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
The reason we went back to that house, is because it was our house. That was a positive of having to move the kids again because there was a home there they were actually familiar with.
NOD: Two kids right?
DD: Yeah, two girls. That was one thing that made it a bit easier to move them, that they knew where they were going.
NOD: Do you find it tough on the family?
DD: I think that I can survive it if they can.
NOD When did you start to panic considering what was happening?
DD: The real panic, the real sense in Ireland within the system that we were in a real, real problem, was post Lehman. If you just look at the time line. Bear Stearns went bust here in the U.S. in mid March 08. That was like the first shock of an earthquake and Anglo had a mini run on it in March 08. It scared us, but it didn’t put us in a mindset that we were in real trouble. The share price was only a proxy for our funding.
Post Lehman, Lehman went bust on the 15 of September 2008. The whole world just went into complete and utter panic, there is no other way to describe it. The Irish banking system in that two week period at the end of September lost 30 billion and Anglo lost six. I’m running from half a billion to a billion a day, now those numbers are big, they are big in any context. In the context of the bank, in the balance sheet to see that kind of money flowing out was panic. Sitting down in the Central Bank every day frankly begging them to do something. I put a proposal to them to give us a loan. We had an unencumbered balance sheet, 73 billion.
So all of our loans were sitting there as assets, a bit like owning a property that you could use as collateral. So I said to the Central Bank, will you give us a loan? The central bank in any country is meant to be the lender at a last resort, such that when a bank gets in trouble, or any bank has a system that they’ve got money to protect the system of the country. It became apparent to us that they did not have the resources to do it.
So I went and looked for a secure loan, that I could have over collateralized three or four times, if they gave me seven billion I could have given them 20 billion collateral or whatever they wanted and that was the way I put it to them. They never gave me an answer. There never seemed to be one person between the governor and the regulator.
NOD: How come they wouldn’t have had the money?
DD: They told me that they had four billion in the system in a number of pockets. There is a naivety to that as well on my part, because you go down and say well we are in a bad place, now we need to go to the Central Bank. I never thought I would see myself doing this, but I am going down to Dame Street with the begging bowl. Saying ‘listen we are in real trouble now, you’ve got to do something’. But you expect the governor of the Central Bank will say ‘thank you, I’m glad that you are here, now here is our procedures for this. You need to do this, this and this and we are gonna’. But they were clueless, because they were not ready for it. We asked for a certain amount of money to be secured, we were never given an answer. The two weeks, I call it the two weeks of Lehman, because it was that between Lehman and the guarantee being issued, went by with us running around trying to get the Central Bank, the government, we put messages into the Department of Finance because the governor kept telling me ‘you know I am relying on the department of finance here and I have to keep asking them’. He wasn’t getting answers from them. So they were all gone into, I think of it like balls of little mercury, sort of scattered. They just weren’t joined up.
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