The Bankers Who Caused Ireland's Crisis

by Niall Stanage Info

Niall Stanage is a New York-based, Irish-born journalist and the author of Redemption Song: An Irish Reporter Inside the Obama Campaign (Liberties Press, Dublin).

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Ireland’s economic troubles threaten the financial health of Europe and even the U.S. At the heart of the multibillion-dollar crisis are two highflying bankers who some say took the country for a ride. By Niall Stanage

Ireland was hailed as an economic miracle not so long ago. Now, it’s an economic basket-case that threatens the financial health not just of Europe but of the U.S. as well.

But the outsize role of two men in this financial meltdown is a little-known story offering a salutary lesson about the dangers of greed, groupthink, and lax regulation as anything that has taken place on this side of the Atlantic.

Sean FitzPatrick was the CEO of Anglo Irish Bank from 1986 to 2005. At that point, he assumed the chairmanship, and David Drumm, his protégé, became the bank’s leader.

                                The two men built the bank from a tiny operation—it had eight employees when FitzPatrick took over—to something that looked like an international powerhouse. Looks were deceptive. The bank would be its nation’s downfall.

During the boom years, Anglo expanded its market share by reckless lending, especially to property developers. More established, conservative Irish banks began to ape some of the same tactics to ward off the new contender. Then, the property bubble popped and the whole house of cards tumbled.

The Irish government took control of Anglo in January 2009. It has been hurling taxpayers’ money into an apparently bottomless pit ever since. Irish Finance Minister Brian Lenihan originally estimated the cost of propping up the bank at $6.1 billion. He admitted two months ago that it would actually be between $39.8 billion and $46.7 billion.

The price tag has propelled Ireland’s deficit to hitherto unimaginable levels—and this, in turn, now necessitates international intervention.

“The banks are gobbling up the state,” is the verdict of Martina Devlin, an Irish newspaper columnist and the co-author of Banksters, a 2009 book tracing the roots of the collapse.

“He is just considered a scumbag… I would think his life would be in serious danger if he came back here.”

Brian Lucey, a Trinity College, Dublin finance professor, says that the feeling on the streets of the Irish capital is that “the republic has been raped, torn apart” by the bankers and their political friends.

At the heart of the rapaciousness, at least in the public mind, are FitzPatrick and Drumm.

Peter Morrison / AP Photo

FitzPatrick was once one of the heroes of Celtic Tiger Ireland. An ebullient former accountant with a fondness for bowties, he was known as “Seanie Fitz” to his many social acquaintances. For those on the way up, FitzPatrick was someone to whom it was useful to pay obeisance.

Devlin recalls seeing the banker’s aura in full effect at a 2007 charity function.

“It really was like the parting of the Red Sea,” she tells The Daily Beast. “People actually did step aside for him.”

FitzPatrick knew some things that the general public did not—notably, that he held personal loans amounting to well over $110 million from the bank. He used the money to finance a host of exotic ventures: a share in a Nigerian oil well; an interest in a casino in Macau; a property investment in Budapest. There were even plans to get into the movie-financing business.

The eventual discovery of these loans precipitated FitzPatrick’s departure from the company in December 2008. David Drumm followed him out the door the next day.

12 November 19, 2010 | 1:35am Twitter Emails

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Your email has been sent. Thanks for recommending The Daily Beast! X Close Share $(function(){ var share_object = SHARETHIS.addEntry({ title: unescape('The%20Men%20Who%20Killed%20the%20Economy'), summary:unescape('Ireland%26rsquo%3Bs%20economic%20troubles%20threaten%20the%20financial%20health%20of%20Europe%20and%20even%20the%20U.S.%20At%20the%20heart%20of%20the%20multibillion-dollar%20crisis%20are%20two%20highflying%20bankers%20who%20some%20say%20took%20the%20country%20for%20a%20ride.'), content:unescape('Ireland%26rsquo%3Bs%20economic%20troubles%20threaten%20the%20financial%20health%20of%20Europe%20and%20even%20the%20U.S.%20At%20the%20heart%20of%20the%20multibillion-dollar%20crisis%20are%20two%20highflying%20bankers%20who%20some%20say%20took%20the%20country%20for%20a%20ride.'), url:'http://www.thedailybeast.com/blogs-and-stories/2010-11-19/irelands-financial-crisis-the-bankers-who-caused-it/' }, {button:false, embeds:true}); var element = document.getElementById("sharethis"); share_object.attachButton(element); share_object.attachButton(document.getElementById("sharethis_1")); share_object.attachChicklet("twitter", document.getElementById("twitter_1")); share_object.attachChicklet("twitter", document.getElementById("twitter_2")); }); var OutbrainPermaLink=document.location.href.replace(document.location.search, '').replace(/\/\d+\/$/,'/').replace(document.location.host, 'thedailybeast.com'); var OB_Template = "The Daily Beast"; var OB_demoMode = false; var OBITm = "1255455386150"; var OB_langJS ='http://widgets.outbrain.com/lang_en.js'; if ( typeof(OB_Script)!='undefined' ) OutbrainStart(); else { var OB_Script = true; var str = ''; document.write(str); } David Drumm, Sean Fitzpatrick, Anglo Irish Bank, Brian Lenihan, Bank Loans, Billions Of Dollars, Eurozone, Financial Trouble, Ireland, Euro, Crisis, Taxpayers, Regulation, Europe, Recession, Economy, Bailout  (–) Show Replies Collapse Replies Sort Up Sort Down sort by date: bosatsu

Sweet children never fear The Republicans are here. As their call goes far and near. "This is just a commie smear" But their hero's at the door and he shouts a mighty roar from his undiminished core I AM.... DE-REGULATOR....

Flag It | Permalink | Reply 4:00 am, Nov 19, 2010 Mixpixlix

Well, at least greed isn't all American. I wonder if any real lessons will be learned from this worldwide financial collaspe. The lessons of the Great Depression died along with that generation. Humans have short memories and unabated appetite for more!

Flag It | Permalink | Reply 7:47 am, Nov 19, 2010 bigking12345

right, it's the men who detroyed the economy, women only do great wonderful things. That's why most men save and help others while most women I know are in debt over their heads and still buying $800 shoes and $1,300 bags.

Flag It | Permalink | Reply | (–) Show Replies Collapse Replies 8:51 am, Nov 19, 2010 RJB-Boston

did you read the same article we all did? or are you off your meds?

Flag It | Permalink | Reply 9:33 am, Nov 19, 2010 EtienneEtoile

The public is suffering IPV. The progressives want to throw the bums out but the Conservatives thinks the bums will change as demonstrated by the recent elections. The money people are taking advantage of the situation. It will be interesting if the public ever figures out who is profiting from this abuse. BTW, how many of these financial folks have suffered any retribution for their actions. Maybe, Madoat the scapegoat.

Flag It | Permalink | Reply 8:52 am, Nov 19, 2010 RJB-Boston

without strict regulation, its gonna be bubble and bust again and again. strict regulation may subdue high growth, but its a small price to pay if it prevents meltdowns. in the US the standards for lending and borrowing declined so precipitously during the bubble that it was a 24X7 happy hour for all. Hangovers hurt

Flag It | Permalink | Reply 9:36 am, Nov 19, 2010 periscope

America's democracy is on the ropes, and it's Big Money or the plutocrats who put it there. The U.S. Chamber of Commerce, the Koch brothers, and many others, including Karl Rove as the ring-master for funneling funds, have turned our elections into auctions. Representative government today doesn't mean "representing the people," it means representing the Special Interests. There is a speech that every adult American should hear. It was given by Bill Moyers at Boston U. recently. It can be seen by going to: www.truth-out.org/moyers. He describes just how the plutocrats are taking over America, and what you could do to stop them. If you have the guts and the brains to do it.

Flag It | Permalink | Reply | (–) Show Replies Collapse Replies 10:15 am, Nov 19, 2010 EtienneEtoile

peri -- do you have the rest of the link to moyer's interview? What a gem of a website. I just watched an interview with an ex cigna exec and how they managed damage control on Moore's Sicko, god how we were duped......

Flag It | Permalink | Reply 11:38 am, Nov 19, 2010 briansays

there is a saying on wall street if you want to rob a bank, buy a bank these same types are still in charge new faces same sociopathic tendencies your prop up the system and bail them out zimbabwe ben, summers and geitner true believers and part of the club limited prosecutions at best pay a small fine a leave with your looted proceeds this is why there will be litlle recovery and why we will be another japan for a decade or more with a lost generation

Flag It | Permalink | Reply 10:21 am, Nov 19, 2010 eurydice9276

Scumbags, indeed. These guys came into Boston, bought up properties at the height of the market, doubled everybody's rent and forced all the small business owners out in favor of large European corportions. Of course, in the long run they'll just have to sell those properties at a reduced price, so maybe some other small business owner will get an opportunity. But Ireland's problems aren't all about these two scumbags and their scummy bank - there's a pretty good article in the Economist this week which spells out the history of the problem.

Flag It | Permalink | Reply 11:15 am, Nov 19, 2010 EtienneEtoile

found it - take out the

During the boom years, Anglo expanded its market share by reckless lending, especially to property developers. More established, conservative Irish banks began to ape some of the same tactics to ward off the new contender. Then, the property bubble popped and the whole house of cards tumbled.

The Irish government took control of Anglo in January 2009. It has been hurling taxpayers’ money into an apparently bottomless pit ever since. Irish Finance Minister Brian Lenihan originally estimated the cost of propping up the bank at $6.1 billion. He admitted two months ago that it would actually be between $39.8 billion and $46.7 billion.

The price tag has propelled Ireland’s deficit to hitherto unimaginable levels—and this, in turn, now necessitates international intervention.

“The banks are gobbling up the state,” is the verdict of Martina Devlin, an Irish newspaper columnist and the co-author of Banksters, a 2009 book tracing the roots of the collapse.

“He is just considered a scumbag… I would think his life would be in serious danger if he came back here.”

Brian Lucey, a Trinity College, Dublin finance professor, says that the feeling on the streets of the Irish capital is that “the republic has been raped, torn apart” by the bankers and their political friends.

At the heart of the rapaciousness, at least in the public mind, are FitzPatrick and Drumm.

Peter Morrison / AP Photo

FitzPatrick was once one of the heroes of Celtic Tiger Ireland. An ebullient former accountant with a fondness for bowties, he was known as “Seanie Fitz” to his many social acquaintances. For those on the way up, FitzPatrick was someone to whom it was useful to pay obeisance.

Devlin recalls seeing the banker’s aura in full effect at a 2007 charity function.

“It really was like the parting of the Red Sea,” she tells The Daily Beast. “People actually did step aside for him.”

FitzPatrick knew some things that the general public did not—notably, that he held personal loans amounting to well over $110 million from the bank. He used the money to finance a host of exotic ventures: a share in a Nigerian oil well; an interest in a casino in Macau; a property investment in Budapest. There were even plans to get into the movie-financing business.

The eventual discovery of these loans precipitated FitzPatrick’s departure from the company in December 2008. David Drumm followed him out the door the next day.

12 November 19, 2010 | 1:35am Twitter Emails

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Enter the recipients' email addresses, separated by commas:

Sweet children never fear The Republicans are here. As their call goes far and near. "This is just a commie smear" But their hero's at the door and he shouts a mighty roar from his undiminished core I AM.... DE-REGULATOR....

Well, at least greed isn't all American. I wonder if any real lessons will be learned from this worldwide financial collaspe. The lessons of the Great Depression died along with that generation. Humans have short memories and unabated appetite for more!

right, it's the men who detroyed the economy, women only do great wonderful things. That's why most men save and help others while most women I know are in debt over their heads and still buying $800 shoes and $1,300 bags.

did you read the same article we all did? or are you off your meds?

The public is suffering IPV. The progressives want to throw the bums out but the Conservatives thinks the bums will change as demonstrated by the recent elections. The money people are taking advantage of the situation. It will be interesting if the public ever figures out who is profiting from this abuse. BTW, how many of these financial folks have suffered any retribution for their actions. Maybe, Madoat the scapegoat.

without strict regulation, its gonna be bubble and bust again and again. strict regulation may subdue high growth, but its a small price to pay if it prevents meltdowns. in the US the standards for lending and borrowing declined so precipitously during the bubble that it was a 24X7 happy hour for all. Hangovers hurt

America's democracy is on the ropes, and it's Big Money or the plutocrats who put it there. The U.S. Chamber of Commerce, the Koch brothers, and many others, including Karl Rove as the ring-master for funneling funds, have turned our elections into auctions. Representative government today doesn't mean "representing the people," it means representing the Special Interests. There is a speech that every adult American should hear. It was given by Bill Moyers at Boston U. recently. It can be seen by going to: www.truth-out.org/moyers. He describes just how the plutocrats are taking over America, and what you could do to stop them. If you have the guts and the brains to do it.

peri -- do you have the rest of the link to moyer's interview? What a gem of a website. I just watched an interview with an ex cigna exec and how they managed damage control on Moore's Sicko, god how we were duped......

there is a saying on wall street if you want to rob a bank, buy a bank these same types are still in charge new faces same sociopathic tendencies your prop up the system and bail them out zimbabwe ben, summers and geitner true believers and part of the club limited prosecutions at best pay a small fine a leave with your looted proceeds this is why there will be litlle recovery and why we will be another japan for a decade or more with a lost generation

Scumbags, indeed. These guys came into Boston, bought up properties at the height of the market, doubled everybody's rent and forced all the small business owners out in favor of large European corportions. Of course, in the long run they'll just have to sell those properties at a reduced price, so maybe some other small business owner will get an opportunity. But Ireland's problems aren't all about these two scumbags and their scummy bank - there's a pretty good article in the Economist this week which spells out the history of the problem.

found it - take out the spaces http://www.truth-out.org/bill-moyers-money-fights-hard-and-it-fights-dir ty64766

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