The banking crisis - Extent of bank’s losses is staggering

ONE of the more colourful but chillingly accurate phrases used to embroider our public discourse in the not-too-distant past was given to us by a former EU commissioner.

Though it is hard to believe that it was offered all of 17 years ago it was used in connection with the debate of the day: whether or not the EU Maastricht Treaty was a good thing or otherwise for Ireland.

Our gallant commissioner suggested that listening to a group of Fianna Fáil backbenchers discussing the treaty was like watching a group of chimpanzees, each armed with a screwdriver, staring into the workings of a broken television set wondering what to do next.

If the truth be told very many of us are like those backbenchers — or chimpanzees — when it comes to the complexities of the banking crisis and the ever-widening range solutions offered to resolve it.

This crisis is having a terrible impact on all of our lives and may yet, if polls of recent days are correct, contribute to the worst ever election results for Fianna Fáil. Much more importantly it may mean a legacy for our children that we cannot be proud of.

Yesterday’s news that Finance Minister Brian Lenihan is to seek EU approval to inject up to €4 billion of State capital into the nationalised Anglo Irish Bank to prevent its utter collapse confirms again that this is a high stakes, trans-generational game and if we — or more importantly our government — get it wrong the consequences will cloud the ambitions of everyone in this country for decades to come.

That all of this is being done against a backdrop of huge jobs losses, wage cuts and tax increases — not to mention the prospect of curtailed services — does nothing to dispel public anger and individual worry.

Minister Lenihan’s move follows the announcement of a €4.1 billion pretax loss by the lender for the six months to the end of March. This figure is primarily a result of loan losses of €3.7 billion. The bank now has total “impairment provisions” of €4.9 billion and said its losses for the three-year period to the end of September 2011, “are likely to reach €7.5 billion”.

The vast majority of these losses have been incurred because of the property collapse. Truly, the price of lunacy and feral greed, excess and immoral recklessness is staggering.

Executive chairman of Anglo Irish Bank, Donal O’Connor, admitted that bad decisions were made. “Clearly the bank made mistakes in some of the lending decisions taken in recent years, particularly in relation to property lending in Ireland,” he said.

A very polite way of putting it Mr O’Connor. At this point it is probably more than is tolerable for a bank holiday weekend to remember there are other banks in similar positions, even if they are of a different scale.

In a co-incidence, straight from a Fawlty Towers scriptwriters’ conference, the Director of Corporate Enforcement, Paul Appleby, launched his annual report for 2008 yesterday.

Mr Appleby said he expects to engage with the Director of Public Prosecutions in the coming months in connection with his investigations into Anglo Irish Bank. Coming months? Just as well we weren’t holding our breath then. What a sad pass things have reached when we are so dependent on those who got so much wrong getting it right.