David Drumm: ‘There is a witch hunt ... I convince myself that this will pass’
An Irish Central exclusive interview with the former Anglo Irish Bank boss now in US
NOD: So he made a three billion dollar mistaken basically?
DD: As it turns out, but he contributed to the weakness of the bank in 2008 by doing it.
NOD: How significant was that weakness?
DD: It was very, very significant because all banks were struggling in the market internationally, life was tough, we got this additional spot light on us because of the Quinn perceived vulnerability and the hedge funds in London rightly took a view that if you push, push, push this guy maybe his stock will be sold, the bank will collapse and they get like a payday.
He fashioned a rod for his own back and ergo our back, the bank’s back. So you couldn’t blame one particular thing, but we had this additional burden right absolute worst possible time that you would want something like that, during an international financial meltdown. We were coping with that at the same time.
NOD: What do you think now when he has declared bankruptcy.
DD: He’s doing what I guess he has to do.
NOD: To go from being the richest man in Ireland to having $15,000 in your bank account?
DD: it’s sad, because he was and maybe he comes again, but he did a lot of great things. There is a lot of collateral damage.
NOD: The whole operation is in danger as well.
DD: Ya and he ran that operation very well and created a lot of jobs and now it’s in receivership.
NOD: Why didn’t the bank buy it’s own shares?
DD: Am, why couldn’t the bank ... you can’t do that. It’s against the law.
NOD: But they were also in huge debt, the ten people who owed you billions.
DD: They were big customers of the bank, they were, hindsight is great and 20:20, but their loans were fully secure, a lot of them were income producing; shopping centers and hotels and office investment properties and so on. They would have a very high net worth, it was not unusual for them to have 200 to 300 million of a net worth.
So you are lending them money on the basis that you have got the collateral, the stock, and you have got recourse to them for a good chunk of it, 25 percent of it, so the margin of error. So you knew that that was fully collectable. It made total sense and it made sense to us, it made sense to the regulator, it made sense to the Central Bank, it made sense to Morgan Stanley who were advising us, it made sense to our legal advisors.
NOD: Yeah, but the counter to that would be the banks misled the government about the extent of debt, is that a fair comment?
DD: No that is another misrepresentation and myth. What happened was, you will hear the words liquidity and solvency get batted around. In 2008 the problem was liquidity, literally cash flow. So I have got a loan of 100 million from Deutsche Bank and it’s maturing on the 18 of November. A year earlier, I didn’t have to think about the loan, they would roll that loan over for another month of three months or six months or whatever the terms of it was.
Now in 2008 my issue was that Deutche Bank were actually going to take that money and not come back. So once it was matured they would just take it because everyone was just pulling their money back to what they perceived to be their safe haven. Be it Citi Group back to America, Deutsche Bank bringing it back to Germany, boom, boom, boom.
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Thanks for that, Steven Star. You seemed to stop posting here for a while, please continue to give us your insights.