NAMA-Why do we take it lying down?

MaceFace

BrownianMotion wrote: »

I'm glad to see some other posters have more faith in this idea than I do. The lack of transparency thus far is alarming. With our Government's track record of corruption and lack of accountability I can't understand how anyone is in any way comfortable with what is happening.

And that's before any crazy ideas such as Long Term Economic Value are touched upon. This is a finger in the air job, whether based on yields, historical data or the expert opinions of some more vested interests.

Incidentally MaceFace, what will the yield be on a ghost estate in rural Ireland in 10 years? Hell, what's the current yield on a ghost estate in rural Ireland??

IMO, yields should always be 5-7%. Its what works elsewhere.

BrownianMotion

MaceFace wrote: »

IMO, yields should always be 5-7%. Its what works elsewhere.

I didn't ask for your opinion on what you think a normal yield should be.

I asked for your opinion on what you think the yield is on a house in a ghost estate in rural Ireland. i.e. it has no rental prospects.

I don't mean to attack you on this it's just it makes the point very clearly that despite what we are told, this is nothing more than a very large spin of the dice. There are too many variables to model such a situation with any accuracy.

MaceFace

BrownianMotion wrote: »

I didn't ask for your opinion on what you think a normal yield should be.

I asked for your opinion on what you think the yield is on a house in a ghost estate in rural Ireland. i.e. it has no rental prospects.

I don't mean to attack you on this it's just it makes the point very clearly that despite what we are told, this is nothing more than a very large spin of the dice. There are too many variables to model such a situation with any accuracy.

Every finished house has rental prospects. Every single one of them.
It could be 100 quid a month, or it could be 600 quid a month.

If a 3 bed semi in Leitrim in a finished ghost estate went on sale today for €50k, I would think it would sell. For €30k it would definitely sell.
Everything has a price.

ei.sdraob

MaceFace wrote: »

Every finished house has rental prospects. Every single one of them.
It could be 100 quid a month, or it could be 600 quid a month.

If a 3 bed semi in Leitrim in a finished ghost estate went on sale today for €50k, I would think it would sell. For €30k it would definitely sell.
Everything has a price.

except NAMA is paying way way about the price

Niall Keane

Every finished house has rental prospects. Every single one of them.
It could be 100 quid a month, or it could be 600 quid a month.

If a 3 bed semi in Leitrim in a finished ghost estate went on sale today for €50k, I would think it would sell. For €30k it would definitely sell.
Everything has a price.

fridges to Eskimos, have you ever heard the expression? because the build it and they will buy thinking is what's landed us here!

I see a lot of: "its a haircut on loan values not property". Have such people considered that the borrowers might default, and skip off to Switzerland? Then your right, we the plebs will be standing there with property worth half the discounted loan value, if that, and that wont happen after 7-10 years, developers will want to default as soon as possible and so pay less, now that NAMA is here, ie when their assets are safe and untouchable, liquidated and transfered to Switzerland or transfered to their families? That is the FF game. In the future, recouping from the banks via levies, means more expensive business loans, car loans, mortgages etc. to their customers, and so a less competitive state to do business in.

NAMA = the destruction of the Irish State.

Liam Byrne

MaceFace wrote: »

There are too many ill informed people who are just spouting out "No to NAMA" and the problem is that they do not realise that it is (probably) the best solution.

And likewise, there are many informed people who are being dimissed and ridiculed as "ill-informed" when they point out the obvious (like the fact that an overpayment is NOT a discount).

The funny thing is that it's strangely similar to the approach used by Ahern when people complained about the economy.

MaceFace wrote: »

The alternatives are worse, so rather than just being a No man, it is time the public educated themselves and before knocking something, at least know what you are knocking and why you are knocking it.

Insulting in the extreme. I never knock something without good reason.

It's time those proposing and supporting NAMA educated themselves in the fact that people can see things different ways, and the level of patronising insults in your post is unreal......implying uneducated, ill-informed, etc ?

People can be informed and considered and still disagree with a big gamble of our money, you know.

Liam Byrne

MaceFace wrote: »

Every finished house has rental prospects. Every single one of them.
It could be 100 quid a month, or it could be 600 quid a month.

Then let the banks and the developers decide amongst them to rent them out.

They took the gamble, and that's the nature of capitalism.

Mind you, given the amount of shops closing because landlords won't reduce the rent, I can't see this happening.

K-9

Liam Byrne wrote: »

Then let the banks and the developers decide amongst them to rent them out.

They took the gamble, and that's the nature of capitalism.

Mind you, given the amount of shops closing because landlords won't reduce the rent, I can't see this happening.

The Bank would foreclose on the developer obviously, so it would be wrote of as a bad debt.

All these ghost estates would end up as substantial bad debts, same with the site mentioned in Athlone. The banks balance sheet would take a massive hit, requiring us to give them more capital on top of what we'll have to give them anyway.

ei.sdraob

K-9 wrote: »

The banks balance sheet would take a massive hit, requiring us to give them more capital on top of what we'll have to give them anyway.

make it clear to the banks that they will not get another cent from taxpayer

that will cop on very quickly to get their act together

on the same day invite banks from europe to come into ireland

give these banks incentives like low tax and subsidized rent and watch everyone switch to these banks

we already have postbank and ulster bank (RBS) that people and business can switch to, and theres many more

let the banks chock on their own toxic assets, they surely arent helping the economy much in their current zombie state

its sickening to see that a third of NAMA is composed of Anglo rubbish

K-9

ei.sdraob wrote: »

make it clear to the banks that they will not get another cent from taxpayer

that will cop on very quickly to get their act together

on the same day invite banks from europe to come into ireland

give these banks incentives like low tax and subsidized rent and watch everyone switch to these banks

we already have postbank and ulster bank (RBS) that people and business can switch to, and theres many more

let the banks chock on their own toxic assets, they surely arent helping the economy much in their current zombie state

its sickening to see that a third of NAMA is composed of Anglo rubbish

That's one alternative alright. Not sure how it would go down with the markets though! Plus you'd have a run on the banks if that was suggested. Depositors would panic.

I'd agree on Anglo, sure we own the damn thing anyway.

SkepticOne

Scofflaw wrote: »

That depends on how you value the risk involved. On 'book value', yes, they are of course losing money - something like 40% on the first tranche of loans transferred, perhaps 30% on later tranches. If the loans perform better than 60-70% of book value, therefore, the banks have lost money on the deal, even ignoring the book value - they've sold an asset for less than it would have made them. If NAMA loses money, on the other hand, there's legal provision for a tax surcharge on bank profits after NAMA is wound up.

The idea that book value is used in determining whether or not the banks have gained or lost makes me believe that there's a confusion here between book value and the market value of the loans.

ei.sdraob

K-9 wrote: »

That's one alternative alright. Not sure how it would go down with the markets though! Plus you'd have a run on the banks if that was suggested. Depositors would panic.

I'd agree on Anglo, sure we own the damn thing anyway.

the bank guarantee scheme is expiring in few months anyways

depositors should realize what that means and start moving any savings now to non Irish banks (plenty to chose from, but rabo would be top choice)

so far no effort is being made to attract non Irish banks, if anything the likes of Halifax have left simply because all the govt bailouts have given an unfair advantage to the 3 Irish banks (among other reasons)


anyways if there is a bank run that would force the hand of ECB to extend special liquidity scheme to bank(s) in question (ie ECB directly helping these banks, something they are reluctant to be seen doing now, but are doing indirectly thru NAMA and taxpayer) in order to ensure stability in the market which is their job

the alternative is the slow cluster**** that NAMA is, 10 years from now people would be asking "why where we so naive to trust the govt to get anything right" when reflecting on NAMA

Liam Byrne

SkepticOne wrote: »

The idea that book value is used in determining whether or not the banks have gained or lost makes me believe that there's a confusion here between book value and the market value of the loans.

This was discussed elsewhere - the book value is fictional, based on the boom, and we're regularly told that there's no current "market value" because no-one is buying.

Liam Byrne

K-9 wrote: »

That's one alternative alright. Not sure how it would go down with the markets though! Plus you'd have a run on the banks if that was suggested. Depositors would panic.

And it'd be about bloody time, when you look at what they deposited into!

I mean, I had to lodge a cheque yesterday, and as I went in there I seriously thought to myself "Do I trust this shower or want to deal with them ?"

K-9

ei.sdraob wrote: »

the bank guarantee scheme is expiring in few months anyways

depositors should realize what that means and start moving any savings now to non Irish banks (plenty to chose from, but rabo would be top choice)

so far no effort is being made to attract non Irish banks, if anything the likes of Halifax have left simply because all the govt bailouts have given an unfair advantage to the 3 Irish banks (among other reasons)


anyways if there is a bank run that would force the hand of ECB to extend special liquidity scheme to bank(s) in question (ie ECB directly helping these banks, something they are reluctant to be seen doing now, but are doing indirectly thru NAMA and taxpayer) in order to ensure stability in the market which is their job

the alternative is the slow cluster**** that NAMA is, 10 years from now people would be asking "why where we so naive to trust the govt to get anything right" when reflecting on NAMA

Why in the name of God would any foreign banks move in here now?

They are all trying to get out and that isn't just because of NAMA or the guarantee scheme.

woodseb

ei.sdraob wrote: »

make it clear to the banks that they will not get another cent from taxpayer

that will cop on very quickly to get their act together

on the same day invite banks from europe to come into ireland

give these banks incentives like low tax and subsidized rent and watch everyone switch to these banks

we already have postbank and ulster bank (RBS) that people and business can switch to, and theres many more

let the banks chock on their own toxic assets, they surely arent helping the economy much in their current zombie state

its sickening to see that a third of NAMA is composed of Anglo rubbish

there's so much wrong with this suggestion...

- the banks won't improve by just 'copping on and getting their act together' , they are financial institutions that need capital to survive not scolded teenagers

- tax is already low, commercial office space very cheap too - none of that will encourage banks across europe that are already on their knees to come into a small market like ireland tomorrow

- you suggest ulster bank as somewhere that the business can go - the same bank that was also involved in crazy developer lending in ireland and is owned by the equally toxic RBS?

- letting the banks 'choke on their toxic assets' would cause chaos and a run on deposits

Anglo in NAMA is a clusterf*ck alright but it is where we are, people are entitled to debate the rights and wrongs on NAMA but some of the alternatives proffered here just beggar belief:rolleyes:

K-9

Liam Byrne wrote: »

This was discussed elsewhere - the book value is fictional, based on the boom, and we're regularly told that there's no current "market value" because no-one is buying.

I don't know, I'm getting mixed up now. Are we talking property value or loan value?

ei.sdraob

woodseb wrote: »

- the banks won't improve by just 'copping on and getting their act together' , they are financial institutions that need capital to survive not scolded teenagers

they wont cop on by being handed a blank chequebook in taxpayers name either, if anything knowing that they will be bailed out no matter how much they **** up would only lead to further bad loans/investments being created

woodseb wrote: »

there's so much wrong with this suggestion...
- tax is already low, commercial office space very cheap too - none of that will encourage banks across europe that are already on their knees to come into a small market like ireland tomorrow

as i said there are many non Irish banks at the moment, anyone with savings who still gives money to the Irish cowboys for safekeeping should not be surprised it it all disappears into thin air
hell how many billions were poured into BOI, and what are they worth now? 1.5Bln?? what sort of black-hole was the money poured into?

woodseb wrote: »

there's so much wrong with this suggestion...
- you suggest ulster bank as somewhere that the business can go - the same bank that was also involved in crazy developer lending in ireland and is owned by the equally toxic RBS?

Ulster Bank among many other, yes RBS is deep in poop too but its considerably larger than all of the Irish banks put together, and is literally to big to fail since that would destibilze the UK economy, which is much large than Ireland

Then theres Rabo being the only triple A rated bank in Ireland now

and of course Postbank whose parent Fortis was bailed out in the Benelux, once again Fortis is much much larger than all of the Irish banks put together

woodseb wrote: »

- letting the banks 'choke on their toxic assets' would cause chaos and a run on deposits

1. they are still chocking on their toxic **** as NAMA is moving painfully slow
2. once again anyone who in the last 2 years haven't coped on that Irish banks are done with, deserves what they get, they are very very risky still

woodseb wrote: »

Anglo in NAMA is a clusterf*ck alright but it is where we are, people are entitled to debate the rights and wrongs on NAMA but some of the alternatives proffered here just beggar belief:rolleyes:

i could have just about accepted NAMA (which would have been about half its size then) if Anglo was allowed to fail and not a cent given to them in bailouts, unlike AIB and BOI, Anglo didnt have many "normal" customers when this whole ****storm started

K-9

ei.sdraob wrote: »

Ulster Bank among many other, yes RBS is deep in poop too but its considerably larger than all of the Irish banks put together, and is literally to big to fail since that would destibilze the UK economy, which is much large than Ireland

Then theres Rabo being the only triple A rated bank in Ireland now

and of course Postbank whose parent Fortis was bailed out in the Benelux, once again Fortis is much much larger than all of the Irish banks put together

Wait a sec here. You are perfectly happy for banks that are/could be bailed out by other Governments moving into a country that wouldn't have bailed out there own?

What would happen the loans held by these now bust banks?

woodseb

ei.sdraob wrote: »

as i said there are many non Irish banks at the moment, anyone with savings who still gives money to the Irish cowboys for safekeeping should not be surprised it it all disappears into thin air
hell how many billions were poured into BOI, and what are they worth now? 1.5Bln?? what sort of black-hole was the money poured into?





Ulster Bank among many other, yes RBS is deep in poop too but its considerably larger than all of the Irish banks put together, and is literally to big to fail since that would destibilze the UK economy, which is much large than Ireland

Then theres Rabo being the only triple A rated bank in Ireland now

and of course Postbank whose parent Fortis was bailed out in the Benelux, once again Fortis is much much larger than all of the Irish banks put together

your suggest is that we should just wash our hands of the irish banks, let depositers go to the wall and then hope that some banks in the continent with the aid of the ECB ride to the rescue - it's fantasy-land stuff

by the way, apart from suggesting RBS which is wrong on so many levels, i note that you have only mentioned savings banks like postbank and rabo - where would the lending come from?

Had we let the banks fend for themseleves back in 08 we would be beginning to recover now instead we are not going to be able to retire as early, we are going to lose a generation to emigration, unemployment over 10% could be the situation for the next few years......

We should have faced the music in 2008, this is gonna drag out for a long time because of hair brained schemes like NAMA

woodseb

Deleted User wrote: »

Had we let the banks fend for themseleves back in 08 we would be beginning to recover now instead we are not going to be able to retire as early, we are going to lose a generation to emigration, unemployment over 10% could be the situation for the next few years......

We should have faced the music in 2008, this is gonna drag out for a long time because of hair brained schemes like NAMA

It's very debatable whether the recession would have been avoided by letting the banks go to the wall - i don't think the emigration/unemployment situation would have been radically different whichever way we dealt with the banks - the seeds of the economic destruciton were sown long before 2008

ei.sdraob

woodseb wrote: »

your suggest is that we should just wash our hands of the irish banks, let depositers go to the wall

all im saying is any depositors who still have savings in Irish banks would only have themselves to blame if that money were to disappear the writing was on the wall 2 years ago and the picture gets uglier by the day

woodseb wrote: »

with the aid of the ECB ride to the rescue - it's fantasy-land stuff

you do realize that NAMA is a mechanism for accessing cheap ECB money?

and yes "fantasy-land stuff" is good way of describing NAMA

my suggestion involves forcing ECBs hand to do something about these banks, and not involve the taxpayer

woodseb wrote: »

by the way, apart from suggesting RBS which is wrong on so many levels, i note that you have only mentioned savings banks like postbank and rabo - where would the lending come from?

i discussed long ago a very simple way of getting lending going

skip the banks and use local credit unions to extend credit to small businesses and soletraders

the CUs deal and work locally and know the people personally, it be hard for CU to make a bad loan since the debtor would be known locally and if he screws up, the community who have a stake in CU wont be happy at all, especially of that debtor is still living in nice house and driving nice car, theres nothing worse for a debtor than being named and shamed locally

those billions spend on banks if given to CUs would have resulted in people and small businesses getting all sorts of loans directly, skipping all the rot in the banks
instead the money was poured into black holes with nothing to show for it

neither do CUs have crazy investment wings like BOI and AIB that gamble billions in stocks and exotic credit default ****

mine is a bottom up approach working from the community level and skipping all the rotten banks to get new credit flowing

/

K-9

Deleted User wrote: »

Had we let the banks fend for themseleves back in 08 we would be beginning to recover now instead we are not going to be able to retire as early, we are going to lose a generation to emigration, unemployment over 10% could be the situation for the next few years......

We should have faced the music in 2008, this is gonna drag out for a long time because of hair brained schemes like NAMA

Well, they'd probably all be bust. I wouldn't mind it myself personally, but I don't know how markets and lenders would react.

Wonder what our Government would be paying in interest? They are seen as risky enough as it is.

ei.sdraob

K-9 wrote: »

Wonder what our Government would be paying in interest? They are seen as risky enough as it is.

by tying ourselves to the banks with bad credit rating

that directly affected the credit rating of the government since now the government is seen as an extension of these banks

hmm the bolded bit is rather disturbing

woodseb

woodseb wrote: »

It's very debatable whether the recession would have been avoided by letting the banks go to the wall - i don't think the emigration/unemployment situation would have been radically different whichever way we dealt with the banks - the seeds of the economic destruciton were sown long before 2008

We wouldnt have avoided the recession by a long shot but it would have been a far quicker correction

K-9 wrote: »

Well, they'd probably all be bust. I wouldn't mind it myself personally, but I don't know how markets and lenders would react.

Wonder what our Government would be paying in interest? They are seen as risky enough as it is.

The govt would probably be paying less as they wouldnt have the banks liabilities increasing their risk. Markets & Investors wouldnt like the banks going bust in the short term but money would return in time provided they made changes to make the country a safe place to put money. At the moment people are afraid of leaving money here even with the guarantee and NAMA simply because the banks are tried and tested, proven failures. You dont bank with failures in the future the risk is there that they will mismanage your money again. Why bank in Ireland with our crippled leeching banks when you could invest abroad with much safer banks?

woodseb

ei.sdraob wrote: »

all im saying is any depositors who still have savings in Irish banks would only have themselves to blame if that money were to disappear the writing was on the wall 2 years ago and the picture gets uglier by the day



you do realize that NAMA is a mechanism for accessing cheap ECB money?

and yes "fantasy-land stuff" is good way of describing NAMA

my suggestion involves forcing ECBs hand to do something about these banks, and not involve the taxpayer /

I do realise how NAMA works - in fact i think your understanding of it is shaky

every bank bailout across Europe has involved taxpayer money in some form - we can't just force the ECB to do something - it's our problem not theirs. You are making a massive assumption that the ECB is willing and able to do that sort of action

ei.sdraob wrote: »

i discussed long ago a very simple way of getting lending going

skip the banks and use local credit unions to extend credit to small businesses and soletraders

the CUs deal and work locally and know the people personally, it be hard for CU to make a bad loan since the debtor would be known locally and if he screws up, the community who have a stake in CU wont be happy at all, especially of that debtor is still living in nice house and driving nice car, theres nothing worse for a debtor than being named and shamed locally

those billions spend on banks if given to CUs would have resulted in people and small businesses getting all sorts of loans directly, skipping all the rot in the banks
instead the money was poured into black holes with nothing to show for it

neither do CUs have crazy investment wings like BOI and AIB that gamble billions in stocks and exotic credit default ****

mine is a bottom up approach working from the community level and skipping all the rotten banks to get new credit flowing

/

BOI and AIB don't have crazy investment wings as you describe , credit unions could have an expanded role but they have little experience in mortgage and the type of business lending that is needed in the economy.

Besides i have very little confidence that those who run the credit unions would be capable of taking on a balance sheet of lending that size. They seem very naive in their case with the financial ombudsman when they claimed successfully that they were mis-sold products

K-9

ei.sdraob wrote: »

by tying ourselves to the banks with bad credit rating

that directly affected the credit rating of the government since now the government is seen as an extension of these banks

hmm the bolded bit is rather disturbing

It did, but in fairness the current deficit is far bigger than the amount borrowed for the banks, NAMA aside. I'm not counting NAMA because there would be no NAMA in your scenario.

Deleted User wrote: »

We wouldnt have avoided the recession by a long shot but it would have been a far quicker correction



The govt would probably be paying less as they wouldnt have the banks liabilities increasing their risk. Markets & Investors wouldnt like the banks going bust in the short term but money would return in time provided they made changes to make the country a safe place to put money. At the moment people are afraid of leaving money here even with the guarantee and NAMA simply because the banks are tried and tested, proven failures. You dont bank with failures in the future the risk is there that they will mismanage your money again. Why bank in Ireland with our crippled leeching banks when you could invest abroad with much safer banks?

Well, you'd have a Government that let banks go bust and default, hardly a good credit rating and we'd still have to borrow €20 Billion a year to pay wages, welfare and things like that.

Would all the personal and business debt just disappear if they went bust?

ei.sdraob

woodseb wrote: »

I do realise how NAMA works - in fact i think your understanding of it is shaky

sorry missed that post of yours i did link to this earlier see page 9

also mentioned on wikipedia which references same document

"In addition to the potential loan book transfer to NAMA, the Draft NAMA Business Plan outlined the existence of over 1,000 derivative positions attached to the commercial loans. These loans are expected to transfer to NAMA as well. The nominal value of this derivative portfolio is €14.7 billion. "

source

thats a heck load of derivatives, pieces of paper not backed by any real assets

woodseb wrote: »

every bank bailout across Europe has involved taxpayer money in some form - we can't just force the ECB to do something - it's our problem not theirs. You are making a massive assumption that the ECB is willing and able to do that sort of action

the FED and BOE were forced to create special facilities for large banks to tap into low interest money

woodseb wrote: »

BOI and AIB don't have crazy investment wings as you describe

then why are they in need of bailouts? giving out bad loans and mortgages is "crazy investment"

i had first hand experience with BOI investment manager trying to sell me shares and stocks in August 2008, you know what happened to all them stocks 2 months later? needless to say the guy doesn't have a job now

woodseb wrote: »

, credit unions could have an expanded role but they have little experience in mortgage and the type of business lending that is needed in the economy.

yes because the banks have alot of experience?

the credit unions have few thing going for them:
* the can be held accountable and in check by shareholders, something that BOI and AIB are not as we seen, which is very dangerous
* they know the local economy and people much better
* they are small and would not take on crazy and reckless risks

woodseb wrote: »

Besides i have very little confidence that those who run the credit unions would be capable of taking on a balance sheet of lending that size. They seem very naive in their case with the financial ombudsman when they claimed successfully that they were mis-sold products

there are hundreds of credit unions and they largely independent

thats another problem with the banks, they got too large for their own good, and hence pose a danger to the economy

Scofflaw

Liam Byrne wrote: »

The idea that book value is used in determining whether or not the banks have gained or lost makes me believe that there's a confusion here between book value and the market value of the loans.

This was discussed elsewhere - the book value is fictional, based on the boom, and we're regularly told that there's no current "market value" because no-one is buying.

Dear me. The 'book value' is the book value of the loan, and has nothing to do with the value of the properties. It is how much is owed by the developer to the bank. Therefore, if the developer remains able to service the loan, it is the amount that will be repaid by the developer to the bank.

The long term or market value of the property is irrelevant - just as it is in a personal mortgage. The borrower owes the bank what they borrowed.

The only point at which the value of the property comes into play is if the borrower cannot service the loan. At that point NAMA may choose to take over the underlying assets (mostly property). Even then, just as with a mortgage, the borrower only gets a credit against their debt to the value of the asset at that point, and still owes the remainder of the debt. There is no 'jingle mail' - the borrower still owes NAMA what they borrowed.

The risk in NAMA depends entirely on the extent to which the loans are non-performing - and there are a lot of different loans in NAMA. Anyone with a loan of over €5m from the participating banks is having their loan transferred to NAMA, barring exceptional circumstances - so for the entire NAMA loan portfolio to be non-performing would require most of Ireland's wealthy classes to flee the country.

NAMA is not a capital injection for the banks, but the cause of capital injection - the capital required is bigger the bigger the loss the banks take on NAMA. That loss is not a loss on the value of the property, because NAMA isn't buying property, it's buying loans.

cordially,
Scofflaw