Councils 'ignored Iceland risks'

1984ReturnsForReal_2

says The Audit Commission who themselves had £10m deposited in Icelandic banks.


http://news.bbc.co.uk/1/hi/uk_politics/7963986.stm


"Others either did not appreciate the risks or underestimated their significance " Steve Bundred, Audit Commission


Well Steve, neither did you.

:T :rotfl:

scousethife

The audit commision themselves had 10 millon it that bank too!!

How stupid are these people to have a go at councills for doing what they themselves have done.

tirano

I know a Local Authority Treasurer who is directly involved in this. They were put under pressure to meet targets set by Central Government to maximise the interest they earned.
The Icelandic Banks were paying the highest rates so they were advised to invest their, had they not done so they would have missed their targets and would been slated by the Audit Commission when they did their annual assessment of targets met etc.

Rochdale_Pioneers

Blame the ratings agencies. They said these investments were high quality. If councils - and the Audit Commission - follow their rating and end up losing when they fold, how is that their fault?

Its the same as with Natwest buying ABN Amro. With hindsight it was bonkers. But at the time that bank was certified as a high quality investment by agencies in the Netherlands, here and elsewhere.

lostinrates

TBF lots of people ignored the risks. There was considerable outrage on the savings board if you wanted to even discuss the risk. I think Martin Lewis was asked to apologise? (IMO a bit stupid, we get told the rated and make our own choices, I was more oncerned by the aggresion on the savings board when people wanted to ask about risks and rumours.)

FWIW we did have money in Iceland and luck saw us get the timing of taking it out just right: and it was luck, no skill or knowledge.

Old_Slaphead

Rochdale_Pioneers wrote: »

Blame the ratings agencies. They said these investments were high quality. If councils - and the Audit Commission - follow their rating and end up losing when they fold, how is that their fault?

Its the same as with Natwest buying ABN Amro. With hindsight it was bonkers. But at the time that bank was certified as a high quality investment by agencies in the Netherlands, here and elsewhere.

Rumours were rife for several months in newspapers, bulletin boards etc of the adverse solvency issues of Icelandic banks. It surely was anything but prudent to invest last October.

Rating Agencies - who'd believe them - they're funded by the big banks. Clearly a vested interest in ensuring the 'blue chips' keep getting pukka ratings.

Re. RBS and ABN - that was a pure ego trip - even at the time concensus of opinion was that they'd vastly overpaid.

Old_Slaphead

lostinrates wrote: »

TBF lots of people ignored the risks

Then they were stupid. Anyone investing above the FSCS guarantee deserved to lose the excess. Anyone with that amount of money invested should have acted responsibly rather than crying for the taxpayer to bail them out.

1984ReturnsForReal_2

Rochdale_Pioneers wrote: »

Blame the ratings agencies...........
Its the same as with Natwest buying ABN Amro. With hindsight it was bonkers. But at the time that bank was certified as a high quality investment by agencies in the Netherlands, here and elsewhere.

Hardly the same. You would expect Natwest to have a team of people who knew what they were doing!

Guy_Montag

lostinrates wrote: »

TBF lots of people ignored the risks. .

I knew the risks - I had 3k+ interest in Icesave.

My mental assessment went something like this (without being so structured):

Risk: Icelandic bank goes bust
Likelihood: Medium
Potential Damage: FSCS covered to £32k beyond Icelandic cover of EUR20k - lose several days' to several months' interest.

Risk : Iceland goes bust
Liklihood: Low
Potential Damage: Lose 3k+interest if intra-Nordic cover fails or FSCS does not pick up the tab.

lostinrates

Guy_Montag wrote: »

I knew the risks - I had 3k+ interest in Icesave.

My mental assessment went something like this (without being so structured):

Risk: Icelandic bank goes bust
Likelihood: Medium
Potential Damage: FSCS covered to £32k beyond Icelandic cover of EUR20k - lose several days' to several months' interest.

Risk : Iceland goes bust
Liklihood: Low
Potential Damage: Lose 3k+interest if intra-Nordic cover fails or FSCS does not pick up the tab.

Yes thats the sort of assessment we ran too. We kept under the 'protected' amount there, and as I say, stayed with it until my nerve faltered. I'm glad we didn't wait to withdraw, even though I know the money was protected. We felt a bit shoddy as it was becomeing clear there was a situation where there people were withdrawing at great rate, but in the scheme of things we felt we'd rather withdraw and feel guilty (and in the scheme of things a small amount if a large amount to us) than stay in a feel poor.

itsnever2lateisit?

As Local Authorities they had no FSCS cover anyway. But, for me, it throws up a different question, Why the hell do councils have such vast amounts of money? It can only mean that they have overcharged council tax