Drumm laid bare by Anglo tapes
By Business Editor David Murphy
The Anglo tapes are riveting listening. Perhaps the most illuminating aspect to them is the insight they give into the mindset of the bank’s then CEO David Drumm.
Clearly he held Irish authorities in contempt and that attitude infected the Anglo’s culture from the top down.
If the problem was down to one man it would have been easier to fix – but it was more widespread.
The chronology of the calls, obtained by The Irish Independent, reveals a fascinating shift Drumm’s opinion in the course of a few weeks.
Prior to the introduction of the guarantee in September 2008, he believed property developers would be able to repay their loans.
Drumm diagnosed Anglo’s the main problem as inability to borrow on the wholesale markets. That’s what he told the then Financial Regulator Patrick Neary, who believed him.
That made Anglo illiquid as opposed to insolvent. Drumm thought the solution would be borrowing for a few months from the Central Bank.
By December, however, Drumm’s attitude had changed.
He said he planned to tell then Finance Minister Brain Lenihan: “‘What’s this about having to go through due diligence? You made that decision on the 29th of September. You’ve told the f***in’ world we’re all solvent.
“‘Now can you protect your hundred billion guarantee of us by writing a two or three billion cheque and get on with it.’”
Aside from Drumm’s breath-taking arrogance, the remarkable feature is that in the space of a few weeks Anglo suddenly required €3bn of capital. This was money which would not be returned.
A slide was underway, the bank was no longer solvent and the developers would not be able to repay loans.
Drumm believed one cheque from the taxpayer would save it.
More alarming was the fact the he was planning to use the authorities’ belief that the bank was solvent, when guaranteed, as justification for taxpayers’ support.
But why did Drumm think that Anglo could be rescued with €3bn? Clearly the true scale of what was happening beyond his comprehension.
The tapes have put the bank’s former head of treasury John Bowe into the spotlight.
He said many things which offended taxpayers who have had to pay to clean up the Anglo catastrophe.
But he is clearly an intelligent man. The transcripts show he foresaw the nationalisation and break up the bank. He forecast the collapse of Sean Quinn’s empire and how much it would damage Anglo.
The tapes also show he warned Drumm that it would “not be that simple” when the then CEO planned to demand €7bn from the Central Bank.
There were some people in the upper echelons of Anglo who weren’t stupid and had sufficient capacity to fathom the scale of what was happening.
It’s a shame David Drumm didn’t listen to them.