Debt forgiveness and moral hazard.

fliball123

sarumite wrote: »

And once they declare themselves bankrupt, the debt is transferred to tax payer as the bank has to write it off.

Yeah but lets see if this happens the bank gets 50% back on selling the property + any other asset.

The mortgage holder loses everything - making it less likely they will make the same mistake again. Therefore meaning less of a loss in the long run for the tax payer

It sends a message out that if you take on the tax payer you may get the tax payer to pay but you will lose everything. Once again meaning less people will go down this route..meaning less of a loss in the long term.

As apposed to a write off..they have already lost 50% of the mortgage value due to the write off and there is a possibility that the mortgage holder will not pay the remaining mortgage..If the property goes up in value and sold the tax payer does not get any of the profit.. So this is such a poor deal for the tax payer its phucking near moron level of stupidness by the AIB on behave of the tax payer

All the while the AIB balance sheet looks better ergo bonus time..I cant believe that they have gotten away with this

traco

What annoys me most with this is that effectively these people have spent 150k and now they don't have to repay it. I'd like to know what revenues position on that is? Surely it should now be classed as taxable income?

To me that's the moral hazard as anyone paying their way pays their debts after they pay their taxes. This solution seems to side step that fact entirely by shifting the debt to the taxpayer and those involved benefit from effectivluy non taxes monies.

sarumite

fliball123 wrote: »

Yeah but lets see if this happens the bank gets 50% back on selling the property + any other asset.

The mortgage holder loses everything - making it less likely they will make the same mistake again. Therefore meaning less of a loss in the long run for the tax payer

It sends a message out that if you take on the tax payer you may get the tax payer to pay but you will lose everything. Once again meaning less people will go down this route..meaning less of a loss in the long term.

As apposed to a write off..they have already lost 50% of the mortgage value due to the write off and there is a possibility that the mortgage holder will not pay the remaining mortgage..If the property goes up in value and sold the tax payer does not get any of the profit.. So this is such a poor deal for the tax payer its phucking near moron level of stupidness by the AIB on behave of the tax payer

I was never in favour of a debt writedown.

However to repeat my previous statement "Complaining that they shouldn't put the debt on the taxpayer is moot since it will happen whether there is a debt write-down or not."

I think in the absence of a debt write down, we will see an increase in the number of bankruptcies in this country. With that in mind, the government needs to update our bankruptcy laws as a matter of urgency. The current system is as much about punishing the borrower as much as possible as it is about recouping as much of the debt as possible. Milder bankruptcy laws are becoming a necessity.

sarumite

traco wrote: »

What annoys me most with this is that effectively these people have spent 150k and now they don't have to repay it. I'd like to know what revenues position on that is? Surely it should now be classed as taxable income?

I am sure they will say they spent the money and lost it and the government currently doesn't tax losses.

fliball123

sarumite wrote: »

I was never in favour of a debt writedown.

However to repeat my previous statement "Complaining that they shouldn't put the debt on the taxpayer is moot since it will happen whether there is a debt write-down or not."

I think in the absence of a debt write down, we will see an increase in the number of bankruptcies in this country. With that in mind, the government needs to update our bankruptcy laws as a matter of urgency. The current system is as much about punishing the borrower as much as possible as it is about recouping as much of the debt as possible. Milder bankruptcy laws are becoming a necessity.

But at the moment the money has not been used to writedown debts as there have been very few..The money is there...taking a hard line on this would mean the government could in theory get this money back and use it to pay down the loans that was taken out to cover this..Its all virtual money in any case..

Also why is complaining about putting the debt on the tax payer moot? Have a good read of that statement when your first water charge comes out and try and connect the dots.

jmayo

whippet wrote: »

If the state pays out compensation to a child sex abuse victim should we also know the identity of the person?

Are you seriously for real ?
You are comparing a child abuse victim to someone who can't repay a loan.

Farmer Pudsey wrote: »

This happens right accross society, when i pay taxes a large porportion of by money is going to support someone else, through Education, healthcare (If I pay HI why cannot everyone else), to income support schemes thta I do not benifit from to just the dole. This is the reality of tax.

Except in those cases taxpayers money is not been given to people to help them own an asset that initially they get to use and long term they will get to benefit from the value of the money tied up in it.

Farmer Pudsey wrote: »

What you suggest is that these people should be turfed out of there house and then the state has to provide them with housing. Most of the so called gaffs will be sold at a huge discount by the banks so it is lose lose for the bank and taxpayer.

Ah yes lets get the old violin out for the poor property owner being turfed out of their home.
Funny how that imagery never materialises when it is a tenant being thrown out by a landlord. :rolleyes:
If they are able to afford a cut down mortgage of some sort, both of them are working, then why can't they afford to rent.
Is the only alternative to home ownership living on the side of the road or in a council house provided by the state ?

5live wrote: »

Iirc, there is a significant portion of the taxpayers money given to the banks to allow for a significant writedown of mortgage debt, so the writedown is already paid for.

Ahh first old chestnut.
The banks already have the money, which really means they have money allocated and backed by the taxpayer.
"Shure the lets spend it" mentality reminds me of public sector budgets which are used at end of year even though money could be saved.

5live wrote: »

Also, for the economy to grow, we will need a big increase in spending power to allow for more businesses to open and remain opened. One reason for the writing off of debt is to allow those gaining from the writedown to be able to spend and grow the economy and save to allow the banks access to the capital needed for businesses to borrow to again grow the economy.

Ahh the second chestnut....
Robbing Peter to pay Pual will kick start the economy.
Share the losses would be more accurate term.

5live wrote: »

I agree with your frustration on people walking away scot-free with money we will have to repay, but the upside for us is more jobs and hopefully less taxes down the line.

So getting the taxpayers and probably other banks customers to fund bailouts for some will mean more money for everyone ?
Interesting concept.

I can just imagine all the SMEs looking forward to increased lending rates so that they expand. :rolleyes:

sarumite wrote: »

The debt is unsustainable, meaning the borrower doesn't have the money to pay the money back. If they cannot pay it back, then they will either seek debt forgiveness and if that is not forthcoming declare themselves bankrupt. Eitherway the bank doesnt get its money.

And they do get the money this way ?
Oh wait they do, it comes from me and other taxpaying smucks.

sarumite

fliball123 wrote: »

But at the moment the money has not been used to writedown debts as there have been very few..The money is there...taking a hard line on this would mean the government could in theory get this money back and use it to pay down the loans that was taken out to cover this..Its all virtual money in any case..

Also why is complaining about putting the debt on the tax payer moot? Have a good read of that statement when your first water charge comes out and try and connect the dots.

Christ Fliball, are you really not getting this. The money doesn't exist. Its gone. Money isn't "used to writedown debts" debts are written down because the money isn't there. Complaining about putting money on the tax payer is moot because it will happen regardless of whether you complain or not.

Godge

whippet wrote: »

If the state pays out compensation to a child sex abuse victim should we also know the identity of the person?

Not the same thing by a long distance. We know who gets grants, we should know who gets bailed out by the banks, and that goes for the developers who got bailed out too.

Curly Judge wrote: »

I don't claim to have all the answers and I'm acutely aware that debt forgiveness is a road strewn with both moral and political land mines.
A certain proportion of the money already given to the banks was earmarked for failing mortgages and, if that is so, it seems to me that the taxpayer would be losing out twice if the bank refused to grant write down and the homeowner ended up on the housing list.
In your example above it could be that couple A bought their house in their homeland of Dalkey and couple B bought a similar sized house in their homeland of Leitrim.
Therefore the only "crime" couple A could be accused of is being born in a high priced area and wanting to get on the property ladder and start a family?

Couple A are from Dalkey and stayed in Dalkey to be near their family and to hell with the cost, sure the state will rescue us.
Couple B are from Dalkey and wanted to stay in Dalkey to be near their family but took the sensible option and moved to Greystones where they could afford the mortgage.
Couple C are from Lucan and bought an ordinary house at the wrong time.

We need transparency to ensure we know who and what types are being bailed out. Otherwise there is no public confidence in what is going on.

Scofflaw wrote: »

So, we need writedowns, but we also need transparency. One way of providing transparency is to publish the names of those getting writedowns along with a rationale for their writedown.

Obviously, that has a large privacy impact on the people getting the writedown. But their privacy is not necessarily paramount, because when public money is involved, as it is, the public do have a right to know that their money is being used acceptably, and not being handed over on the basis of who plays golf with the bank manager or local TD.

The other mechanism for ensuring transparency is to ensure that the rules for qualification for a debt writedown are transparent, and are overseen. That's how we handle most other disbursements of public money.

Currently, neither of these things are happening, and as fliball says, if you have a heavy debt load, you might as well strategically default - it might work, and if it does, nobody will be any the wiser.

I think a large part of the problem is that we're not actually publicly admitting that debt writedowns are going to be part of the solution, even though they are.

cordially,
Scofflaw

Agree wholeheartedly. We have given money to the banks for writedowns, we now need to know that it is going to those who deserve it and not to trophy-house owners.

You could put a size limit on the house being written down, say 2,000 sq. ft. being the maximum eligible. That would take care of the lived in Dalkey versus Mayo argument.

Farmer Pudsey wrote: »

Your are if and but as well to a greater extent. Do I like what is happening no but I need to get on with my life and I want acountry that can prosper for my children.

I do not see any crock of gold for these defaulters. Most strategic defaulters are in the main multiple property's owners. here we are dealing with those that have a family home. It is unliky that banks will wear trophy property being part of the game. In general it will be ordinary houses anf ordinary family's. Can i see some people jumping on the bandwagon yes but banks in gereral are not full of the milk of human kindbness.

You talked about people running up credit card and other debt to wipe that off as well. If banks and credit intutitions wear that they deserve to be taken for the proverbial ride. If they fail to carry out credit checks then too bad. tis was a lot of the reason we got into this sh!t in the first place.

THe question I always ask myself is if i was in that situtation and this and that senario what would i do. In your solution I would jack the job and join the dole, let the state provide housing, medical care, and grants for my kids to go to college. Why the [EMAIL="f@@k"]f@@k[/EMAIL] would I do otherwise if i had 250k of debt and no home.

There are family homes and there are family trophy homes. We are not just talking about ordinary semi-D owners getting a break.

fliball123

sarumite wrote: »

Christ Fliball, are you really not getting this. The money doesn't exist. Its gone. Money isn't "used to writedown debts" debts are written down because the money isn't there. Complaining about putting money on the tax payer is moot because it will happen regardless of whether you complain or not.

Sorry what am I not getting..The money is there even if virtual..we have taken out a great big motherphucking loan of over 200billion over the last 8/9years...We got the money for these write downs from the troika and passed it onto the banks..The avalanche of defaults/write downs has to date not happened yet..but the repayment of those loans is already a noose around the tax payers head with interest. So if these mortgage holders are held accountable for what they owe or the banks get as much as they can out of them it means that less of that money that was pumped into the banks will be used and could in theory be paid back to pay off some of the tax payer debts. So like I say complaining is what is needed.

If this happens on a large scale there will be all sorts of people chancing there arm at this and it will cost the tax payer more as there will not only be the loss of money from people who were actively paying there mortgage, it will also be legal costs and courtroom battle after battle and I can foresee a need to recapitalize the banks once again. Which is why I state it is a dangerous precedent and for the life of me I cannot understand why the AIB have done this in this case. As from what I have read they were both working , they have written off 150k with no recourse so if the property rises (which a lot around dublin and cork are currently) and it is sold for over the price of what is owed on the mortgage..The couple get the full profit off this..

jmayo

fliball123 wrote: »

Sorry what am I not getting..The money is there even if virtual..we have taken out a great big motherphucking loan of over 200billion over the last 8/9years...We got the money for these write downs from the troika and passed it onto the banks..The avalanche of defaults/write downs has to date not happened yet..but the repayment of those loans is already a noose around the tax payers head with interest. So if these mortgage holders are held accountable for what they owe or the banks get as much as they can out of them it means that less of that money that was pumped into the banks will be used and could in theory be paid back to pay off some of the tax payer debts. So like I say complaining is what is needed.

Fliball123 haven't you learned by now that sensible economic arguments don't win in Ireland.
As was often said in retort to statements about crashes during the bubble, "we are different".
Thus certain people in massive debt believe they and others are entitled to debt writedowns, forgiveness, what ever you want to call it and who the feck cares who is paying for it.

fliball123 wrote: »

If this happens on a large scale there will be all sorts of people chancing there arm at this and it will cost the tax payer more as there will not only be the loss of money from people who were actively paying there mortgage, it will also be legal costs and courtroom battle after battle and I can foresee a need to recapitalize the banks once again. Which is why I state it is a dangerous precedent and for the life of me I cannot understand why the AIB have done this in this case. As from what I have read they were both working , they have written off 150k with no recourse so if the property rises (which a lot around dublin and cork are currently) and it is sold for over the price of what is owed on the mortgage..The couple get the full profit off this..

Basically at this stage if I had loan with AIB I would stop paying it.
On top of that blow the credit card.
Make that once in a lifetime trip to Vegas.
Why would I continue to act as a good deligent customer when the ones next door may get a nive handout courtesy of me (both as functioning AIB customer and taxpayer).

And this is from someone who up until now has been vehemently anti bailouts, pro responsibility.

Idbatterim

what effects will this have on the couples future borrowing or will there be non? When the house rises up to the original value of the loan can we expect anything in return? they want to socialise the loses dont they, will they be happy to share their future profit? :rolleyes: I know someone who is doing everything in her power to pay off the mortgage, there is literally no money for anything else. I have to question is she having the piss taken out of her? This couple is effectively being donated 150,000 plus the cost of the interest?!

They should literally get revenue to deduct a large amount of wages at source, bar some money for the bills, groceries and a bangernomics car. That would be the minimum I would expect. Could someone please tell me the cons to not being able to or voluntarily paying the mortgage? because the pro (all 150,000) of it in this case, is pretty bloody obvious!!!

Is this the case "only in Ireland"?! I mean shouldnt it apply to all or non? How about in America with their recourse loans?

drumswan

Idbatterim wrote: »

I know someone who is doing everything in her power to pay off the mortgage, there is literally no money for anything else. I have to question is she having the piss taken out of her? This couple is effectively being donated 150,000 plus the cost of the interest?!

She should stop paying immediately. Everything else comes first, then the mortgage.

Idbatterim

She should stop paying immediately. Everything else comes first, then the mortgage.

you might be right, see the logic before was mortgage first, but if there are going to be different rules for different people, I just dont know. This isnt pocket change we are talking about, it is serious serious money after tax...

Man the people of Ireland or AIB could kick off a major unforeseen **** storm if they wanted to...

sarumite

fliball123 wrote: »

Sorry what am I not getting..

you said this

fliball123 wrote: »

These 2 people have passed this debt onto an already over burdened tax payer contingent

This would have happened with or without debt writedown.

The money is there even if virtual..we have taken out a great big motherphucking loan of over 200billion over the last 8/9years...We got the money for these write downs from the troika and passed it onto the banks..The avalanche of defaults/write downs has to date not happened yet..but the repayment of those loans is already a noose around the tax payers head with interest. So if these mortgage holders are held accountable for what they owe or the banks get as much as they can out of them it means that less of that money that was pumped into the banks will be used and could in theory be paid back to pay off some of the tax payer debts. So like I say complaining is what is needed.

If this happens on a large scale there will be all sorts of people chancing there arm at this and it will cost the tax payer more as there will not only be the loss of money from people who were actively paying there mortgage, it will also be legal costs and courtroom battle after battle and I can foresee a need to recapitalize the banks once again. Which is why I state it is a dangerous precedent and for the life of me I cannot understand why the AIB have done this in this case. As from what I have read they were both working , they have written off 150k with no recourse so if the property rises (which a lot around dublin and cork are currently) and it is sold for over the price of what is owed on the mortgage..The couple get the full profit off this..

I agree wholeheartedly with this, although it reads like a rebuttal to a point I haven't made.

Farmer Pudsey

Godge wrote: »

Not the same thing by a long distance. We know who gets grants, we should know who gets bailed out by the banks, and that goes for the developers who got bailed out too.




Couple A are from Dalkey and stayed in Dalkey to be near their family and to hell with the cost, sure the state will rescue us.
Couple B are from Dalkey and wanted to stay in Dalkey to be near their family but took the sensible option and moved to Greystones where they could afford the mortgage.
Couple C are from Lucan and bought an ordinary house at the wrong time.

We need transparency to ensure we know who and what types are being bailed out. Otherwise there is no public confidence in what is going on.





Agree wholeheartedly. We have given money to the banks for writedowns, we now need to know that it is going to those who deserve it and not to trophy-house owners.

You could put a size limit on the house being written down, say 2,000 sq. ft. being the maximum eligible. That would take care of the lived in Dalkey versus Mayo argument.





There are family homes and there are family trophy homes. We are not just talking about ordinary semi-D owners getting a break.

I agree entirely there is no point in not repossessing trophy homes if repayments cannot be met. However most forget that what was sustainable during the boom is not now. I have debts and struggled through 2008-2012 to repay same. However I can understand why other people may not be able to.

Some have the idea that these people will go out and borrow again or will try to repeat this again. Few will be that stupid as if numbers are small the government and banks are quite ruthless. Most will have blemished credit records for the next 5+ years. Even after that when they go to a bank someone somewhere will know there record. It is not easy to get money from a bank now.

But a lot of what is posted smells of revenge. The reality the reason this has taken so long to play out is that we had ludricous bankrupty laws. In the US if you go bankrupt you keep your home, this is the reason David Drum went there. In the UK it is a 12 month process. Most of this would have been done and dusted if we had similar bankrupty laws or non recourse mortgage's. We might never have got beyond 70% loans if non recourse was in play which would have kept a lid on property.

During the boom you had banks that kept lending to house buyers to prop up loans to developers and a state that ignored what was happened and actually whipped it on. I am just glad that my children were too young to take part in it and I was a little too old to get caught up in it.

But I see no reason for revenge on those with what were considered ordinary loans then. A lot of these loans were lend recklessly by bank staff or brokers that were paid a commission on ever loan. Often by a broker that worked for an property firm that had sales business as well. The broker told the auctioneer how much the punter could spend.

5live

jmayo wrote: »

(1)Ahh first old chestnut.
The banks already have the money, which really means they have money allocated and backed by the taxpayer.
"Shure the lets spend it" mentality reminds me of public sector budgets which are used at end of year even though money could be saved.



(2)Ahh the second chestnut....
Robbing Peter to pay Pual will kick start the economy.
Share the losses would be more accurate term.



(3)So getting the taxpayers and probably other banks customers to fund bailouts for some will mean more money for everyone ?
Interesting concept.

I can just imagine all the SMEs looking forward to increased lending rates so that they expand. :rolleyes:

(1)Perhaps you can show me where i said 'Shure lets spend it'?
A bank, when it makes a loan, makes a provision for losses on that loan and this is kept in reserve to guard against future losses, same as in insurance (see Quinn direct lack of adequate provision for an example). Every year some billions of 'profits' are retained as this reserve as even in good times there are people defaulting. Its not a decision being made today to 'spend' this money, the decision was made at the time the loan was given. Our banks difficulties was they didn't have enough reserves to cover the ginormous losses suffered.

(2)I admit there is a huge element of rob Peter to pay Paul in this way of kick-starting the economy but i defer to people with greater knowledge of economics than me that say there is a need for this to happen. Listening to Matt cooper on Today FM, there usually is a piece on it every week. It doesn't sit happily with me as those who didn't go mad borrowing will end up paying for those who did.
Share the losses is the correct term. But in a society that is to function properly both the losses and gains have to be shared to a degree. I don't like it but it appears necessary.

(3)Again i will repeat the need to get people spending money to get the economy moving. For the last 5 years people were expecting the economy to get worse so they stopped spending money and saved instead where they could. If you have 300-400k people not able to spend because they simply don't have any disposable income then they will not help grow the economy.
Once negative equity starts falling, as it is at the minute, people will be feeling more positive and will begin spending again. When people spend it supports jobs and gives small businesses a chance to expand, either through cashflow or borrowings, if they feel there is a chance to increase profits.
The same 'virtuous circle' will be created by giving those hugely over-borrowed individuals debt relief, apparently.

But if, as Pudsey said, you are only interested in revenge on those who made a(huge) mistake in over borrowing then i wish you well and farewell:)

traco

sarumite wrote: »

I am sure they will say they spent the money and lost it and the government currently doesn't tax losses.

I spent money on cars and property that all lost money but they were paid for after income tax. Doubt I'd get away with filing losses on my income tax return.

If you contractually borrow money and agree to pay it back inc interest those payments are post income tax. Therefore as I see it if that loan is written off you have had the benefit of those monies and spent them on goods, lifestyle items, house, holidays or whatever then that has effectively been the same as income?

Bankruptcy is a different matter all your assets are liquidated and creditors get x in the €. Case is closed and off everybody goes.

This debt write down scenario with no ties or subsequent liens is effectively free money particularly if the asset is not recovered.

Maybe I'm just grumpy but to me it looks like the groups tax payer is getting hit twice, once with the debt being passed along and then with the beneficiaries of the debt write down not contributing to the exchequer for the financial gain they have made with no loss in actual asserts. Is my thinking bonkers?

sarumite

traco wrote: »

I spent money on cars and property that all lost money but they were paid for after income tax. Doubt I'd get away with filing losses on my income tax return.

If you contractually borrow money and agree to pay it back inc interest those payments are post income tax. Therefore as I see it if that loan is written off you have had the benefit of those monies and spent them on goods, lifestyle items, house, holidays or whatever then that has effectively been the same as income?

The application of income tax is very specific in that it applies to money that was obtained through a particular type of activity, namely employment. Other incomes are taxed differently and some, such as CGT, only apply where a positive net increase of money occurs. It would be difficult to argue that money that wasn't derived from employment should have an employment tax applied to it. The manner in which the loan would be pay back is not the actual money they received. Mty feeling is that CGT would be the most obvious tax that applies to money obtained through a loan transaction for the purpose of purchasing a property and as I mentioned CGT is not applied to loss making ventures.

Scofflaw

sarumite wrote: »

The application of income tax is very specific in that it applies to money that was obtained through a particular type of activity, namely employment. Other incomes are taxed differently and some, such as CGT, only apply where a positive net increase of money occurs. It would be difficult to argue that money that wasn't derived from employment should have an employment tax applied to it. The manner in which the loan would be pay back is not the actual money they received. Mty feeling is that CGT would be the most obvious tax that applies to money obtained through a loan transaction for the purpose of purchasing a property and as I mentioned CGT is not applied to loss making ventures.

But nobody makes up the losses to loss-making ventures either, because businesses are clearly in it for the possible profit. Apparently, though, everybody was just trying to buy a family home, that's all - they weren't even trying to build up a nest-egg for retirement.

It's a marvellous country, this - not a soul was trying to make money in the boom by buying and selling on, just as nobody apparently voted Fianna Fáil.

cordially,
Scofflaw

Farmer Pudsey

Scofflaw wrote: »

But nobody makes up the losses to loss-making ventures either, because businesses are clearly in it for the possible profit. Apparently, though, everybody was just trying to buy a family home, that's all - they weren't even trying to build up a nest-egg for retirement.

It's a marvellous country, this - not a soul was trying to make money in the boom by buying and selling on, just as nobody apparently voted Fianna Fáil.

cordially,
Scofflaw

I must say Scofflaw I was always out to make a bob make no bones about it. However I never did vote FF from before the boom. I did sometime in the late 70's early 80's.

People got caught in the hype. I was lucky I did not. I was lucky my kids were too young. Still got stung bought a bit of land in 2005 that was and still is too expensive. Was lucky in that all loans are tied to euribor rate (interest is expensive at the moment:D). From 2008-12 taught I had borrowed too much, now I wish i had a bit more of it.

However life moves on. Do not want another Japan stuck in a time warp still after 20 years. It a cases of heads we lose tails they win. Yes loads thinking of buying and selling during the boom, that's life, was it Gordon Gecko said ''greed is good'', most know different now. As the Bomber Liston said after the '87 munster final it time to take the Big Top down and leave town the show is over.

I have a believe that we need to move on we are creeping out of the recession, the EU it seems will pick up part of the tab as we have been good boys. Am I happy about what is happening not really it however may be the lesser of two evils. I listen to Ivan Yates in the morning, I saw Bill Cullen and Jackie Lavin on TV, David Drum in the USA, Bertie and Brian et al have about 150K/year of taxpayers money. Pudsey has survived lets move on.

Godge

Farmer Pudsey wrote: »

I agree entirely there is no point in not repossessing trophy homes if repayments cannot be met. However most forget that what was sustainable during the boom is not now. I have debts and struggled through 2008-2012 to repay same. However I can understand why other people may not be able to.

Some have the idea that these people will go out and borrow again or will try to repeat this again. Few will be that stupid as if numbers are small the government and banks are quite ruthless. Most will have blemished credit records for the next 5+ years. Even after that when they go to a bank someone somewhere will know there record. It is not easy to get money from a bank now.

But a lot of what is posted smells of revenge. The reality the reason this has taken so long to play out is that we had ludricous bankrupty laws. In the US if you go bankrupt you keep your home, this is the reason David Drum went there. In the UK it is a 12 month process. Most of this would have been done and dusted if we had similar bankrupty laws or non recourse mortgage's. We might never have got beyond 70% loans if non recourse was in play which would have kept a lid on property.

During the boom you had banks that kept lending to house buyers to prop up loans to developers and a state that ignored what was happened and actually whipped it on. I am just glad that my children were too young to take part in it and I was a little too old to get caught up in it.

But I see no reason for revenge on those with what were considered ordinary loans then. A lot of these loans were lend recklessly by bank staff or brokers that were paid a commission on ever loan. Often by a broker that worked for an property firm that had sales business as well. The broker told the auctioneer how much the punter could spend.

My mortgage is reasonable.

However, I have sensible loans as well and some small credit card debt. In the light of what happened today, the most sensible option for me is to stop paying the mortgage, use the extra income to pay down the car loan and the credit card and hope for a write-off because I can't pay the mortgage.

Happy days, off to Spain three times a year on holidays the year after next when I get a write-down.

Farmer Pudsey

Godge wrote: »

My mortgage is reasonable.

However, I have sensible loans as well and some small credit card debt. In the light of what happened today, the most sensible option for me is to stop paying the mortgage, use the extra income to pay down the car loan and the credit card and hope for a write-off because I can't pay the mortgage.

Happy days, off to Spain three times a year on holidays the year after next when I get a write-down.

Go for it

Idbatterim

Go for it

Easier said than done, but if a critical mass of people did it, even a few hundred, I could see them immediately having to stop their sorry, the taxpayers debt forgiveness... I wouldnt care less if the banks were profitable and it was just reducing their profit btw...

K-9

Curly Judge wrote: »

It's my contention that people do have to be named.
Just as they are named in Stubbs Gazette or the tax defaulters list.
Or as the farmers who got subsidies used to be named, and probably will be again.
You cannot have partial transparency any more than you can be partially pregnant!

Is it that different from bank staff getting preferential loan rates?

K-9

sarumite wrote: »

The application of income tax is very specific in that it applies to money that was obtained through a particular type of activity, namely employment. Other incomes are taxed differently and some, such as CGT, only apply where a positive net increase of money occurs. It would be difficult to argue that money that wasn't derived from employment should have an employment tax applied to it. The manner in which the loan would be pay back is not the actual money they received. Mty feeling is that CGT would be the most obvious tax that applies to money obtained through a loan transaction for the purpose of purchasing a property and as I mentioned CGT is not applied to loss making ventures.

My first thought was that write downs wouldn't be taxed, but you have to declare preferential interest rates on mortgages so it could well be.

jmayo

5live wrote: »

(1)Perhaps you can show me where i said 'Shure lets spend it'?
A bank, when it makes a loan, makes a provision for losses on that loan and this is kept in reserve to guard against future losses, same as in insurance (see Quinn direct lack of adequate provision for an example). Every year some billions of 'profits' are retained as this reserve as even in good times there are people defaulting. Its not a decision being made today to 'spend' this money, the decision was made at the time the loan was given. Our banks difficulties was they didn't have enough reserves to cover the ginormous losses suffered.

Talk about being economical with the actual facts.
For a start stop quoting from a patrick neary report on Irish banks capital base.
We know damm well that the provisions for the bad debts were nowhere near where it had to be to handle the fallout from the manic incompetent lending carried out by the banks during the bubble.
Thus provisions for the losses actually haven't and wont come from the bank or their profits (what profist i hear you say), but from capital provided courtesy of the taxpayer.
Your example above is what was meant to happen and what used to happen in normal well run institutions.
Or maybe you forgot how NAMA had to take all those dud loans off their books and the taxpayer had to provide capital to make up for the shortfall between loan book values and what NAMA paid.
And yes I know they were developer and high end loans above 5million, but money also had/has to be found to cover residential mortgage proposed losses.
In 2009 the Irish taxpayer, thanks to lendahand, poured 3.5 billion euro into AIB.
In 2010 the government agreed to pour another 3.7 billion from the pensions reserve fund into AIB, effectively nationalising it.
Is that not also taxpayers money.
So please less of the cr** that somehow AIB has or had the money to cover debt writeoffs.
Without the Irish taxpayers they wouldn't have a fecking pot to píss in.

And just in case you come back and say how the banks have paid money back to the state I will leave you with these nuggets.

For instance in April 2010 Bank of Ireland paid €491 million for the cancellation of preference share warrants. AIB paid €53 million in December of that year for the same reason.

Minister Noonan’s figures indicate that Bank of Ireland has paid €6.1 billion to the State in various payments over the past six years, while AIB (including EBS) has returned just more than €1.7 billion, almost exclusively in fees for the bank guarantees.

Bank of Ireland received a €4.7 billion bailout from the State while AIB, including the EBS building society, got €20.8 billion.

http://www.irishtimes.com/business/sectors/financial-services/state-has-received-10-24bn-from-bailed-out-banks-since-collapse-1.1692496

So no matter how you try and spin this, this 150k writeoff comes out of taxpayers funds.
If they didn't give a 150k writeoff then maybe that could be another 150k they could one day return to the taxpayer.

5live wrote: »

(2)I admit there is a huge element of rob Peter to pay Paul in this way of kick-starting the economy but i defer to people with greater knowledge of economics than me that say there is a need for this to happen. Listening to Matt cooper on Today FM, there usually is a piece on it every week. It doesn't sit happily with me as those who didn't go mad borrowing will end up paying for those who did.
Share the losses is the correct term. But in a society that is to function properly both the losses and gains have to be shared to a degree. I don't like it but it appears necessary.

I also remember during the boom how people deferred to economists and their superior knowledge.
I also remember how the morons in Dept of Finance and Central Bank/IFSRA couldn't see a bubble.

It is also noticable how one well known tv evangelist economist is involved with the group continously looking for mortgage writeoffs and debt forgiveness.
Has anyone ever asked if he wants to avail of it himself ?

5live wrote: »

(3)Again i will repeat the need to get people spending money to get the economy moving. For the last 5 years people were expecting the economy to get worse so they stopped spending money and saved instead where they could. If you have 300-400k people not able to spend because they simply don't have any disposable income then they will not help grow the economy.
Once negative equity starts falling, as it is at the minute, people will be feeling more positive and will begin spending again. When people spend it supports jobs and gives small businesses a chance to expand, either through cashflow or borrowings, if they feel there is a chance to increase profits.
The same 'virtuous circle' will be created by giving those hugely over-borrowed individuals debt relief, apparently.

Yeah lets kick start the old property and we will have a boom again.
When will people learn that an economy is not based on house prices. :mad:
Have you ever thought that to fund these bailouts, lending costs will increase and those same SMEs will not be ale to expand ?

Idbatterim

lendahand,

Yeah lets kick start the old property and we will have a boom again.

I agree construction was far too large a % of GDP and we were far too dependent on it, but it is now at the other extreme, we need a happy middle, there is a massive housing shortage in Dublin. Rising property prices on the one hand are a good thing for the banks and government, but we all remember what led to the last benchmarking greed fest and the rapid rise in wages and salaries, rapidly spiralling house prices...

jmayo

Idbatterim wrote: »

I agree construction was far too large a % of GDP and we were far too dependent on it, but it is now at the other extreme, we need a happy middle, there is a massive housing shortage in Dublin. Rising property prices on the one hand are a good thing for the banks and government, but we all remember what led to the last benchmarking greed fest and the rapid rise in wages and salaries, rapidly spiralling house prices...

Sorry my point was in reference to how decreasing negative equity was a good thing for the economy and this implies that high house prices were a good thing.

You are right thought that we have had almost zero activity in residential constructiion industry over last few years and that is a normal situation either.
But kick starting the proeprty merry go round and increasing prices is not going to get us out of this mess and will only create more problems.

_Kaiser_

All this back and forth misses the key, indisputable points....

Point 1:

Anyone who signs up for a mortgage does so of their own free will. It is their responsibility to be aware of the requirements and potential consequences of that agreement.

It is not the responsibility of the bank or taxpayer to "bail them out" because they don't like the result. Certainly the debt should be restructured in-line with ability to repay (and amended over time to account for further changes in circumstance), but if it takes them the rest of their lives to repay it then that's what they do!

Point 2:

No-one in this backwards corrupt failed State has a "right" to own property.

If you want to own property YOU need to pay for it, or you rent like thousands of others.

The sense of entitlement in this thread is beyond a joke - and ironic considering many of the same people are the first ones to rant against the unemployed for the same perceived notions.

Bits_n_Bobs

Kaiser2000 wrote: »

All this back and forth misses the key, indisputable points....

Point 1:

Anyone who signs up for a mortgage does so of their own free will. It is their responsibility to be aware of the requirements and potential consequences of that agreement.

It is not the responsibility of the bank or taxpayer to "bail them out" because they don't like the result. Certainly the debt should be restructured in-line with ability to repay (and amended over time to account for further changes in circumstance), but if it takes them the rest of their lives to repay it then that's what they do!

'Restructuring' a debt is debt forgiveness - it's just a matter of scale. Debt forgiveness has a valid position in any just and entrepreneurial capitalist society.

A lack of debt forgiveness stops people taking any entrepreneurial risks such as starting businesses. It would also confer an unimaginable benefit to limited companies as they would be the only entity capable of borrowing at a relatively low-risk. And finally the end solution to no debt forgiveness to anyone unfortunate to end up on the wrong side of a risk is the 'poor house'.

People who borrowed stupid amounts of money for property should lose the property (even if it is the 'family house') and there should be some penalty i.e. some residual debt, a lack of access to future debt in the form of a bad debt record etc. However burdening people for the rest of their lives with debt is idiotic and grossly vindictive.

Farmer Pudsey

Kaiser2000 wrote: »

All this back and forth misses the key, indisputable points....

Point 1:

Anyone who signs up for a mortgage does so of their own free will. It is their responsibility to be aware of the requirements and potential consequences of that agreement.

It is not the responsibility of the bank or taxpayer to "bail them out" because they don't like the result. Certainly the debt should be restructured in-line with ability to repay (and amended over time to account for further changes in circumstance), but if it takes them the rest of their lives to repay it then that's what they do!

Point 2:

No-one in this backwards corrupt failed State has a "right" to own property.

If you want to own property YOU need to pay for it, or you rent like thousands of others.

The sense of entitlement in this thread is beyond a joke - and ironic considering many of the same people are the first ones to rant against the unemployed for the same perceived notions.

In most developed economies there is a proper debt restructuring (bankrupty) arrangments. In Ireland we had a 12 year process. The UK is 12 months the US is around the same. In Germany and part of the US there are mortgage's are non recourse. The reason they do this is to allow for labour market flexability. If there is no hope in debt situtations then people walk away.

Do I think that someone should get a 400K house for 100K no I do not. However I see no reason for a bank not to restructure a loan if it the most advantagous thing to do.Large numbers of repossions will not benifit ordinary people rather it will benifit property speculators. If a loan is unsustainable for the last 4-5 years then it may never be sustainable.

If you consider Ireland a backward corrupt state you are welcome to imigrate. There was three party's to blame for the present issue's the banks, the state and the borrower. WE have seen large numbers of extremely rich walk away from there debts, there is no reason that solutions cannot be found for those ordinary people that got caught.

I remember in the middle of last year pointing out that we were turning a corner, other still held the hope of a further 20-50% drop in house prices. I wonder is this part of this revenge saga. Am I hapy about the solution, no I am not I am paying my debts, however some cannot.

Others seem to want that we should return to the debtors jails of the 1800's. They seem to think that we can get blood from a turnip. Even Angela Merkel seems to be finally understanding that as a country our debts have to be restructured. And they will be. My own opinion back in 2010-2012 is that we should have treatened to default if not actually left the euro. However we did not. We have to move on however some are caught up by idealology and in the past

Godge

Bits_n_Bobs wrote: »

'Restructuring' a debt is debt forgiveness - it's just a matter of scale. Debt forgiveness has a valid position in any just and entrepreneurial capitalist society.

A lack of debt forgiveness stops people taking any entrepreneurial risks such as starting businesses. It would also confer an unimaginable benefit to limited companies as they would be the only entity capable of borrowing at a relatively low-risk. And finally the end solution to no debt forgiveness to anyone unfortunate to end up on the wrong side of a risk is the 'poor house'.

People who borrowed stupid amounts of money for property should lose the property (even if it is the 'family house') and there should be some penalty i.e. some residual debt, a lack of access to future debt in the form of a bad debt record etc. However burdening people for the rest of their lives with debt is idiotic and grossly vindictive.

Bankruptcy laws are for this, they should be used more.

fliball123

Bits_n_Bobs wrote: »

'Restructuring' a debt is debt forgiveness - it's just a matter of scale. Debt forgiveness has a valid position in any just and entrepreneurial capitalist society.

A lack of debt forgiveness stops people taking any entrepreneurial risks such as starting businesses. It would also confer an unimaginable benefit to limited companies as they would be the only entity capable of borrowing at a relatively low-risk. And finally the end solution to no debt forgiveness to anyone unfortunate to end up on the wrong side of a risk is the 'poor house'.

People who borrowed stupid amounts of money for property should lose the property (even if it is the 'family house') and there should be some penalty i.e. some residual debt, a lack of access to future debt in the form of a bad debt record etc. However burdening people for the rest of their lives with debt is idiotic and grossly vindictive.

So your suggestion is that we rob the tax payer to pay this..Its just debt shifting .. i wish people would stop using term forgiveness as it suggests that one party has wronged and wants to be absolved and the problem goes away..What happens here is the debt is loaded onto already over debted tax payer...Its their debt not mine..I dont phucking want it.

Loading this debt from one section to another section of society is morally unjust and wrong and even do I feel sorry for anyone who bought a house and they are under pressure after losing a job or whatever their circumstances, why should I be tapped up for more money to sort out their problems and allow them away with debts and stay in a house that a lot of people paying for this could not afford at the current interest rates or with the banks doing very little lending..

fliball123

Farmer Pudsey wrote: »

In most developed economies there is a proper debt restructuring (bankrupty) arrangments. In Ireland we had a 12 year process. The UK is 12 months the US is around the same. In Germany and part of the US there are mortgage's are non recourse. The reason they do this is to allow for labour market flexability. If there is no hope in debt situtations then people walk away.

Do I think that someone should get a 400K house for 100K no I do not. However I see no reason for a bank not to restructure a loan if it the most advantagous thing to do.Large numbers of repossions will not benifit ordinary people rather it will benifit property speculators. If a loan is unsustainable for the last 4-5 years then it may never be sustainable.

If you consider Ireland a backward corrupt state you are welcome to imigrate. There was three party's to blame for the present issue's the banks, the state and the borrower. WE have seen large numbers of extremely rich walk away from there debts, there is no reason that solutions cannot be found for those ordinary people that got caught.

I remember in the middle of last year pointing out that we were turning a corner, other still held the hope of a further 20-50% drop in house prices. I wonder is this part of this revenge saga. Am I hapy about the solution, no I am not I am paying my debts, however some cannot.

Others seem to want that we should return to the debtors jails of the 1800's. They seem to think that we can get blood from a turnip. Even Angela Merkel seems to be finally understanding that as a country our debts have to be restructured. And they will be. My own opinion back in 2010-2012 is that we should have treatened to default if not actually left the euro. However we did not. We have to move on however some are caught up by idealology and in the past

not at all if you can come up with a solution that does not involve tax payers money being used go for it..but this case where someone gets 150k written off and could get another 50k off and if the house is sold even at a profit the bank gets none of the profit is vile and an absolute insult to the hard working tax payers of this state..How phucking dare they use my money and other tax payers money to give this write off..They could of restructured, debt for equity, the mortgage stretched over a longer period..There were numerous options yet the took one where they have lost 50% of the loan and they leave the home with the owners, leaving the owners the option of a further default on this and have no recourse on 150k if the house is sold for a profit in the future..

Bits_n_Bobs

fliball123 wrote: »

So your suggestion is that we rob the tax payer to pay this...

No, my suggestion is that the banks, the banks shareholders and the banks depositors take a loss on the bad debt. Unless you live in a democracy whose government decides that none of that should happen and that instead the taxpayer should pay.

It's not fair that the taxpayer should pay.

It's also not fair that people should live in penury for the rest of their lives because of one bad financial decision.

Two wrongs do not make a right and linking them in an attempt to justify a retaliatory, punitive attitude and vindictive punishment towards peoples mistakes is not smart.

_Kaiser_

Bits_n_Bobs wrote: »

Two wrongs do not make a right and linking them in an attempt to justify a retaliatory, punitive attitude and vindictive punishment towards peoples mistakes is not smart.

I keep seeing this emotive and frankly wrong language used in the last few days to try and justify this move

So for clarity: It's nothing at all to do with being "vindictive" or "punishing" people etc etc - it's to do with making them take responsibility for the debts they freely signed up to until the debts are cleared in full rather than pushing that debt onto "someone else" who has no legal claim to (the asset) or liability for it (the debt).

Should "someone else" pay my rent for me this month? How about my credit card? I think we all know the answers to this and this case (and the others like it) is NO different - despite the attempts to muddy it using the aforementioned emotive language or terms like "family home"

Again, no-one has a RIGHT to own property - you want it, YOU pay for it!

fliball123

Bits_n_Bobs wrote: »

No, my suggestion is that the banks, the banks shareholders and the banks depositors take a loss on the bad debt. Unless you live in a democracy whose government decides that none of that should happen and that instead the taxpayer should pay.

It's not fair that the taxpayer should pay.

It's also not fair that people should live in penury for the rest of their lives because of one bad financial decision.

Two wrongs do not make a right and linking them in an attempt to justify a retaliatory, punitive attitude and vindictive punishment towards peoples mistakes is not smart.

This bank is owned by the tax payers..so they are one and the same. Everything you say is correct except your last 2 sentence...I did not have any hand, act or part in the mortgage between the bank and these people..They signed on the dotted line, they are getting to live in the phucking house...I get nothing infact I get worse than nothing I get a further hit on my wage in the form of higher taxation.....Why is it wrong to expect someone to pay for a decision they made..God forbid..Maybe I can go and have live in this house for a few weekends a year seems as do I have phucking paid for part of it.

Bits_n_Bobs

Kaiser2000 wrote: »

I keep seeing this emotive and frankly wrong language used in the last few days to try and justify this move

So for clarity: It's nothing at all to do with being "vindictive" or "punishing" people etc etc - it's to do with making them take responsibility for the debts they freely signed up to until the debts are cleared in full rather than pushing that debt onto "someone else" who has no legal claim to (the asset) or liability for it (the debt).

Should "someone else" pay my rent for me this month? How about my credit card? I think we all know the answers to this and this case (and the others like it) is NO different - despite the attempts to muddy it using the aforementioned emotive language or terms like "family home"

Again, no-one has a RIGHT to own property - you want it, YOU pay for it!

I already stated that people should lose their property, including the 'family' home. They should also forfeit all their assets, as far as humanely possible. That's what a proper bankruptcy regime does.

If a person goes bankrupt (or if the debt is written down) it is because there is no chance of the money being repaid. None. The money is gone; the bank is not getting it back. The only upside for this not being recognised as a fact is to extend out the timeline for when it will be recognised, good news for the current management and some shareholders of the banks but bad news for pretty much everyone else.

As a virtuous taxpayer this extend and pretend may forestall the day when you have to pony up more dough to recapitalise the banks with more money.

Also you need to remember that you have in fact already paid money into the banks to enable them to write off debts. So until that happens you have provided the banks with an interest free loan. Meanwhile you are insisting that some other citizen (and presumably potential taxpayer) cannot become a productive member of the economy, via a bankruptcy as happens in every other non-medieval country, for the rest of his/her life. Why?

fliball123

Bits_n_Bobs wrote: »

I already stated that people should lose their property, including the 'family' home. They should also forfeit all their assets, as far as humanely possible. That's what a proper bankruptcy regime does.

If a person goes bankrupt (or if the debt is written down) it is because there is no chance of the money being repaid. None. The money is gone; the bank is not getting it back. The only upside for this not being recognised as a fact is to extend out the timeline for when it will be recognised, good news for the current management and some shareholders of the banks but bad news for pretty much everyone else.

As a virtuous taxpayer this extend and pretend may forestall the day when you have to pony up more dough to recapitalise the banks with more money.

Also you need to remember that you have in fact already paid money into the banks to enable them to write off debts. So until that happens you have provided the banks with an interest free loan. Meanwhile you are insisting that some other citizen (and presumably potential taxpayer) cannot become a productive member of the economy, via a bankruptcy as happens in every other non-medieval country, for the rest of his/her life. Why?

We didnt pay money into the bank it was borrowed and thus far with very few writedowns this virtual cash should be still there...If there is an active campaign by the tax payers or the banks to tell mortgage holders no deal it will mean a lot of this cash borrowed could be taken back to pay off the 200billion odd we owe as a nation....As for your last sentence..He is insisting that a citizen holds their end of a bargain that they signed up to...It may or may not be for the rest of their life , if they are working they could pay the remaining loan over a period of time..But look on the flip side why should the taxpayer pay more to cover this...Why should people who are paying their mortgage and struggling cover this..and why should those renting or on the housing list cover this..There were lots of options and they took the one that frankly screwed the tax payer the most.

Bits_n_Bobs

I think we're fundamentally disagreeing on whether the borrowings will ever be repaid.

The people / institutions who reckon this money is gone and have acted accordingly over the last few years include;
IMF
ECB
Dept. of Finance
The banks
The banks debtors, creditors and shareholders
The Irish Government
The bond market

However if they're all wrong and you're right, then you might reasonably insist that these people are chased for the rest of their lives to ensure they repay it.

fliball123

Bits_n_Bobs wrote: »

I think we're fundamentally disagreeing on whether the borrowings will ever be repaid.

The people / institutions who reckon this money is gone and have acted accordingly over the last few years include;
IMF
ECB
Dept. of Finance
The banks
The banks debtors, creditors and shareholders
The Irish Government
The bond market

However if they're all wrong and you're right, then you might reasonably insist that these people are chased for the rest of their lives to ensure they repay it.

Well thats great so tell me you get onto the powers that you have listed and tell them I want my taxes cut zero for the next decade as we no longer have that 200billion debt (as the money is gone) or sure lets all party we are not borrowing 9billion this year (sure the money will be gone once we spend it)..The money maybe gone but the debt remains, what makes under pressure mortgage holders immune to this?

Bits_n_Bobs

fliball123 wrote: »

Well thats great so tell me you get onto the powers that you have listed and tell them I want my taxes cut zero for the next decade as we no longer have that 200billion debt (as the money is gone) or sure lets all party we are not borrowing 9billion this year (sure the money will be gone once we spend it)..The money maybe gone but the debt remains, what makes under pressure mortgage holders immune to this?

I understand It's difficult to form a cogent argument when suffering such monstrous righteous butthurt, but could you at least make one articulate point that might be debatable rather than just angry?

fliball123

Bits_n_Bobs wrote: »

I understand It's difficult to form a cogent argument when suffering such monstrous righteous butthurt, but could you at least make one articulate point that might be debatable rather than just angry?

What do you not understand from my comment? You follow the road of those who have lost the argument and are now going for the man and not the ball...What part of the below retort to your previous comment is stumping you. As far as your concerned the money is gone but the debt does not matter. So I am just saying if we play by those rules..I should be able to tell the tax man to phuck off forever saying the money is gone as I have spent it...Which is just as ridiculous as listing a load of different government and financial bodies that you think believe the money has gone..and then you completely ignore the 200billion debt the country has not to mention the 9 billion being borrowed this year...See how quickly any of these would change if we decided as a country we were not paying this money back..Suddenly the money would not be gone in their eyes

Well thats great so tell me you get onto the powers that you have listed and tell them I want my taxes cut zero for the next decade as we no longer have that 200billion debt (as the money is gone) or sure lets all party we are not borrowing 9billion this year (sure the money will be gone once we spend it)..The money maybe gone but the debt remains, what makes under pressure mortgage holders immune to this?

Bits_n_Bobs

Are you saying you're paying your mortgage so people who can't should never be forgiven the debt? Or am I reading too many nuances into your argument?

fliball123

Bits_n_Bobs wrote: »

Are you saying you're paying your mortgage so people who can't should never be forgiven the debt? Or am I reading too many nuances into your argument?

No I am saying that the idea of forgiveness around these current deals should be cut out..It is infact not forgivenss but a hoisting of debt onto other people.

My argument is this
People are saying the money is there for these deals....which it isnt as we borrowed it and we have to pay it back. Thus the reference to our 200billion loan we have, aswell as the 9 billion we need this year.

I am arguing that this forgiveness that they are looking for is basically taking money from other peoples pockets who cannot afford it.

I am arguing that the house should of been taken off them and given to someone who can afford to pay for the house. There are a lack of houses out there in a lot of areas at present.


Its not just black and white and on an add hock basis. If it was just 1 maybe the tax payer could suck it up..but already there are 2 others being reported of deals of over 140k written off..and that my friend is just the beginning..

The idea that neg equity only becomes a reality when the person sells..The same applies to the loans we got to pump into AIB..They only become a debt once those clowns running the bank start using the tax payers money to give out deals.

I am arguing that the AIB now have a performing loan and makes the bank look better, which in the long run cooks the books (using the tax payers money as frying oil) and ergo bonus time all around for the AIB top execs..

The tax payer is being phucked over in so many ways by this its beyond the pale

jmayo

Bits_n_Bobs wrote: »

Are you saying you're paying your mortgage so people who can't should never be forgiven the debt? Or am I reading too many nuances into your argument?

Putting a simplistic spin on it.
Actually the money hasn't really gone because someone somewhere benefitted even if they subsequently wasted it.
The EA, the revenue commissioner (i.e. the government), the developer all walked away with major wads of cash that the buyer handed over for their property.
Of course these entities may have blown it subsequently on new offices, more land to develop or vanity projects such as bertie bowls, electronic voting machines and all expense trips for families to gamble in Vegas.
But the money didn't just disappear.

Case in point sean "bighead" dunne blew major money on his vanity project in Ballsbridge.
Ulster bank got royally stung for it because they gave him the huge loans.
But the Doyle family made a fortune selling their two hotels and were laughing all the way probably to a properly run bank in Switzerland or the like.

Anyway back to gneral point ... the major wad of cash that the buyer paid over was in turn borrowed from a bank.

And someone is left holding the end product i.e the now much depreciated house and the loans attached to it.
The mortgage holder owes the amount on the loan irrespective of how much it is now worth.
And the bank that owns the loan in turn owes someone else money it borrowed initially to pass onto the buyer.

Now because we as taxpayers got into the business of guaranteeing the debts of the banks and subsequently owning some of them, we now have to make sure that the bank can repay their borrowing.
Hell lots of their borrowings have already being paid off.
Remember those bondholders ???
And we have had to borrow to pay off those bondholders hence our jump in soverign debt.

We have had to either directly borrow or guarantee the borrowing of the banks to pad out their balance sheets through recapitalisation.

What these writeoffs do is transfer some of the debt owed by the mortgage holder back to the bank and thus back onto the people funding the bank i.e. taxpayers and other customers.

The debt hasn't disappeared, it has just been shifted.

Remember our bailout and how it was re-negogiated.
Well the EU/ECB/IMF didn't cut it, they just rearranged the terms which means we still owe it.

Farmer Pudsey

I think that I need to get this straight the people here suggesting no debt restructuring( as they seem to have an issue with forgiveness) think that those who over borrowed no matter what the circumstances should be turfed out of the houses they borrowed for and then let the banks sell these houses ( more than likly at a substancial loss I imagine at a way higher loss provision that a restructured loan due to the number that would come on the market).

That this is done no matter what the circumstances, no matter what level of income loss these people had or if they had there own buisness and these failed due to the recession. That we do this even though it may( and most economists believe) will have a higher loss to the banks. That we leave all the residual debt with the borrowers even though they may be unable to ever pay. That we force them to rent accomdation( as due to residual debt they will never be allowed another loan) fo the rest of there lives.

That if they were a small buisness person, a young idiot, a nurse, a teacher, a self employed trade person, a factory worker, an IT professional that we tell them tough this is your lot. If you make any advancement in career or life we will extract it from you. If you work for the rest of your life or so for the next 10 or twenty years you must live on a minimum income until all thsi residual debt is paid.

Even though you had offered or an agreement could have been put in place that was more advantagous to you, to the tax payer and to the bank.

coolshannagh28

There is a bit of a circular argument going on here , the question that needs to be answered is how in a functioning capitalist system did it come to the small people being hounded for unpayable debts while the big fish were bailed out and backstopped long ago . The nature of the argument shows how quickly we choose to forget the nature of that injustice and bear in mind that we are not out of the woods yet,our banks would still face a challenge if all this debt was crystallised as this moral outpouring demands.

_Kaiser_

Farmer Pudsey wrote: »

I think that I need to get this straight the people here suggesting no debt restructuring( as they seem to have an issue with forgiveness) think that those who over borrowed no matter what the circumstances should be turfed out of the houses they borrowed for and then let the banks sell these houses ( more than likly at a substancial loss I imagine at a way higher loss provision that a restructured loan due to the number that would come on the market).

That this is done no matter what the circumstances, no matter what level of income loss these people had or if they had there own buisness and these failed due to the recession. That we do this even though it may( and most economists believe) will have a higher loss to the banks. That we leave all the residual debt with the borrowers even though they may be unable to ever pay. That we force them to rent accomdation( as due to residual debt they will never be allowed another loan) fo the rest of there lives.

That if they were a small buisness person, a young idiot, a nurse, a teacher, a self employed trade person, a factory worker, an IT professional that we tell them tough this is your lot. If you make any advancement in career or life we will extract it from you. If you work for the rest of your life or so for the next 10 or twenty years you must live on a minimum income until all thsi residual debt is paid.

Even though you had offered or an agreement could have been put in place that was more advantagous to you, to the tax payer and to the bank.

Basically - yes. Few random observations though:

- If YOU took on the debt, it's YOUR responsibility to pay it back. Simple as that

- Those who didn't go "mad" are being punished (to use one of those emotive terms) for the mistakes of others and will struggle too - but that's ok I guess cause we should feel sorry for those who gambled and lost AND bail them out too

- God-forbid these poor creters should have to rent right? Shure that's only for poor people or a temporary thing on the road to property ownership

- God-forbid people learn that there are consequences and responsibilities that come with the choices we make in life, right?

- Oh and on coolshannagh's point - the "but the big fish got away with it so why shouldn't everyone else" argument. It's either right or wrong. The attempts to deflect attention from some groups to others doesn't change that.

Ultimately what I, and I think a lot of others here, want is a level playing field that applies to EVERYONE, and since it's just not realistic for everyone to live in a fantasy world of "free money" forever, the reality of having to grow-up and behave like the adult you are by taking responsibility for your decisions is the next best thing.

coolshannagh28

One question that should be answered is if there had been a widespread banking collapse what would the debt be worth now. What will the debt being sold on from the banks exiting the Irish market make on the open market . Ultimately the value of these loans will plummet offering the debtors a possible writedown depending on how pragmatic the vulture fund which acquires them will be . How does moral hazard apply in a properly functioning market?