EU-IMF Programme Documents & Secret Side Letter on the Banks - Update: Lenihan's Letter of November 9th Released

[PaddyJoe]

Once again thestory.ie is making all the headlines today. Good work by Gavin Sheridan

The European Central Bank has refused to release a letter sent to former Finance Minister Brian Lenihan in November 2010, stating that the release of the letter’s contents would “undermine the protection of the public interest as regards the monetary policy of the Union and as regards the stability of the financial system in a Member State”. I submitted a request to the ECB for all letters sent to Brian Lenihan or his office in November 2010.

In April last year the contents of an interview between Dan O’Brien of the Irish Times and the late Brian Lenihan were published, in which Lenihan said Ireland had been “bounced” into the EU/IMF bailout and that the first hard indication he had of the ECB wanting Ireland to accept a bailout came in a letter he received from the head of the bank, Jean-Claude Trichet, on November 12. In the letter, according to Mr Lenihan, Mr Trichet “raised the question about whether Ireland would be participating in a programme at that stage”.

http://thestory.ie/

[C. Flower]

Just to be clear on the side letter, reference to it first occured in the Irish Times (link below) which said "The Government has withheld from publication a side letter agreed with the EU and IMF outlining confidential measures for the banks and tax changes to be included in Tuesday’s budget."

We don't know how the banks will deleverage up to €90bn of loans and what effect that would have on the economy, not to mention the terms of the ECB's emergency assistance programme which was signposted as ending in Jan 2011, nor how NAMA will raise €5bn of funding, nor IMF estimates of losses in the banks or the outlooks for the banks which are getting capital at 6% (does that mean that our mortgages are set to rise to 8% so that the banks make a profit?). There is neither a credible starting position for the banks (non-NAMA and off-balance sheet losses) nor a published plan for restructuring the sector nor evidence that the effect of the restructure might have on the wider economy.

http://www.irishtimes.com/newspaper/...284574676.html

Well, an interesting development that you've written about in your blog today - Gavin of "The Story" has done the necessary thing, and requested the ECB to release the letter. The reply was that if they released it, the sky would fall in, so they will not.

The letter was sent by the ECB to Lenihan at a stage at which he was still trying to avoid the burden of unguaranteed debt falling on the taxpayer, and trying to do a separate deal with the EU/IMF on domestic, rather than bank debt.

http://namawinelake.wordpress.com/20...brian-lenihan/

The decision is going to be appealed I am delighted to read and will be emailing the ECB with my own support for its release.

[DCon]

Well, an interesting development that you've written about in your blog today - Gavin of "The Story" has done the necessary thing, and requested the ECB to release the letter. The reply was that if they released it, the sky would fall in, so they will not.

The letter was sent by the ECB to Lenihan at a stage at which he was still trying to avoid the burden of unguaranteed debt falling on the taxpayer, and trying to do a separate deal with the EU/IMF on domestic, rather than bank debt.

http://namawinelake.wordpress.com/20...brian-lenihan/

The decision is going to be appealed I am delighted to read and will be emailing the ECB with my own support for its release.

Could a fair minded MEP request same, and then release it?

[C. Flower]

Could a fair minded MEP request same, and then release it?

I don't know if MEPs have any special authority in relation to the ECB.

It would seem like a very good idea for them to ask for it, anyway.

Here's the post in The Story, with the ECB reply in full.

http://thestory.ie/2012/01/09/ecb-re...ailout-letter/

[TotalMayhem]

The letter’s contents would undermine the protection of the public interest the debt collectors' a$$es from a pitchfork wielding public.

[C. Flower]

Anyone want to have a shot at their own version of what the letter says ?

[PaddyJoe]

Anyone want to have a shot at their own version of what the letter says ?

Maybe it said:

....“we don’t want you to default on these payments, it is your decision ultimately but a bomb will go off; and the bomb will go off in Dublin and not in Frankfurt.”

[Captain Con O'Sullivan]

The ECB is just a front for investment banks, remember. And therefore will happily spend its time ensuring that its paymasters, the bondholders, get paid no matter what happens.

[ang]

Once again thestory.ie is making all the headlines today. Good work by Gavin Sheridan

http://thestory.ie/

Karl Whelan raises the spectre of that letter again -

By announcing it is only willing to purchase Spanish and Italian government bonds if these governments apply for funding from the EFSF bailout fund, the ECB is now exerting pressure on these countries to sign full bailout agreements. Officially, Mario Draghi’s position on how the ECB engages with governments (as explained at his June press conference) is :-

"I do not view it as the ECB’s task to push governments into doing something. It is really their own decision as to whether they want to access the EFSF or not".

In reality, the record of the ECB’s role in Ireland’s bailout application (admittedly at the time under the leadership of Draghi’s predecessor) suggests it is an organization that is not at all averse to pushing governments into bailout funds. As the facts below illustrate, this record also doesn’t provide encouragement that the ECB will act in an open and transparent manner when doing so.

http://www.forbes.com/sites/karlwhel...ome-questions/

[C. Flower]

Karl Whelan raises the spectre of that letter again -

http://www.forbes.com/sites/karlwhel...ome-questions/

We had a couple of threads going at that time in which it was clear that there was coertion.

Lenihan was trying his damndest to get a loan to cover everything but the banks.

Lenihan had already made sure that much of the bondholder debt had been paid.

I'm struggling to imaging what the ECB might have said that would be so deeply embarrassing to them, if made public.



http://www.politicalworld.org/showth...reland+Bailout

[PaddyJoe]

Karl Whelan raises the spectre of that letter again -



http://www.forbes.com/sites/karlwhel...ome-questions/

Richard Curran of the SBP tried to FOI these letters last year but was refused by the DOF.

[MPB]

People need to ask the question.

Did we join the EU or the ECB?

I did,nt vote for Goldman Sachs in the last election. But then again I did,nt vote for FG either.

However FG stood for election and were democratically elected by the people of Ireland.

The fact that FG would prefer to be run by Goldman Sachs is their problem and one I intend to highlight at every opportunity.

[C. Flower]

To the government . The DFA. For the following reasons:

(a) access to the record could reasonably be expected to have a serious adverse affect on the financial interests of the State or on the ability of the Government to manage the national economy,

I have a fairly good imagination, but am unable to envisage what kind of horrors this letter must contain, for it to represent such a threat.

[MPB]

Are elections necessary anymore?

It,s obviously a waste of public money, when the ECB are able to dictate the policy of sovereign states.

[MPB]

To be more exact.

"Having reviewed your request, I consider that the records you have requested are covered by Section 31 of the Freedom of Information Act 1997 (extract copied ,below, *for ease of reference)* and are, therefore, exempt from disclosure under the Act as they would undermine the protection of the financial, monetary and economic policy of Ireland as a member State of the European Union.

I too am trying to imagine but clearly the reasons are serious in some way

It,s a pity they did,nt apply that line of thinking to the blanket bank guarantee.