You cannot put people in jail for stupidity….
Posted on July 3, 2013
So says Antoin Murphy, associate professor of economics at TCD, in last week’s Prime Time Special on the Anglo tapes. The tapes, which were leaked to the Irish Independent newspaper and published last week, detail conversations between senior bank officials at Anglo Irish Bank during its collapse in 2008.
The tapes give a small window into the mentality of the men, whose reckless lending of billions of euro to property developers and total lack of regard for regulatory issues has ended up costing the government over €30 billion so far – that’s €6,500 for every person in the country.
The recordings do indeed display a level of arrogance that can only be equated with stupidity in the light of the obvious insolvency and impending collapse of Anglo.
Large-scale depositor flight had already begun at Anglo, leaving it insolvent by 2007. The show was kept on the road until September 2008 thanks to creative accounting by the bankers and their auditors, and a “don’t ask, don’t tell” approach from the regulator, the Central Bank and the Department of Finance. By the time Lehman Brothers conveniently collapsed in 2008, the hole in Anglo was almost €30 billion and could be concealed no more.
I don’t believe that anyone involved in this charade wasn’t aware of the extent of it. What I think the tapes show though is that those in charge at Anglo weren’t totally cognisant of the consequences of their actions. One of the conversations between John Bowe and Peter Fitzgerald (Clip 4) suggests that they think the only options are being nationalised (“We’d all keep our jobs”, “It would be fantastic, wouldn’t it?”) or being sold. They don’t foresee the ultimate collapse or winding down of Anglo. And there is no regard for where the €30 billion might come from or who may be fleeced to pay for it.
These bankers also show no fear of any penalties arising from their behaviour. They are not afraid for their freedom, their wealth or even their careers. They know that they have social permission to behave the way they do and that their actions will be supported by those in power regardless of the price. The greater the silence of the regulator, the Central Bank and the Department of Finance, the greater their complicity and if one falls, the rest will be implicated. In theory, of course.
So does it all come down to state-supported stupidity? Are the Anglo bankers simply the “faintly dim former rugby players” that Morgan Kelly spoke of in 2011? Does stupidity excuse them the greatest fraud ever perpetrated on the Irish people?
The tapes clearly show an attempt to defraud the taxpayer via the regulator. Bowe says of the figure of €7 billion (“picked it out of my arse”) that he told the regulator would sort out Anglo’s liquidity problem:
“The strategy is here, you pull them in, you get them to write a big cheque and they have to keep, they have to support their money, you know. If they saw the enormity of it up front, they might decide they have a choice. They might say the cost to the taxpayer is too high.”
He knew that Anglo would require much more money, he lied to the regulator and the Central Bank about the extent of it and tried to trick them into giving Anglo €7 billion (SEVEN BILLION EURO). Surely there is a financial law or regulation breached here? Surely this is fraud?
Central Bank governor, Patrick Honohan, certainly thinks so and has said that it needs further scrutiny. He has also said that it should not have been possible to fool the regulator “in such a simple and gross way”.
So what investigation will take place into this likely fraud? Imminent criminal trials as suggested by former DPP, James Hamilton? Eh, no. The Taoiseach, Enda Kenny, has said that legislation to provide for an inquiry will be passed by the summer recess, and the government would then decide the best way to proceed. And that he will continue kicking that can down the road for as long as he likes. The truth is that there is no separation between those to be investigated and those doing the investigation and they have no interest in the truth ever coming out.
There are tens of thousands of hours of recorded conversations in all of Ireland’s banks. Who has them? Will we ever hear them? Will it change anything?
This is not over; €30 billion is not the final figure. The mortgage arrears crisis and the pensions crisis have been well forecast. There are huge losses in the banking sector coming down the line. Are you going to pay for them? Are you going to let that decision be made for you?
This is our last chance. Do something about it. Join one of the “Jail the bankers” protests near you, make your views known to your local representatives, talk about it, write about it, get on your feet and march about it. If we let this one go, we don’t stand a chance.
You cannot put people in jail for stupidity but you should for fraud.