Irish Banks are considering legal action against several hedge funds in the belief that they gave false information about them in order to drive down their stock price and therefore make money by short-selling their stocks. If the regulator didn’t hammer the banks for the several million euro that the Irish Consumers were ripped off of in various debacles from account fees to forex charges then why should they get involved in this row?
The Regulator is there to enforce proper conduct in the Irish market, if the hedge-funds in question are not based here (chances are their administration might be though) then they will have little recourse, further more, the Irish Banks should be levied more if the Regulator does get involved, Irish Financial institutions have to pay for 50% of the Financial Regulators budget requirements, if they are going to be called in as inter-company police then the levy on firms using them for that purpose should increase. If there are two firms both regulated in Ireland that’s one thing, but hedge-funds are international institutions by and large and international litigation doesn’t fall under their remit.
I do feel that Anglo may have been victim of malicious activity, but given that we are at the end of the first reporting period the truth of any Banks position will be clearly evident very soon, unless of course the public choose not to believe them. Alan Schwartz of Bear Stearns told everybody things were fine at the start of the week and then was selling the company only three days later for $2 a share (this was just revised up to $10), if the CEO of the 5th largest bank on Wall Street (a bank that was 85 years old and managed to survive the Great Depression) can’t tell the truth then perhaps his credibility crisis will bleed over into other markets and we might notice a correlation of good news not being well met.
Now that we have gotten over the fear of using the dreaded ‘R’ word, the question is (to quote Morpheus from the Matrix) ‘how far does this rabbit hole go?’ Personally I’m kind of in the mood for taking the blue pill and staying in happy la-la land but that option doesn’t exist in the real world so having swallowed the red pill with a mouthful of painfully strong coffee I can say that life in a recession isn’t as bad as its made out to be, or maybe I just have an easier time coping with less.
An interesting survey would be to get people who have little or no debt and then some who are up to their neck in it and to ask them a series of qualitative financial questions, I’m certain that their impressions of how stressed they feel or their outlook for the future would vary wildly, and that’s why I also believe that in our society which now takes debt for granted that there are so many people seriously worried. If you would like to see posts about ridding yourself of debt let us know.
To return to the original basis of this article, The Financial Regulator should not in our opinion rush into this mess of accusations and denials, their job is the regulation of firms in Ireland and the enforcement of the law as it pertains to them, how can you regulate or control hearsay generated by international firms even if they are in the wrong?