AS OUR COUNTRY reels in shock over the Anglo Irish Tapes revelations, I, as one who has worked in the financial services before the fall, am also shocked, but not at all surprised.
Despite having some great years there, I was not sorry to leave it all behind as I had seen the writing on the wall, the rot setting in, as did my colleagues, for a long time before I left.
I saw first-hand the goalposts of lending criteria change
I started working in the last year of the 70s, worked through the 80s into the 90s, seeing in technicolor the massive changes that occurred. My last job was mortgage-lending so I saw first-hand the goalposts of lending criteria change from prudent to downright cavalier.
My remit as a lending officer included the refinancing of short-term debts, as in credit card debts, over the term of a home loan, up to 30 years, albeit at a lower interest rate, but this was negated by the sheer amount of time they would be paying this rate – compound interest, simple as. The added madness was that, once refinanced, you could rack up the debt again, time and again.
This went against sound, basic economics. You do not stretch short-term debts over long terms. A holiday loan should be paid off before you go on the next one, a car loan should be paid off in three to five years, then you get a new one, only a house loan should be paid off over 20 or 25 years.
So what happened?
What happened, you ask? Greed happened. And we all bought into it. But we can’t blame ourselves entirely, as the finance houses were lashing out unsolicited ‘pre-approved’ loans, along with lending 100 per cent and more, of property values at the height of their market value, not building in future stress-testing on whether you could pay them off before you drew your pension. You’d hear things like:
Sure you have two fine, healthy, incomes there! Don’t worry when one goes when you happen to have a few sprogs, isn’t Women’s Lib great, you can work now till you drop. A few bob from the parents, and what about that Credit Union loan that doesn’t show up on the ICB checks, sure throw that into the pot and we’re laughing!
Get the white goods on higher purchase, or better still on the Visa card, and sure don’t deny yourself that holiday in the Seychelles while you’re at it, sure Torremolinos is only for the plebs… live a little! And just sign here on the bottom of the receipt for a bag of crisps/mortgage contract and we will see your children in 50 years time while they are still paying off the loan. Here’s a free coffee too!
Bit like a sketch from D’Unbelieveables, eh? Unbelievable but true.
In the madness that was the property boom they lent out money on the security of investment properties so you could buy an apartment in ‘Ballymun in the Sun’, totally denying the cornerstone of the three most important things when considering buying a property – Location, Location and Location – aka resale value.
Replacements that were sales-hungry and target-driven
The most insidious thing that happened in my time with my particular finance house was the change in the guard. They got rid of the ‘dead wood’ from their staff, namely the people who actually gave a damn when a loan application fell on their desks, who were qualified to process them, replacing them with sales-hungry, target-driven, non-financial-background staff (at the time we called them ‘yellow pack’ staff) and paid them peanuts (well they were little more than performing monkeys). They helped them to put profit before prudent lending and people, resulting in the spectacular fall we lived through, and are reaping the ‘benefits’ of now.
I witnessed the advent of ‘the mortgage broker’, an independent, untrained Drumesque character (or as Paul Williams put it, a thug) that walked in our doors armed with a gansy-load of sub-standard loan applications (they weren’t even using the term sub-prime lending at the time but this is what they were) with falsified income documentation. The company I worked in, and many many more, could only see the profits from the vast numbers of applications, approvals and drawdowns on all the houses and apartments the property developers where flooding the market with. ‘If we don’t do them, some other company will, so turn a blind eye and get on with it…’ was the toxic attitude.
I saw the future where banks would be run by non-financial types
I was so glad I needed to give up work at the precise time all this crap was silting up our financial services. I saw the future and it was full of non-financial types working in positions of power, down to the counter staff whose work ethic was becoming not so much customer-focused as more ‘can I get away with working while hungover?’.
Boy, a lot had changed in such a short time.
I am not naïve enough to think that all banking, and all business for that matter, is squeaky clean and nice, of course it isn’t. Money is nasty business after all, a necessary evil. However I think we should expect a modicum of prudence and best practice from the monoliths that look after huge sums of money in the public’s interest.
Politicians and the regulator who were asleep on the job
Politicians in power then, and now, are getting their fair share of mud slinging as the fallout from the Anglo iceberg hits, however we should expect some standard from our elected representatives, surely? Not to mention the watch dogs, Central Bank and Financial Regulator, who were obviously sleeping on the job – and while they were sleeping the Drumms of this world started laughing up their sleeves, indulging their thieving instincts.
So when I heard the tapes, laden with the disregard for anyone other than themselves, surprise was not an emotion I registered. The word arrogance has been bandied about and this is the quintessential attitude I encountered all the way through working in finance.
In fact, if you didn’t have a good dose of it you were out. We can’t rid our financial services of this arrogance completely, however if we wake up the watch dogs and put a few good men, and women, into power to make sure they stay awake, maybe we can reverse our fortunes, wash off the mud and regain some respect on the world’s stage.
Carol Redmond is now a qualified Life Coach and holds a certificate in psychology from NUI Maynooth. She lives in Delgany, County Wicklow.