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Budget Part II - Buying debt from the banks, how does it work?

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    #92
    NewDubliner
    Closed Accounts Posts: 1,615 ✭✭✭NewDubliner


    Akrasia wrote: »
    Nonsense, what use has the state for massive empty commercial developments on the outskirts of towns? or for half built estates on the outer suburbs of cities and towns, or for holiday homes on the west coast, or for hotels and strip malls
    'Decentralisation'....it hasn't gone away & there was a bit in the budget speech about moving people around as needed....

    And, it might just be enough to force the Dublin workers into the early retirement scheme so that their jobs can be moved out of Dublin and down to the provinces in time for the elections.


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    #93
    aare
    Registered Users Posts: 1,579 ✭✭✭aare


    Anyone else watching the analysis on RTE one - now?


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    #94
    edanto
    Registered Users Posts: 2,809 ✭✭✭edanto


    There's a plea in the Irish Times today for a huge amount of transparency to be in this process - it reminds me of what I've heard about the reforms in Sweden.

    http://www.irishtimes.com/newspaper/opinion/2009/0409/1224244286241.html
    If there is any hint of a special bailout for builders or bankers, terrible damage will be caused to the political system. The Government is right to argue that we need cleansed and functioning banks to allow business to function and to protect existing jobs. But it should not be at a cost of transferring responsibility for crazy lending practices to the public.

    And the Government should complete a clean-out of top banking executives and board members. While these individuals remain in place, a public perception of golden circles and unaccountable behaviour will retain its potency.

    I'm not sure how this would work - it's not like there are hundreds of people that know how to manage banks just floating around this country looking for work.

    So, while transparency and a change in management are both welcome ideas, I just doubt they would actually happen in practice.

    Akrasia - one line from your post kinda struck me "This is one idea proposed by the people who are responsible for the mess, it is hugely flawed"

    This idea probably was proposed by a bankers lobby to the department of Finance, much like the midnight meetings we've heard of right before the guarantee. Do you think there's any way we could get details of the proposals that the Bankers made under FOI? What would we ask for? Any ideas?


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    #95
    SkepticOne
    Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    edanto wrote: »
    This idea probably was proposed by a bankers lobby to the department of Finance, much like the midnight meetings we've heard of right before the guarantee. Do you think there's any way we could get details of the proposals that the Bankers made under FOI? What would we ask for? Any ideas?
    The idea of a "bad bank" has been floating around for some time now so I don't think it needs a midnight meeting as such. Having said that, it certainly creates a huge conflict of interest. Should the government now subsidise the builders with extra incentives for people to by their output (still overpriced by international standards) or should they let them go bust and default on loans with the tax-payer picking up the tab.

    I'm also against forcing the public who (along with the international markets) have quite rightly, imo, decided real estate is too expensive to now take a massive punt on land and half-built developments.

    It is good that there are places like this where you can point out in advance the stupidity of moves like this. The government can't say that nobody objected at the time.


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    #96
    Mr.Micro
    Registered Users Posts: 5,336 ✭✭✭Mr.Micro


    It will be interesting to see how much the developers will get ( will we ever know) for their assets and the banks for their asset debts? Full price at 2006-2007 rates I will bet. As regards Mr. Bacon and his report re trhe debt agency was he not an economist/ property expert who produced several reports re the housing market? Conflict of interest here?


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    #97
    RealityCheck
    Closed Accounts Posts: 695 ✭✭✭RealityCheck


    There is something about this "bad bank" idea that I cant understand. Are we surely not going to have to pay more than the book value for these bad loans? Based on the fact that when we buy these loans at discount, the banks will have to write off the difference, leading to fresh Goverment reaciptalisation.
    So what im saying is if the bad loans have a book value of 90bn, and we pay 40bn for them, are we not going to finance the other 50bn that the banks will have to write off ?


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    #98
    SkepticOne
    Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    Mr.Micro wrote: »
    It will be interesting to see how much the developers will get ( will we ever know) for their assets and the banks for their asset debts? Full price at 2006-2007 rates I will bet. As regards Mr. Bacon and his report was he not an economist/ property expert? Conflict of interest here?
    [Via the property pin]He's a director of the builders, Ballymore Homes. See thread here.


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    #99
    Mr.Micro
    Registered Users Posts: 5,336 ✭✭✭Mr.Micro


    SkepticOne wrote: »
    [Via the property pin]He's a director of the builders, Ballymore Homes. See thread here.

    Thanks for that.

    Now that is scary. So its bail out the developers time with a tailor made plan by a man who is a developer?


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    #100
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,507 Mod ✭✭✭✭johnnyskeleton


    aare wrote: »
    Something else has just occurred to me...

    Does anyone realise that some of the bad debt bought from the banks will be mortgages that people hit by the recession default on?

    If only it did, but the government have been quite clear that it only applies to Development and Commercial loans, and that residential owner occupier loans are not covered. Whether it applies to residential investment loans is not entirely clear, but I don't think it does.


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