayers expense.  John Bowe, has vehemently denied that he had misled the Central Bank last night, but the quotes attributed to him seem to suggest otherwise, he was the Head of Capital Market at the time and continued to work in Anglo/IBRC up until last year, the other main speaker on the tapes was Peter Fitzgerald, who only left the bank in February of this year.  Bowe went on to say on the tape that Anglo had approached the state and the Central Bank with a proposal to bailout the bank to the tune of €7 billion euro in order to maintain Anglo’s viability.  

 However, on the tape negotiators and officials make it quite clear that this amount will not be enough to save the bank and that once the initial funding was provided to the bank, the state would have to continue bankrolling the failed Anglo.  Bowe is quoted as saying, “That number is seven but the reality is we need more than that. But you know, the strategy here is you pull them [the Central Bank] in, you get them to write a big cheque and they have to keep, they have to support their money, you know.”  He goes onto justify the manipulation of the regulator by saying, “If they saw the enormity of it up front, they might decide they have a choice.  You know what I mean?  They might say the cost to the taxpayer is too high…if it doesn’t look too big at the outset…if it doesn’t look big, big enough to be important, but not too big that it kind of spoils everything, then, then I think you can have a chance. So I think it can creep up.”  In the subsequent years, a further €30 billion euro was poured into the basketcase zombie bank, before it was wound up.  

On the day of the tapings, negotiators were meeting with state officials and in that meeting they claimed to the Government that they would make 1.4 billion euro of profits in the coming year and further profits thereafter.  Fianna Fail Finance spokesperson, Michael McGrath said today, “We need to get to the full truth about the way that bank was run and the level of knowledge the bank’s executives had about its true financial position in September 2008,” meanwhile, Labour Party TD, Kevin Humphreys said that, the public needs to know the “the inside story of what was going on in our banking system when Fianna Fáil bailed them out”.  Opposition TD’s have called for an immediate banking inquiry and Taoiseach Enda Kenny hopes such an inquiry can be passed before the summer recess of the Oireachtas, Minister for Public Expenditure Brendan Howlin has recently published legislation to examine the banking collapse.  

 The shocking revelations in today’s Irish Independent calls into account, Fianna Fail and their Government partners, the Central Bank and the Financial Regulators handling of Anglo Irish Bank at the height of the economic banking crisis that Ireland faced in 2008.  In the early part of that year, I was contacted by a banking official and expert in this area who told me that Anglo Irish Bank was close to failure.  The story never developed beyond rumour and conjecture at that time, but surely if this information was around at the start of the year, the Government and the regulator must have known that the bank was in trouble in advance of the events of September 2008!  How officials in Anglo could get away with pulling the wool over their eyes is beyond belief.  Their inaction and belief in the assurances of Anglo Irish Bank, in this matter, went on to cost the state almost €30 billion euro directly in recapitalisation of the bank and far more in the wider banking system.  It precipitated a collapse in house prices, building, employment and the general economy and brought real suffering, unemployment and hardship to the people of Ireland.  Why were officials in Anglo taken at face value when they stated they need €7 billion euro of recapitalisation to reinvigorate and save the bank, when it appears quite clear that no amount of reasonable funding was going to save it.  An immediate, open and transparent banking inquiry is necessary now to get to the truth of the most devastating period in Irish economic, political and social history.

The Irish Independent will follow up with part two of ‘Inside Anglo’, in tomorrows newspaper.

Irish Independent Article on Anglo Irish Bank and with audio of the tapings: http://www.independent.ie/business/irish/inside-anglo-the-secret-recordings-29366837.html