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Thread: ECB raises fears over Irish collateral - and "Legal Certainty" of CIS Bill

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    Default ECB raises fears over Irish collateral - and "Legal Certainty" of CIS Bill

    Discussed in the FT here http://www.ft.com/cms/s/0/8a8542da-0...#axzz18ZF3GEWn

    The European Central Bank has expressed alarm that Ireland’s bank rescue plans could jeopardise assets put up as collateral in its liquidity providing operations.
    The warning reflects ECB concern at the risks involved in providing liquidity to Ireland’s banks. The most recent data show Irish banks having €136bn in loans outstanding from the ECB – a quarter of the total in the eurozone – and €45bn in emergency liquidity assistance from the Irish central bank. To obtain liquidity, eurozone banks have to put up assets as collateral.

    The ECB’s concern is to ensure it always holds enough collateral of sufficient quality to minimise its exposure were some of the massive amounts of liquidity it provides not to be paid-back.

    The opinion prepared by the ECB is the latest example of it expressing fears about the risks it is carrying as it combats the eurozone’s debt crisis.
    The ECB paper is here http://www.ecb.int/ecb/legal/pdf/en_con_2010_92_f.pdf

    Some of their observations are not good, and a well directed slap seems to be aimed at Lenihan the Great

    The Minister for Finance has requested the ECB to deliver an opinion by 17 December 2010. The
    ECB notes that, in cases of particular urgency which do not allow for the normal consultation
    period, the consulting authority may indicate such urgency in its consultation request and ask for a
    shorter deadline for the adoption of the ECB’s opinion. However, even though the ECB welcomes
    this consultation request and understands the need for an accelerated legislative procedure, it would
    have appreciated being consulted by the authority preparing the draft legislation at an earlier stage.
    2.3 The ECB would like to stress that, given the very short time in which it has been consulted on this
    important legislation, it has not been possible to assess all the many constitutional, other legal and
    regulatory issues which this draft law undoubtedly raises. In particular, the ECB has serious
    concerns that the draft law is insufficiently legally certain on a number of critical issues for the
    Eurosystem. For example, problems of legal uncertainty relate to the impact of, inter alia, Article
    61 (effects of orders on certain other obligations) of the draft law on the rights of the Central Bank,
    the ECB and possibly other central banks within the ESCB, the scope of collateral rights of central
    banks given as security against ELA, as well as other issues. The ECB would expect that nothing in
    this Act would affect operations, rights or entitlements of the Central Bank or the European Central
    Bank, or any other central banks within the ESCB.
    Reorganisation of credit institutions
    3.6 Section 4(1)(c) provides that a further purpose of the draft law is to continue the process of
    reorganisation, preservation and restoration of the financial position of Anglo Irish Bank
    Corporation Limited (Anglo) and, due to the reference in Section 4(1)(d) to the financial position of
    building societies, potentially also of Irish Nationwide Building Society (INBS). This appears to go
    beyond the position agreed with the IMF and the European Commission in liaison with the ECB,
    which envisaged a specific resolution plan for these two non viable banks.
    The ECB would
    welcome an amendment to the recital and confirmation that any action taken by the Minister under
    the draft law with respect to Anglo and INBS will be conditional on agreement by the IMF and the
    European Commission, in consultation with the ECB, and will relate to the State’s commitments
    under the agreement reached with the IMF and the European Commission, in liaison with the ECB.
    Direction orders
    3.5 In respect of direction, special management, subordinated liabilities and transfer orders, the Minster
    may, in exceptional circumstances, waive the requirement to notify in writing the relevant
    institution, allowing the relevant institution time to make written submissions to the Minister.
    Under the current draft, exceptional circumstances will exist where: (a) there is an imminent threat
    to the stability of the institution concerned, (b) there is an imminent threat to the stability of the
    national financial system, or (c) the Minister has reasonable grounds for believing that the
    confidentiality of the proposed order or the possibility of making such an order would not be
    maintained and that the breach of such confidentiality would have significant adverse
    consequences. The draft law should clarify whether the exceptional circumstances justifying a
    waiver of the written notice requirement are established when any of either (a), (b) or (c) are
    satisfied or whether (a) and (b) must both be satisfied, with (c) being an exceptional circumstance
    on its own15. In the ECB’s view, waiver of the basic notice requirement for measures interfering
    with creditors’ property rights would only be justified by the additional risk to the stability of the
    financial system.
    Last edited by C. Flower; 19-12-2010 at 03:46 PM.
    Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other. ~Oscar Ameringer

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    Default Re: ECB raises fears over Irish collateral

    Thats interesting CF- looks to me like the ECB loan in summary was agreed on condition that Lendahand wind up the two 'non-viable' banks and FF are starting to wriggle about shoving yet more loan money into dead banks presumably in the hope of getting to a point where the funds will obscure some of the well-connected holes in their balance sheets.

    Lennie is now trying to con the ECB over INBS and Anglo. The fear in Fianna Fail that there will be an open investigation on transactions and loan books in these two dead ducks is almost palpable.

    I'd say the death of FF for good lies in those books and at every turn Lennie like some mad old pooch that has been trying to scrape an expensive shower of publicly funded soil over it. Looks like the ECB have indeed taken a slap at Lennie and told him to stop scrabbling with their money.
    Last edited by Captain Con O'Sullivan; 19-12-2010 at 02:44 PM.
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: ECB raises fears over Irish collateral

    Quote Originally Posted by Captain Con O'Sullivan View Post
    Thats interesting CF- looks to me like the ECB loan in summary was agreed on condition that Lendahand wind up the two 'non-viable' banks and FF are starting to wriggle about shoving yet more loan money into dead banks presumably in the hope of getting to a point where the funds will obscure some of the well-connected holes in their balance sheets.

    Lennie is now trying to con the ECB over INBS and Anglo. The fear in Fianna Fail that there will be an open investigation on transactions and loan books in these two dead ducks is almost palpable.

    I'd say the death of FF for good lies in those books and at every turn Lennie like some mad old pooch that has been trying to scrape an expensive shower of publicly funded soil over it. Looks like the ECB have indeed taken a slap at Lennie and told him to stop scrabbling with their money.
    I don't think they are wriggling about putting money into them - they are trying to get out of winding them up.

    The ECB is saying the Credit Institutions (Stability) Bill- Draft Law- should not go through as is.

    I agree the Bill should not be enacted - it hasn't been yet, has it??

    It is also almost certainly not constitutional and should be stopped.

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    Default Re: ECB raises fears over Irish collateral

    Quote Originally Posted by C. Flower View Post
    I don't think they are wriggling about putting money into them - they are trying to get out of winding them up.

    The ECB is saying the Credit Institutions (Stability) Bill- Draft Law- should not go through as is.

    I agree the Bill should not be enacted - it hasn't been yet, has it??

    It is also almost certainly not constitutional and should be stopped.
    It has passed Dail and Seanad butEl Pres has called the Council of State for a review next week

    PRESIDENT MARY McAleese will convene the Council of State next Tuesday to consider the Credit Institutions (Stabilisation) Bill 2010, which was passed by the Dáil and Seanad this week.
    Members of the council include: Taoiseach Brian Cowen, Tánaiste Mary Coughlan, Chief Justice Mr Justice John Murray, president of the High Court Mr Justice Nicholas Kearns and Attorney General Paul Gallagher SC.

    Former office holders who sit on the council include former president Mary Robinson and former taoisigh Dr Garret FitzGerald, Liam Cosgrave, John Bruton, Albert Reynolds and Bertie Ahern. Members appointed by Mrs McAleese include Mary Davis and Minister of State Dr Martin Mansergh.
    http://www.irishtimes.com/newspaper/...285836529.html
    Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other. ~Oscar Ameringer

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    Default Re: ECB raises fears over Irish collateral

    Martin Mansergh by the way is the official Irish representative (referred to as 'governor') at the International Monetary Fund.

    No doubt little Martie will fart, hoot and whistle his way through an explanation at the Council of State meeting why he should recuse himself from the discussion as he has a conflict of interest...?

    I know Lendahand and Cowen don't want to wind up Anglo and INBS because there is a danger they won't be able to hide the books for good if shareholders and bondholders demand an open investigation.

    That would be the end of Fianna Fail going by the efforts Lennie and Cowen are making to prevent the books being examined. I'm sure they'd love to keep it technically alive which means they can say 'no' to independent investigations.

    They start to lose control over the books when a receiver or administrator is appointed and well-funded legal departments start demanding a forensic examination. The bondholders may want to sue individuals or the DoF remember...
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: ECB raises fears over Irish collateral

    Quote Originally Posted by DCon View Post
    It has passed Dail and Seanad butEl Pres has called the Council of State for a review next week



    http://www.irishtimes.com/newspaper/...285836529.html
    Thank you very much DCon.

    The Council of State is stacked with the most dubious people from North and South and certainly in part non-Irish interests are represented in it.

    But the Bill is blatantly unconstitutional.

    There is a need for a case to be taken in relation to the 4-year plan and IMF Memorandum - but the time for it may have passed - I wish there were some honest lawyers about who would advise, but they are all it seem bought out by the enormous funds slushed at the legal profession by RTE ?

    The Council of State meets next Tuesday - where, I wonder ?

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    Default Re: ECB raises fears over Irish collateral

    Looks like Lennie and the DoF tried to 'bums rush' the ECB into not going over their plans in detail and have failed to do so.

    Take that in tandem with the executive powers that Lennie is trying to award himself (possibly to enable him to cover up Anglo and INBS -related corruption to his own party before leaving office?) and the ECB are rightly wary.

    This man should have been sacked long ago as MoF and instead it just looks like he's trying to bend the constitution to give himself extraordinary powers.

    Didn't the US Treasury Secretary try to ram something similar through congress when looking to gain extraordinary powers not granted by the constitution? It was only stopped when Congress pointed out that the powers were so wide and so hemmed in by guaranteed immunity from prosecution that the man could have walked off with half the Treasury and been free from prosecution afterwards.

    Needless to say the attempt was dropped.
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: ECB raises fears over Irish collateral - and "Legal Certainty" of CIS Bill

    Lenihan is now caught between the C of S - how can they say it's constitutional - even given who they are - and the ECB.

    Debacle, if this falls....

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    Default Re: ECB raises fears over Irish collateral

    Quote Originally Posted by Captain Con O'Sullivan View Post
    Looks like Lennie and the DoF tried to 'bums rush' the ECB into not going over their plans in detail and have failed to do so.

    Take that in tandem with the executive powers that Lennie is trying to award himself (possibly to enable him to cover up Anglo and INBS -related corruption to his own party before leaving office?) and the ECB are rightly wary.

    This man should have been sacked long ago as MoF and instead it just looks like he's trying to bend the constitution to give himself extraordinary powers.

    Didn't the US Treasury Secretary try to ram something similar through congress when looking to gain extraordinary powers not granted by the constitution? It was only stopped when Congress pointed out that the powers were so wide and so hemmed in by guaranteed immunity from prosecution that the man could have walked off with half the Treasury and been free from prosecution afterwards.

    Needless to say the attempt was dropped.

    Lenihan was forced by the EU to back track when he tried to take on similar powers in relation to the Bank Guarantee and I think NAMA. At each stage he told them after the event or gave virtually no time for consultation.

    At this stage, the fury is palpable.

    I'm told by TheCountofSix that if the Council of State approves the legislation, that it can't be subsequently challenged. I would like to get my head around the law.

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    Default Re: ECB raises fears over Irish collateral

    [QUOTE=C. FlowerThe Council of State meets next Tuesday - where, I wonder ?[/QUOTE]

    Room above Fagans?
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: ECB raises fears over Irish collateral - and "Legal Certainty" of CIS Bill

    We need to get the law on this out, and to have a look at it.

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    Default Re: ECB raises fears over Irish collateral

    Quote Originally Posted by C. Flower View Post
    Lenihan was forced by the EU to back track when he tried to take on similar powers in relation to the Bank Guarantee and I think NAMA. At each stage he told them after the event or gave virtually no time for consultation.

    At this stage, the fury is palpable.

    I'm told by TheCountofSix that if the Council of State approves the legislation, that it can't be subsequently challenged. I would like to get my head around the law.
    Thats absolutely true and to my mind the only reason the Council of State is looking at it.

    Once a proposed measure has been passed by the CoS it can't be challenged later. Its a bit of a PR measure which reassures the plebs that the President cares when in fact its a rubberstamp measure.

    Anyone care for a bet on whether the CoS will okay it or not?
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: ECB raises fears over Irish collateral - and "Legal Certainty" of CIS Bill

    @_politicalworld Do you think Mary is going to send the bill to the Supreme Court via CoS to stop it being challenged in the future?


    @_politicalworld Article 34.3.3 of Bunreacht: http://tinyurl.com/ybemlt4 (PDF.) Otherwise, constitutionality can be challenged in HC or SC.

    @_politicalworld Attraction of this to the state is that challenge can be pre-empted before all constitutional ramifications become clear.


    From TCoS, via twitter.

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    Default Re: ECB raises fears over Irish collateral - and "Legal Certainty" of CIS Bill

    3° No Court whatever shall have jurisdiction to question the validity of a law, or any provision of a law, the Bill for which shall have been referred to the Supreme Court by the President under Article 26 of this Constitution, or to question the validity of a provision of a law where the corresponding provision in the Bill for such law shall have been referred to the Supreme Court by the President under the said Article 26.

  15. #15

    Default Re: ECB raises fears over Irish collateral

    Quote Originally Posted by C. Flower View Post
    Lenihan was forced by the EU to back track when he tried to take on similar powers in relation to the Bank Guarantee and I think NAMA. At each stage he told them after the event or gave virtually no time for consultation.

    At this stage, the fury is palpable.

    I'm told by TheCountofSix that if the Council of State approves the legislation, that it can't be subsequently challenged. I would like to get my head around the law.
    Yeah, the Council of State is convened to refer bills to the Supreme Court if necessary. If the Supreme Court then approves it, then, according to the Bunreacht:

    No Court whatever shall have jurisdiction to question the validity of a law, or any provision of a law, the Bill for which shall have been referred to the Supreme Court by the President under Article 26 of this Constitution, or to question the validity of a provision of a law where the corresponding provision in the Bill for such law shall have been referred to the Supreme Court by the President under the said Article 26.
    In other words, it's a way of pre-empting a legal challenge before the full impact of the law becomes clear. It's like insisting that a car, once passed safe, can never be recalled even if new information arises in unforeseen circumstances. It's basically just changing the blade on the guillotine the government uses to pass its legislation. A cynical and sinister exercise by the establishment.

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