New Anglo Irish Bank tapes just published reveal alarming exchanges among leading bankers in the industry.
A leading British banker in Merrill Lynch, Matt Pass, who advised the Irish state on the bank guarantee, told Anglo Irish Bank Head of Treasury John Bowe that the industry had “totally f*****g let the world down.”
Despite that assertion, the British banker added it was politicians such as then Taoiseach (Prime Minister) Brian Cowen and British Prime Minister Gordon Brown who would lose their jobs.
Irish banker Bowe replied “yeah” and added that the politicians in charge had to take responsibility for the crash because “you pay the piper, you call the tune.”
The tapes, the details of which appeared in this week’s Sunday Independent and Irish Independent, follow on equally startling tapes from Anglo Irish published in July.
At that time Justice Minister Alan Shatter was prompted to urge David Drumm, former Anglo Irish chief executive, to return from his U.S. home to help Gardai (police) in their inquiries. Drumm moved to the U.S in 2009 following the loss of his bank job.
He figures again in details released from the latest tapes in a sector showing that worried Anglo Irish chiefs wanted the Central Bank to express confidence in Anglo’s financial position, despite knowing the institution was in crisis. The Central Bank is responsible for the supervision of most financial institutions in Ireland.
A full 10 months before the 2008 bank guarantee, Anglo chiefs Drumm and Bowe were desperate to defend their bank’s weakening financial position and stave off attacks from international investors.
So in November 2007 they discussed, according to the tapes, how the then Central Bank governor, John Hurley, might be persuaded to help them out and make a public statement of confidence in the Irish banks.
However, they also admitted that such a move could in itself set alarm bells ringing on the markets about Anglo.
They feared the reaction from the markets to a statement of confidence coming from Ireland. Drumm laughingly agreed with an observation by Bowe that the reaction could be “those f***in’ Irish, you wouldn’t want to believe a word they’re saying.”
Taped conversations between Drumm and Bowe also show they wanted Sean Quinn, then Ireland’s richest man, to create the impression he was buying more shares in the bank – even after telling the Financial Regulator that the one-time billionaire’s shareholding was dangerously large.
They wanted him to help keep up the bank’s stock market price by creating the impression he was still ready to buy more of the doomed bank’s shares.
The relationship between Quinn and Anglo has become one of the most controversial episodes to emerge from the banking collapse. It has spawned a massive legal battle between the two sides that is set to run for years.