On Monday of this week a judge in the High Court in Dublin made a decision that will send shivers down the spines of the top developers and bankers here. The former boss of Anglo Irish Bank, Sean FitzPatrick, was officially declared a bankrupt by the judge.
It's not the kind of thing that was supposed to happen to a member of the golden circle, the super wealthy elite who made fortunes during the boom here, largely due to the property bubble.
FitzPatrick was the poster boy for the madness, the ultimate mover and shaker who built the tiny Anglo Irish investment bank on Stephen's Green in Dublin from an annual profit of one million in 1987 to one billion in 2007.
He did it by becoming the bank for speculators and developers, ignoring the basic banking rulebook and pumping out money without adequate security, money borrowed on the international markets. While the boom continued, he appeared to be hugely successful.
As well as being a lender, the bank became a player, often taking a share in the action.
FitzPatrick got personally involved in developments as well, with tens of millions borrowed from his own bank.
And it was that personal involvement that has now sunk him. He owes the now nationalized Anglo Irish around €110 million, and his assets are about half of that. It was Anglo that pushed him into bankruptcy on Monday, although there are other creditors out there and he has a total debt of around €150 million.
Being a bankrupt under Irish law is a humiliating experience, tougher than in Britain or the U.S. Basically it means that almost all his assets and earnings (if any) will be used by a court appointed administrator to pay off his debts.
Any asset worth more than €3,100 can be taken from him at the discretion of the administrator, right down to his fancy watch or golf clubs or his car if the administrator decides he doesn't need it to enable him to earn money to pay his debts.
Even his house is in danger. Under Irish law his wife automatically owns 50% of it, but the other 50% can be sold to pay debts.
Usually the wife is given the chance to buy her husband's 50% from the administrator. Often the bankrupt's private home is left alone by the administrator, but in this case his luxury house has attracted so much attention that the administrator may feel compelled to act.
Any other property and assets automatically transfer to the control of the administrator, as will any earnings or pension payments FitzPatrick gets (the administrator will decide how much he needs to live on).
Bankruptcy here lasts for 12 years. FitzPatrick can't be a company director during that time. He can't even borrow more than €650 without prior approval.
As I said, it's enough to send shivers down the backs of his fellow Celtic Tigers who also owe hundreds of millions. For a man who once seemed to have everything it's the ultimate humiliation, an extraordinary fall from the peak of society into a black hole of relative poverty in just a couple of years.
But there will be little or no sympathy here for FitzPatrick. Anglo Irish Bank, under his direction, was the rogue bank which did more than anyone else to inflate the property bubble.
When the two main banks here (Bank of Ireland and Allied Irish Bank) saw how much Anglo Irish was making from property, they felt they had to match FitzPatrick's tactics to protect their profit levels and share prices. And they piled in as well. Like FitzPatrick, they loaned the developers and speculators hundreds of millions on very little security.
So FitzPatrick carries a significant part of the responsibility for what went wrong here. His bank wasn't the biggest player, but it was the one that led the way in irresponsible lending.
The collapse of the property bubble led to our present economic woes, making the recession here the deepest in Europe and leading to soaring unemployment and severe cutbacks in state spending, cuts which are now impacting on the lives of ordinary people across Ireland.
That's why there will be no sympathy here for FitzPatrick. In fact most people here will feel a sense of satisfaction that at last one of the fat cats is feeling the pain that so many ordinary people are going through as they try to pay their bills and hang on to their homes. FitzPatrick is only one, but like the old joke about what you call a dead lawyer at the bottom of the sea, he's a start.
People here are fed up reading about the billionaire developers whose toxic loans have now been taken over by the state backed National Asset Management Agency (Nama) to stop our banks going bust.
Hundreds of millions in loans given to individual developers by the banks are now owned by Nama, which keeps on saying that it will pursue these developers for all of the money. But we see little sign of the developers being put under pressure.
They may no longer take their helicopters to the races, but they still live in luxury homes, drive limos and enjoy a lifestyle the rest of us can only dream about. A few even turn up at glitzy social events as though everything was normal. One of these developers whose development company has a billion in loans in Nama even took a model friend to Morocco recently on a private jet for a weekend break.
Most of these guys are unable to pay off their loans, and some of them gave personal guarantees when they got the loans to start with. Yet in spite of public admissions that they can't meet their liabilities, they still seem to be able to live the high life.
We have now learned that some of the banks were allowing them to keep rental income on some properties even though they had hundreds of millions in loans they were not repaying. Nama has now said it will put a stop to that.
But we need to see more of them being made to face the reality of the situation they are in and the consequences of their behavior for the rest of us. Because of the way many of the big property developments that have now gone belly-up were financed across several banks with other developments used as security, it's a complicated mess for Nama to sort out.
Nama is "working with" the developers to do this and to finish some of the buildings that may still find a market. But that should not stop Nama aggressively pursuing the developers through the courts for the money they owe. And if they can't meet their liabilities then, like FitzPatrick, they should be pushed into bankruptcy.
As far as most people here are concerned, FitzPatrick is just the start. We have now learned that the next tranche of billions in bad loans that will be going into Nama includes quite a few multi-million euro loans taken out by syndicates of lawyers, doctors and other professionals as a way of minimizing their tax liabilities (in some renewal areas in Dublin you used to get tax breaks for new office blocks etc).
These loans are also non-performing (no interest is being paid) and have gone into Nama but presumably the professional gentlemen (and ladies!) who took out the loans are still making lots of money.
And it's not just the top 20 developers and these syndicates who must be forced to pay the price. There are many medium sized developers and builders around who are also trying to carry on as though their non-performing loans are really someone else's problem (like the taxpayer).
But perhaps the biggest scandal of all is that most of the senior bankers who allowed this mess to develop are still in their comfortable offices getting their telephone number salaries. One of the first things the new Fine Gael finance spokesman Michael Noonan said last week was that they should all be thrown out. And he is right.
It has now emerged that the initial 40% figure the banks gave to Nama for their performing loans (those at least paying interest) in fact should have been 25% at best. The head of Nama said last week that he was shocked and appalled at this, which had to be either incompetence or duplicity by the bank executives.
In either case, they should all be dumped.
The final piece of bad news last weekend was that the amount that Anglo Irish is going to cost the taxpayers here will not be €22 billion, but at least €32 billion. It seems there is a €10 billion loan that the Irish Central Bank gave to Anglo Irish to keep it going that everyone had forgotten about.
Yet another reason why FitzPatrick will get no sympathy, and why the rest of the bankers and developers who caused the biggest economic crisis in the history of the Irish state should be made face a personal reality. It's time for reality to bite in the golden circle.
It's not the kind of thing that was supposed to happen to a member of the golden circle, the super wealthy elite who made fortunes during the boom here, largely due to the property bubble.
FitzPatrick was the poster boy for the madness, the ultimate mover and shaker who built the tiny Anglo Irish investment bank on Stephen's Green in Dublin from an annual profit of one million in 1987 to one billion in 2007.
He did it by becoming the bank for speculators and developers, ignoring the basic banking rulebook and pumping out money without adequate security, money borrowed on the international markets. While the boom continued, he appeared to be hugely successful.
As well as being a lender, the bank became a player, often taking a share in the action.
FitzPatrick got personally involved in developments as well, with tens of millions borrowed from his own bank.
And it was that personal involvement that has now sunk him. He owes the now nationalized Anglo Irish around €110 million, and his assets are about half of that. It was Anglo that pushed him into bankruptcy on Monday, although there are other creditors out there and he has a total debt of around €150 million.
Being a bankrupt under Irish law is a humiliating experience, tougher than in Britain or the U.S. Basically it means that almost all his assets and earnings (if any) will be used by a court appointed administrator to pay off his debts.
Any asset worth more than €3,100 can be taken from him at the discretion of the administrator, right down to his fancy watch or golf clubs or his car if the administrator decides he doesn't need it to enable him to earn money to pay his debts.
Even his house is in danger. Under Irish law his wife automatically owns 50% of it, but the other 50% can be sold to pay debts.
Usually the wife is given the chance to buy her husband's 50% from the administrator. Often the bankrupt's private home is left alone by the administrator, but in this case his luxury house has attracted so much attention that the administrator may feel compelled to act.
Any other property and assets automatically transfer to the control of the administrator, as will any earnings or pension payments FitzPatrick gets (the administrator will decide how much he needs to live on).
Bankruptcy here lasts for 12 years. FitzPatrick can't be a company director during that time. He can't even borrow more than €650 without prior approval.
As I said, it's enough to send shivers down the backs of his fellow Celtic Tigers who also owe hundreds of millions. For a man who once seemed to have everything it's the ultimate humiliation, an extraordinary fall from the peak of society into a black hole of relative poverty in just a couple of years.
But there will be little or no sympathy here for FitzPatrick. Anglo Irish Bank, under his direction, was the rogue bank which did more than anyone else to inflate the property bubble.
When the two main banks here (Bank of Ireland and Allied Irish Bank) saw how much Anglo Irish was making from property, they felt they had to match FitzPatrick's tactics to protect their profit levels and share prices. And they piled in as well. Like FitzPatrick, they loaned the developers and speculators hundreds of millions on very little security.
So FitzPatrick carries a significant part of the responsibility for what went wrong here. His bank wasn't the biggest player, but it was the one that led the way in irresponsible lending.
The collapse of the property bubble led to our present economic woes, making the recession here the deepest in Europe and leading to soaring unemployment and severe cutbacks in state spending, cuts which are now impacting on the lives of ordinary people across Ireland.
That's why there will be no sympathy here for FitzPatrick. In fact most people here will feel a sense of satisfaction that at last one of the fat cats is feeling the pain that so many ordinary people are going through as they try to pay their bills and hang on to their homes. FitzPatrick is only one, but like the old joke about what you call a dead lawyer at the bottom of the sea, he's a start.
People here are fed up reading about the billionaire developers whose toxic loans have now been taken over by the state backed National Asset Management Agency (Nama) to stop our banks going bust.
Hundreds of millions in loans given to individual developers by the banks are now owned by Nama, which keeps on saying that it will pursue these developers for all of the money. But we see little sign of the developers being put under pressure.
They may no longer take their helicopters to the races, but they still live in luxury homes, drive limos and enjoy a lifestyle the rest of us can only dream about. A few even turn up at glitzy social events as though everything was normal. One of these developers whose development company has a billion in loans in Nama even took a model friend to Morocco recently on a private jet for a weekend break.
Most of these guys are unable to pay off their loans, and some of them gave personal guarantees when they got the loans to start with. Yet in spite of public admissions that they can't meet their liabilities, they still seem to be able to live the high life.
We have now learned that some of the banks were allowing them to keep rental income on some properties even though they had hundreds of millions in loans they were not repaying. Nama has now said it will put a stop to that.
But we need to see more of them being made to face the reality of the situation they are in and the consequences of their behavior for the rest of us. Because of the way many of the big property developments that have now gone belly-up were financed across several banks with other developments used as security, it's a complicated mess for Nama to sort out.
Nama is "working with" the developers to do this and to finish some of the buildings that may still find a market. But that should not stop Nama aggressively pursuing the developers through the courts for the money they owe. And if they can't meet their liabilities then, like FitzPatrick, they should be pushed into bankruptcy.
As far as most people here are concerned, FitzPatrick is just the start. We have now learned that the next tranche of billions in bad loans that will be going into Nama includes quite a few multi-million euro loans taken out by syndicates of lawyers, doctors and other professionals as a way of minimizing their tax liabilities (in some renewal areas in Dublin you used to get tax breaks for new office blocks etc).
These loans are also non-performing (no interest is being paid) and have gone into Nama but presumably the professional gentlemen (and ladies!) who took out the loans are still making lots of money.
And it's not just the top 20 developers and these syndicates who must be forced to pay the price. There are many medium sized developers and builders around who are also trying to carry on as though their non-performing loans are really someone else's problem (like the taxpayer).
But perhaps the biggest scandal of all is that most of the senior bankers who allowed this mess to develop are still in their comfortable offices getting their telephone number salaries. One of the first things the new Fine Gael finance spokesman Michael Noonan said last week was that they should all be thrown out. And he is right.
It has now emerged that the initial 40% figure the banks gave to Nama for their performing loans (those at least paying interest) in fact should have been 25% at best. The head of Nama said last week that he was shocked and appalled at this, which had to be either incompetence or duplicity by the bank executives.
In either case, they should all be dumped.
The final piece of bad news last weekend was that the amount that Anglo Irish is going to cost the taxpayers here will not be €22 billion, but at least €32 billion. It seems there is a €10 billion loan that the Irish Central Bank gave to Anglo Irish to keep it going that everyone had forgotten about.
Yet another reason why FitzPatrick will get no sympathy, and why the rest of the bankers and developers who caused the biggest economic crisis in the history of the Irish state should be made face a personal reality. It's time for reality to bite in the golden circle.
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