There was a nice question put Mr Dukes on Newstalk – about the extraordinary €10 billion worth of ‘Master Loan Repurchase Agreements’ carried on the banks books (per Anglo’s latest annual report). Mr Dukes didn’t answer that question. But here is what we know:
MLRepos are in effect Central Bank of Ireland repurchase agreements that are so toxic, the ECB refuses to accept them as a collateral for its own discounted lending. So our Central Banks stepped in to hover these off the Anglo’s balance sheet.
Which begs several questions – and I do hope Mr Dukes actually answers these:
- What exactly are these MLRepos and why are they held by the CB and not ECB?
- Does Anglo continues to engage in such derivative operations vis-à-vis Irish CB?
- Is this equivalent to the CB ripping out the decks to keep Anglo afloat – after all, in all banking finance theory, special purpose Repos held by the lowest rank lender of last resort can only be viewed as the last chance corral for a financial lender?
Really? How many tens of billions of taxpayers funds later would that be, Mr Dukes?
I wish Mr Dukes well in his role. And I am sad to see Donal O'Connor leaving the post - he has great experience and did his best to keep the sinking Titanic afloat.
Anglo is the sinking titantic,
the Irish taxpayer taking the hit, reminds me of the doomed navy sailors that perished aboard the KURSK submarine in the Barents Sea.
Just a small point (which I have to admit I find really annoying) Its not begs the question, its raises the question. Begging the question is something else altogether. Small I know but there you go. Enjoy your blog, you tell it like it is.
What is the quantum of MLRepos exercised by Irish Nationwide, AIB & BofI.
Lehman's had fun with repos as well.
Here's an interesting 8 minutes on off-balance sheet accounting.
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