Saturday, June 29, 2013

Horse, meet stable door

So far in the Irish Independent's Anglo Irish tapes, the bank's former CEO David Drumm is emerging as a classic villain. But maybe the villains get the best lines. Here he is in the latest tape release [Clip 11(a) "Punch"], recounting one of his December 2008 meetings with the Department of Finance concerning how to raise capital for the bank in which the department was telling him what he had to do once he had gotten some outside investor interest --

and then when you come back, we've got a long process to go through to sort of approve you for capital, including due diligence --  which is insulting to the intelligence because they've guaranteed all our liabilities

Which is exactly right. Why was the government asking a bank to wait for due diligence when they'd already given it a full guarantee? The due diligence is done by the entity before putting the big money on the table, which they already had in September. Unless ... they hadn't!

UPDATE: Much of the initial commentary on this tape focuses on a supposed threat by Drumm to punch Brian Lenihan, then Minister of Finance. It's clear that Drumm meant it metaphorically as a demand to Lenihan to clarify whether or not Anglo was considered systemic by the government. Incidentally, Lenihan was not diagnosed with cancer till a year after this conversation, contrary to some tweets related to the topic this evening.

FINAL UPDATE: In a related clip "pregnant", Drumm unintentionally writes the epitaph for the guarantee --

When you've guaranteed somebody's entire liabilities, it's smart to write a very small cheque to stop them being called.

Note: here's a transcript of the full conversation involving both clips above.