The Irish Banks, The Central Bank and the Property Bubble

[Lennon]

Is the Central Bank there to protect the banks or to protect the consumers?

During the property bubble the Central Bank presided over a situation where banks operating in Ireland were permitted to engage in totally inappropriate lending practices such as 100% mortgages over 40 year periods which were a multiple of 10 times the borrowers earnings.

The banks of course were making a lot of money. Property prices continued to rise and rise as more and more Irish people paid way over the odds for houses which are now descending into negative equity. But what did the Central Bank do to prevent this scandal? Absolutely nothing!

As the share price of Irish banks plummet (along with property prices) the Central Bank continues to claim that the Irish banks are solid. The banks are now in big trouble and in the end the Irish taxpayer will be forced to bail them out when the inevitable collapses occurs.

It is now clear that the Central Bank is there to protect the banks and not to protect the consumers.

[mairteenpak]

Could the Central Bank face civil suits if they were proved to be negligent?

[Lennon]

Could the Central Bank face civil suits if they were proved to be negligent?

The Central Bank Act 1942, states that:

"The Bank shall be a body corporate with perpetual succession and an official seal (which shall be judicially noticed) and power to sue and be sued in its corporate name and to hold and dispose of land."

http://www.irishstatutebook.ie/1942/...022/print.html

Individual accountability including the imprisonment of those responsible for this outrage needs to be looked at.

[mairteenpak]

Some of the UK financial institutions were sued successfully in relation to endowment mortgages.

It is conceivable that a financial institution could face an action for permitting over lending

[Lennon]

Some of the UK financial institutions were sued successfully in relation to endowment mortgages.

It is conceivable that a financial institution could face an action for permitting over lending

A class action could be taken by all those people now in negative equity because these overzealous unregulated lending practices.

However I would not expect our political elite who are also complicit in this scandal to take any action.

[mairteenpak]

Could the people who provided the valuations be sued, as it was reasonable for an expert to foresee that a valuation based on a multiplier of 26 times rent would not hold up in the event of higher interest rates, where as a layperson would be likely to rely on the expertise of the valuer.

The valuers have nice juicy indemnity policies

[Lennon]

Could the people who provided the valuations be sued, as it was reasonable for an expert to foresee that a valuation based on a multiplier of 26 times rent would not hold up in the event of higher interest rates, where as a layperson would be likely to rely on the expertise of the valuer.

The valuers have nice juicy indemnity policies

The large estate agents are now running scared about giving property valuations.

There is every likelihood that estate agents who continued to provide inflated property valuations using unreasonable assumptions could be joined into this class action.

[Anorakphobia]

We all know what teh spivs and knaves in vested interests like actioneers,lenders, landlords and builders did but you'd surely expect better from Government and Central Bank
However,
as late as Thursday night on CNBC our Taoiseach said
"the anticipated correction in property prices is occurring"
also
stated all our banks are rock solid and "very liquid"
Why would banks who are "very liquid" refuse to lend people 30% of the book value of a property?
Dunno?
Me neither but i could make a very reasonable guess but of course I am not allowed speculate anything about the strength or otherwise of banks, sure isn't that prohibited by teh Central Bank.

Unless of course you are John Hurley, Governor.
The Governor of the Central Bank effectively gave investment advice and tipped up Irish banking shares by stating in front of an Oireachtas panel on Tuesday that falls in bank shares are "overdone"

Great ************************ing little country we live in

[Lennon]

Country Tom still thinks it's a good time to buy property in Ireland!

[youtube:3uctlos0]http://www.youtube.com/watch?v=p-kuggPZzO8[/youtube:3uctlos0]

[politicaldonations]

Amazingly the governor of the central bank gets more than the heads of the US Fed, ECB and Bank of England despite having little or no responsibility and overseeing a tiny economy/financial system. What do the staff in central bank do since the arrival of Euro and ECB rate setting in 2002? They should have taken pay cuts since 2002. There were many ways to control credit bubble apart from setting rates if te central bank and government had acted. Alan Aherne recently outlined some things. They Central bank made a belated effort at end of boom by demanding higher reserve ratios and stress testing but this was too little far too late. A civil case with independent economic and financial experts from around world testifying could succeed against Central bank IMO.