Sounds familiar, but it is not about Anglo Irish. This was Patrick Gallagher's Merchant Banking which collapsed in 1982, twenty six years ago.
"The liquidator's report to the High Court said bluntly that the bank had been 'operated and run by the directors with scandalous disregard not only for the Companies Act but also for the Central Bank Act'. According to liquidator Paddy Shortall, possible offences included bribery, conspiracy, corrupt transactions, falsifying or destroying books, publishing fraudulent statements, making false returns to the Central Bank, concealment of property and obtaining credit by false pretences. On foot of his report the Garda Fraud Squad was called in but no further action was taken against Gallagher in this jurisdiction"The Builders, pps 32/3
And there has been no shortage of other implosions over the years, both in this country and abroad, which underlined the need for rigorous, conservative and cross-border supervision. ICI (1985), Savings and Loan crisis (1980/90s), BCCI (1991), Enron (2001), to name but a few.
But the country was becoming bewitched by the Celtic Tiger and it's hubris knew no bounds.
The Celtic Tiger, insofar as it represented genuine economic advancement, was the product of a number of sensible polices over previous decades, including investment in education, strict (albeit intermittent) control of the public finances, joining the EU, attraction of multi-national industries from abroad, and developing an indigenous entrepreneurial sector.
Unfortunately, the financial sector, or at least a large proportion of it along with property developers, lost the run of itself. It was subject to "light regulation" and was, inter alia, advancing megabucks to speculative developers and 100%+ mortgages to ordinary housebuyers. The state itself was becoming accustomed to a lavish income stream, much of it generated by excessive property values and ultimately dependent on mega-loans from abroad.
The country was firmly in hock to the bubble. The system could only continue to work as long as property values kept rising at a sufficient rate to keep householders in positive net equity and to sustain the enormous gambles being taken by the developers and the banks.
Now that the bubble has burst, the country is burdened with repayment of these loans at a time when "private" real estate values have tumbled and public sector income is massively reduced.
And the public sector is stuck with servicing a settlement pattern which has been effectively determined by a crowd of cute hoors rather than sensible long term planning. The Kenny Report (1973) made recommendations aimed at taking the corruption out of land zoning and ensuring that any increase in land values as a result of zoning accrued mainly to the community. These recommendations were sacrificed on the altar of the absolute rights of "private property" by successive governments hiding behind the constitution. It cannot speak well for our democratic system that one party (FF) has been in power for 80% of the last half century.
Some of these thoughts flashed through my mind the other day when I noticed the sign on the pillar of the headquarters of the Bank of Ireland in Baggot St. I wondered if, in its current straitened circumstances, the bank might ultimately be obliged to take down the sign and lease the space for the very activities it now prohibits.
God forbid.
Previous posts:
Blogging against Poverty Bloody bankers et al.
Blogging for the Environment Perverse incentives in the economic system.
Crock of Gold Pardon the somewhat optimistic conclusion!