NAMA - How can it be profitable for Irish tax payer?

20goto10 · 17-09-2009 12:15pm #1

If 2/3 of the bad assets are Irish then how does the goverment expect to make a profit? I mean they will be selling the assets to mostly Irish taxpayers so in actual fact it's a lose lose situation for us. Does anyone know if they have specified how they plan on selling the assets and at the same time protect the tax payer? Because the only possible way as I can see it is to sell the assets outside of the state which makes no sense.

TheInquisitor · 17-09-2009 12:23pm

First can i just say LOL

It will make a profit when prices recover in the next ten years. It doesn't make a difference if they sell them to irish people or not. The money ends up in government coffers taken from someone's personal bank account etc and that is how they will make a profit!

Riskymove · 17-09-2009 12:25pm

20goto10 wrote: »

I mean they will be selling the assets to mostly Irish taxpayers so in actual fact it's a lose lose situation for us.

say what now?

LostinBlanch · 17-09-2009 12:29pm

Profit???????? For the Irish taxpayer????????

What a f*cking joke.

There is a profit to be made, but only if you're a bank shareholder or bondholder / friend of FF / bank executive responsible for the mess in the first place.

Anyone else can go and f*ck themselves. Oh and leave your wallet at the door on your way out.

20goto10 · 17-09-2009 12:49pm

Ok so the answer is no they haven't specified.

SLUSK · 17-09-2009 12:56pm

20goto10 wrote: »

If 2/3 of the bad assets are Irish then how does the goverment expect to make a profit? I mean they will be selling the assets to mostly Irish taxpayers so in actual fact it's a lose lose situation for us. Does anyone know if they have specified how they plan on selling the assets and at the same time protect the tax payer? Because the only possible way as I can see it is to sell the assets outside of the state which makes no sense.

Since it is only government who is willing to by these assets for this price, clearly the chance of any profits are very small. If there were any good chances for profits private investors would have been queing to by these assets.

SLUSK · 17-09-2009 12:57pm

TheInquisitor wrote: »

First can i just say LOL

It will make a profit when prices recover in the next ten years. It doesn't make a difference if they sell them to irish people or not. The money ends up in government coffers taken from someone's personal bank account etc and that is how they will make a profit!

why would prices recover for these assets? Why would their value magically appreciate in the future?

hobochris · 17-09-2009 1:01pm

SLUSK wrote: »

why would prices recover for these assets? Why would their value magically appreciate in the future?

My guess is the government plan to stimulate another property bubble.

is_that_so · 17-09-2009 1:15pm

LostinBlanch wrote: »

Profit???????? For the Irish taxpayer????????

What a f*cking joke.

There is a profit to be made, but only if you're a bank shareholder or bondholder / friend of FF / bank executive responsible for the mess in the first place.

Anyone else can go and f*ck themselves. Oh and leave your wallet at the door on your way out.

We are shareholders.

AS I've said before I am not huge fan of NAMA although I do see how it could logically work. Like everyone else I am extremely nervous about the risk. As none of the other "plans" seemed to gather traction or support it's ended up as the only game in town.

The very basic idea is this

40% of loans going into NAMA are generating cash. It is believed/hoped/expected that this cash will help NAMA fund the interest on the money borrowed.

They are also proposing to split the types of bonds going to banks into two groups. Simply put the good ones and the bad ones. How this will happen is still unclear.

The discount on all of the loans is supposed to reflect a "fair" valuation of what the loans and properties are worth. The properties have been assessed at €48 billion or so.

Meanwhile they'll try to figure out what to do with the rest. There is an argument at present to hang onto some sites as a firesale will deliver very little at present. There's €5 billion available for "project completion" which as far I understand it could be used with some sites to finish and sell them off. Developers will still have to pay off the loans or where they can't the original bank may have to cough up more for it.

Incidentally we the taxpayers will benefit from this anyway as we own Anglo and will get money back through bonds for the €28 billion or so they have.

So if, and this is a real guess but they claim historical evidence for it, property prices increase by 10% over the lifetime of NAMA it will break even. If it's more then there's your profit. What seems to be pushing that logic is that fact that a lot of the property is not in Ireland. Property in the US and UK might be expected to recover in price better.

If and only if the historical evidence is proven correct and we are close to the bottom, which is why there is so much concern about NAMA, then there'll be loadsa money. If not then it's that children's children speech.

20goto10 · 17-09-2009 2:06pm

The problem I have is let's say they do break even or make a profit, that does not mean the tax payer wins. Simply because they will be selling most of the assets to us, so Nama wins on paper but it is us who ultimately pay.

I think lenihan has been taking tips from Darren Brown! And yes I'm aware Darren Brown is ****!

LostinBlanch · 17-09-2009 2:07pm

IS that so. Nice try attempting to make it look like we're paying ourselves. To quote from one of the tribunals "are we f*ck!"

As for property prices, we're nowhere near bottom, and the only way that NAMA can actually "make money" is by reinflating another property bubble. So thats a bit like pouring more petrol onto a fire in order to put the fire out.

We're deliberately overpaying to bail out bank bondholders / shareholders / FF friends et al. If you want historical evidence for seeing property prices rising to pre bubble prices I suggest you look at Japanese property prices after the property bubble of the late 80's or the prices paid for agricultural land from the early 70's after we joined the EEC. There was a good article about it in the Times a couple of days ago.

jmayo · 17-09-2009 2:18pm

20goto10 wrote: »

If 2/3 of the bad assets are Irish then how does the goverment expect to make a profit? I mean they will be selling the assets to mostly Irish taxpayers so in actual fact it's a lose lose situation for us. Does anyone know if they have specified how they plan on selling the assets and at the same time protect the tax payer? Because the only possible way as I can see it is to sell the assets outside of the state which makes no sense.

20goto10 nice to see you have left the conforts of the Accomodation and Property forum.
Sadly you have brought your over optimistic outlook on Irish property with you to this forum and to this topic.

Profit ?
Oh yes if we return to the glory days of the peak of the bubble and people are dumb enough to fall for the same tricks.

As for is_that_so posts about 47 billion being a fair valuaiton then why are we paying 7/8 billion over that amount for the loans.

I also take huge issue with the way RTE are offloading the news thius morning on the news.
According to them, NAMA will involve us spending 54 billion to buy loans with a book value of approx. 71 billion, a 30% discount.
They failed to lead with NAMA paying 7 billion too much for loans of 71 billion book value, that are now really only secured by less than 47 billion worth of assets.

is_that_so · 17-09-2009 2:35pm

LostinBlanch wrote: »

IS that so. Nice try attempting to make it look like we're paying ourselves. To quote from one of the tribunals "are we f*ck!"

As for property prices, we're nowhere near bottom, and the only way that NAMA can actually "make money" is by reinflating another property bubble. So thats a bit like pouring more petrol onto a fire in order to put the fire out.

We're deliberately overpaying to bail out bank bondholders / shareholders / FF friends et al. If you want historical evidence for seeing property prices rising to pre bubble prices I suggest you look at Japanese property prices after the property bubble of the late 80's or the prices paid for agricultural land from the early 70's after we joined the EEC. There was a good article about it in the Times a couple of days ago.

Well we will be for the all the use it is.

My comments were in answer to the original poster's question.

I am not 100% convinced by the pricing but I am also unconvinced by anyone who claims they know what will happen. This is where the real debate lies amid all the hysteria. I certainly don't know who to believe on the valuations or the price movements but 10% over 10 years could hardly be called a property bubble and at the very least sounds like a reasonable gamble. But this is really the NAMA risk. The only part of NAMA that does give comfort and IMO can be believed is the use of the performing loans, which at €1 billion should pay some if not all of the cost of the bonds.

Development/Agricultural land on the other hand I agree is a completely different story and is 36% of the total. This is where the individual loan valuations are supposed to come in. The discount will be an average of 30%. That implies that for some it will probably far more an for others less.

Also I don't think Japan is relevant as properties are not all caught up in our property mess. Japan was also almost wholly responsible for its own mess by denying they even had a problem.

whatnext · 17-09-2009 2:39pm

Firstly. NAMA are buying the Debt, and taking the asset as security on the dept the same as any mortgage? So the Developer will still owe the same amount of money before and after NAMA?

Secondly. If (and I appreciate its a big if) the developer does somehow manage to repay the whole debt then NAMA is 30% on that debt?

Thirdly. If a Developer defaults on a loan and NAMA takes over control of the Asset then they have 10 years to achieve 70% of the loan value to break even? Would any rent earned in this period belong to NAMA?

Do NAMA earn interest on these Debts?

And finally could the people on here that say it will definitely fail or definitely succeed PM the lotto numbers to me while they have their crystal ball out:)

is_that_so · 17-09-2009 2:40pm

jmayo wrote: »

20goto10 nice to see you have left the conforts of the Accomodation and Property forum.
Sadly you have brought your over optimistic outlook on Irish property with you to this forum and to this topic.

Profit ?
Oh yes if we return to the glory days of the peak of the bubble and people are dumb enough to fall for the same tricks.

As for is_that_so posts about 47 billion being a fair valuaiton then why are we paying 7/8 billion over that amount for the loans.

I also take huge issue with the way RTE are offloading the news thius morning on the news.
According to them, NAMA will involve us spending 54 billion to buy loans with a book value of approx. 71 billion, a 30% discount.
They failed to lead with NAMA paying 7 billion too much for loans of 71 billion book value, that are now really only secured by less than 47 billion worth of assets.

I used "fair" in an attempt to describe how NAMA might view a price for them. Announcing 30% makes sense to allow both the market and the affected institutions to look at funding needs. However Lenihan did repeatedly use the word "estimated" in his speech. The only crumb of comfort I think is the review of each loan individually.

is_that_so · 17-09-2009 2:47pm

whatnext wrote: »

Firstly. NAMA are buying the Debt, and taking the asset as security on the dept the same as any mortgage? So the Developer will still owe the same amount of money before and after NAMA?

Secondly. If (and I appreciate its a big if) the developer does somehow manage to repay the whole debt then NAMA is 30% on that debt?

Thirdly. If a Developer defaults on a loan and NAMA takes over control of the Asset then they have 10 years to achieve 70% of the loan value to break even? Would any rent earned in this period belong to NAMA?

Do NAMA earn interest on these Debts?

And finally could the people on here that say it will definitely fail or definitely succeed PM the lotto numbers to me while they have their crystal ball out:)

NAMA will replace the developer's bank so anything in relation to the loans a developer will now have to deal with NAMA. They will have to fully repay the loan and NAMA will operate as any bank which may involve acquiring assets. If there's still a shortfall on what NAMA pays at the end, the original bank pays.

20goto10 · 17-09-2009 2:55pm

jmayo wrote: »

20goto10 nice to see you have left the conforts of the Accomodation and Property forum.
Sadly you have brought your over optimistic outlook on Irish property with you to this forum and to this topic..

Eh? Sadly you once again misinterpret what I'm saying. And I'm asking a question not stating an opinion.

population · 17-09-2009 3:18pm

is_that_so wrote: »

NAMA will replace the developer's bank so anything in relation to the loans a developer will now have to deal with NAMA.

Ugh "deal with NAMA"........I am sure they are quaking at the prospect of having a state agency founded by their mates asking them for money.

Far more likely they will say "cant you get my gambling debts paid by some other schmuck, or I don't know....say 6 million schmucks???"

"Of course we can!!! Remember this is Ireland and you are untouchable!!! Life is great!!!"

population · 17-09-2009 3:22pm

whatnext wrote: »

Firstly. NAMA are buying the Debt, and taking the asset as security on the dept the same as any mortgage? So the Developer will still owe the same amount of money before and after NAMA?

Secondly. If (and I appreciate its a big if) the developer does somehow manage to repay the whole debt then NAMA is 30% on that debt?

Thirdly. If a Developer defaults on a loan and NAMA takes over control of the Asset then they have 10 years to achieve 70% of the loan value to break even? Would any rent earned in this period belong to NAMA?

Do NAMA earn interest on these Debts?

And finally could the people on here that say it will definitely fail or definitely succeed PM the lotto numbers to me while they have their crystal ball out:)

Well dont know the lotto numbers, but I know NAMA is a FF creation. The party that embodies every single aspect of cute hoorism and crimnal economic mismanagement known to man. It will fail US not them and their mates

is_that_so · 17-09-2009 3:34pm

population wrote: »

Ugh "deal with NAMA"........I am sure they are quaking at the prospect of having a state agency founded by their mates asking them for money.

Far more likely they will say "cant you get my gambling debts paid by some other schmuck, or I don't know....say 6 million schmucks???"

"Of course we can!!! Remember this is Ireland and you are untouchable!!! Life is great!!!"

Suspect that NAMA will be more like Revenue than Fás.

It'll be a criminal offence to lobby NAMA.

population · 17-09-2009 3:39pm

is_that_so wrote: »

Suspect that NAMA will be more like Revenue than Fás. It'll be a criminal offence to lobby NAMA.

They dont HAVE to lobby NAMA!!!

For fcuk sake NAMA will be paying them to finish their own developments!!!

population · 17-09-2009 3:48pm

is_that_so wrote: »

Suspect that NAMA will be more like Revenue than Fás. It'll be a criminal offence to lobby NAMA.

Red herrings for all

bangersandmash · 17-09-2009 4:31pm

is_that_so wrote: »

I certainly don't know who to believe on the valuations or the price movements but 10% over 10 years could hardly be called a property bubble and at the very least sounds like a reasonable gamble.

Is the 10% figure not based on the assumption that the properties connected to the loans really are worth €47bn in the current market, and not considerably less?

Clare_Guy · 17-09-2009 4:42pm

There are a couple of things that I think people are not discussing.

1. The 54 billion estimate includes at least 9 billion of unpaid interest that has been rolled up into it. When you take this into account, the "haircut" or discount on the book value is less than 20% Does anyone here believe that property has "only" dropped in value by less than 20%?

2. When NAMA comes to selling on the assets, who will be financing the purchases? The very banks that have received the original bailout. These banks will know exactly how much the properties owe to NAMA, do you think they'll finance for more than that? Will they f*ck?!!!

Amhran Nua · 17-09-2009 4:54pm

is_that_so wrote: »

As none of the other "plans" seemed to gather traction or support it's ended up as the only game in town.

There were no other plans put forward, they robbed the idea from the Scandinavians and twisted it until it could be used to start another property bubble, losing all other merit in the process.

is_that_so wrote: »

If there's still a shortfall on what NAMA pays at the end, the original bank pays.

Aha, no this is not the case. It is not in the legislation, not written down anywhere, only a muttered gesture from a minister who will have retired by the time his promises come due. The idea that it can't be included in the legislation because it would represent a future liability that would discourage investment is nonsensical.

thebman · 17-09-2009 8:32pm

Clare_Guy wrote: »

There are a couple of things that I think people are not discussing.

1. The 54 billion estimate includes at least 9 billion of unpaid interest that has been rolled up into it. When you take this into account, the "haircut" or discount on the book value is less than 20% Does anyone here believe that property has "only" dropped in value by less than 20%?

2. When NAMA comes to selling on the assets, who will be financing the purchases? The very banks that have received the original bailout. These banks will know exactly how much the properties owe to NAMA, do you think they'll finance for more than that? Will they f*ck?!!!

Very good points TBH.

limerickman95 · 17-09-2009 9:02pm

OK this NAMA thing is a little confusing me so can people help me understand it better.

So am i correct in saying this bank NAMA will purchase bad loans off the regular banks for a negotiated price, and the developers will repay there loans to NAMA.

So if these developers go bust NAMA will then own the collateral for these bad loans(such as land, builders etc?)

So any replies will be fantastic?

is_that_so · 17-09-2009 9:33pm

Amhran Nua wrote: »

There were no other plans put forward, they robbed the idea from the Scandinavians and twisted it until it could be used to start another property bubble, losing all other merit in the process.

Most plans of this type are based on previous successful ones anyway. NAMA is what we ended up with.

Amhran Nua wrote: »

Aha, no this is not the case. It is not in the legislation, not written down anywhere, only a muttered gesture from a minister who will have retired by the time his promises come due. The idea that it can't be included in the legislation because it would represent a future liability that would discourage investment is nonsensical.

Indeed but there is plenty of precedent and bank levies will be the order of the day to resolve issues of this nature as with ICI. If the NAMA plans work it won't be needed and even if there are shortfalls no-one can even guess at them so a muttered gesture is as good as it gets for now.

is_that_so · 17-09-2009 9:38pm

limerickman95 wrote: »

OK this NAMA thing is a little confusing me so can people help me understand it better.

So am i correct in saying this bank NAMA will purchase bad loans off the regular banks for a negotiated price, and the developers will repay there loans to NAMA.

So if these developers go bust NAMA will then own the collateral for these bad loans(such as land, builders etc?)

So any replies will be fantastic?

Yes in answer to your questions but NAMA will buy both good and bad loans.
If a developer goes bust the collateral will be exposed. NAMA, will in theory acquire it and sell it off to get the best possible price. If there's still a shortfall there will most likely be a mechanism whereby NAMA can go after the original bank for it. I reckon as I posted above that will a levy of some sort.

is_that_so · 17-09-2009 9:40pm

bangersandmash wrote: »

Is the 10% figure not based on the assumption that the properties connected to the loans really are worth €47bn in the current market, and not considerably less?

Yep it is but Lenihan has been using the word "estimated" about all of it to cover the fact that they really don't seem to know. He was also claiming that yields are very high which in his words "is a signal that we are near the bottom of the market".

SkepticOne · 17-09-2009 9:42pm

is_that_so wrote: »

Yes in answer to your questions but NAMA will buy both good and bad loans.
If a developer goes bust the collateral will be exposed. NAMA, will in theory acquire it and sell it off to get the best possible price. If there's still a shortfall there will most likely be a mechanism whereby NAMA can go after the original bank for it. I reckon as I posted above that will a levy of some sort.

I think in reality what will happen will be that further credit will be extended to keep the developer going in some form so that this does not happen for the same reasons that the banks (except ACC of course) are falling over themselves to keep Zoe going.

17-09-2009 9:44pm

is_that_so wrote: »

Indeed but there is plenty of precedent and bank levies will be the order of the day to resolve issues of this nature as with ICI. If the NAMA plans works it won't be needed and even if there are shortfalls no-one can even guess at them.

You can pretty much guarantee that if the banks end up paying levies, that WE will be the ones paying for them through higher rates and fee's.

is_that_so · 17-09-2009 9:48pm

Rojomcdojo wrote: »

You can pretty much guarantee that if the banks end up paying levies, that WE will be the ones paying for them through higher rates and fee's.

Absolutely but my one wish for this whole NAMA thing is that the second stated element - facilitating banks return to normal activity comes with wholesale banking sector reform.

bangersandmash · 17-09-2009 9:48pm

Rojomcdojo wrote: »

You can pretty much guarantee that if the banks end up paying levies, that WE will be the ones paying for them through higher rates and fee's.

We're unlikely to have to wait that long

Once NAMA gets up and running banks will be expected to start lending again, but there is also likely to be a sting in the tail for consumers.

This is because those banks with assets that are due to be sold off to NAMA have been told by the Department of Finance to resist hiking rates or charges until the new body is set up. The rationale here is that banks and building societies are unpopular enough without further upsetting consumers by raising the interest rates they charge on loans and mortgages and increasing credit card charges and fees.

But once NAMA is up and running, expect banking to get dearer for consumers.

http://www.independent.ie/opinion/columnists/charlie-weston/postnama-rates-likely-to-sting-the-consumer-1880587.html

It really is Win-Win!

is_that_so · 17-09-2009 9:53pm

SkepticOne wrote: »

I think in reality what will happen will be that further credit will be extended to keep the developer going in some form so that this does not happen for the same reasons that the banks (except ACC of course) are falling over themselves to keep Zoe going.

Yes I agree but I think it very much depends on the developer and the likelihood of them failing. A developer failing is not going to affect NAMA to the same degree it might a bank. Part of the enthusiasm for the Zoe deal I suspect was to get the loans into NAMA anyway.

17-09-2009 9:57pm

is_that_so wrote: »

Yes I agree but I think it very much depends on the developer and the likelihood of them failing. A developer failing is not going to affect NAMA to the same degree it might a bank. Part of the enthusiasm for the Zoe deal I suspect was to get the loans into NAMA anyway.

From where I was sitting, the enthusiasm for the ZOE deal was purely to avoid a sale of the assets which would expose their true worth.

The banks will take FF's makey-uppy valuations any day over what these 'assets' are actually worth.

transylman · 17-09-2009 10:13pm

is_that_so wrote: »

Yes in answer to your questions but NAMA will buy both good and bad loans.
If a developer goes bust the collateral will be exposed. NAMA, will in theory acquire it and sell it off to get the best possible price. If there's still a shortfall there will most likely be a mechanism whereby NAMA can go after the original bank for it. I reckon as I posted above that will a levy of some sort.

If the developers go bust and the assets have to be sold, the value of property is going to drop further. They are hardly going to let this happen when the whole premise of NAMA is that property prices will bottom out at 47% below peak prices, before rising 10% by 2019. We will in effect be propping up developers as well, in the hope the property prices will magically start to rise again.

I have no idea where you pulled this idea of a levy on banks from. As far as I know nobody has mentioned anything of the sort.

The main beneficiaries of NAMA are the banks, the banks shareholder, the developers, and FF. The country will most probably lose 30 billion from the scheme.

http://www.irishtimes.com/newspaper/opinion/2009/0915/1224254555311.html

is_that_so · 17-09-2009 10:22pm

transylman wrote: »

If the developers go bust and the assets have to be sold, the value of property is going to drop further. They are hardly going to let this happen when the whole premise of NAMA is that property prices will bottom out at 47% below peak prices, before rising 10% by 2019. We will in effect be propping up developers as well, in the hope the property prices will magically start to rise again.

I have no idea where you pulled this idea of a levy on banks from. As far as I know nobody has mentioned anything of the sort.

The main beneficiaries of NAMA are the banks, the banks shareholder, the developers, and FF. The country will most probably lose 30 billion from the scheme.

http://www.irishtimes.com/newspaper/opinion/2009/0915/1224254555311.html

It was mentioned, quite some back and left floating while they were trying to wok out how NAMA would function. I have no doubt that NAMA will devise a mechanism to address this if it comes up short although the subordinated debt bond proposal may mitigate that risk anyway.

FF will not benefit from this at all as their goose is cooked. If your point is that losing the NAMA vote will bring down the Govt unfortunately that is not the case. Bank reform has already been mentioned and like many others I'd take great pleasure in seeing some of the so-called developers disappear. I also don't understand this blanket schadenfreude for bank shareholders. Big institutions sure but there are an awful lot of small older shareholders who have been decimated by the recklessness of the banks.

superhooper · 17-09-2009 11:15pm

Is this the right take on the workings of the thing.NAMA will issue bonds in lieu of the loans. The banks will then go to the EU Central bank and use the bonds as collateral. Will there be any interest payments on these Loans?

Amhran Nua · 18-09-2009 4:24am

is_that_so wrote: »

Most plans of this type are based on previous successful ones anyway. NAMA is what we ended up with.

No, NAMA is where we are being dragged.

is_that_so wrote: »

Indeed but there is plenty of precedent and bank levies will be the order of the day to resolve issues of this nature as with ICI. If the NAMA plans work it won't be needed and even if there are shortfalls no-one can even guess at them so a muttered gesture is as good as it gets for now.

It would be a very easy matter to include legislation based on the total, the maximum amount of exposure of NAMA to bad loans, with repayment schedules graded based on the amount due. By making the banks solely responsible for this shortfall you ensure both honest valuations and the vigorous pursuit of bad debts by the banks, who will be managing the loans. There is no reason to exclude this from the legislation, and plenty of reasons to include it.

The great thing about all this is the banks are meant to start lending after NAMA -why would they, they've just been handed years of profit.

20goto10 · 18-09-2009 8:01am

transylman wrote: »

If the developers go bust and the assets have to be sold, the value of property is going to drop further. They are hardly going to let this happen when the whole premise of NAMA is that property prices will bottom out at 47% below peak prices, before rising 10% by 2019. We will in effect be propping up developers as well, in the hope the property prices will magically start to rise again.

You're assuming that continued drops in property prices is good for everyone. There are a lot of people who would be glad to see the crash bottom out right now. Myself included, someone who bought 6 years ago and is trying to move home. That's a lot of people who have bought or remortgaged in the last 6 years (and more) who have an interest in seeing prices bottom out.

TheInquisitor · 18-09-2009 8:23am

SLUSK wrote: »

why would prices recover for these assets? Why would their value magically appreciate in the future?

Its called Inflation

Mr.Micro · 18-09-2009 8:23am

Since the collapse of Lehman brothers bank a year ago on Wall Street there has been much debate as to should it have been saved by the US Government? Many argue that the financial credit crunch was much worse for that failure to act. Now it appears that the banks have not learned their lesson. Effectively the banks are now in a stronger position, more powerful and realize that Governments will not allow them to fail, so they can really do as they like and will probably continue as before. How can bank be regulated if it can never be allowed fail no matter what it does wrong, as it will always be rescued, with Lehmans being the notable exception. It defies logic but that what we now have.

http://news.bbc.co.uk/2/hi/business/8256010.stm

MY point is that what happens here if the banks go belly up again and we have another crisis and its possible. Will there be NAMA 2 that's how ridiculous this whole farce is. So it would have been better off to nationalize all the banks because that is probably what has been done but in this case its passing over public money to private hands forever, its absolute robbery of the Irish people.

MeatProduct · 18-09-2009 9:06am

Could someone tell me what bonds actually are? What value does a government have on a bond it is issuing, what is backing it? Is it property, TAX returns, assets?

Nick

is_that_so · 18-09-2009 10:12am

MeatProduct wrote: »

Could someone tell me what bonds actually are? What value does a government have on a bond it is issuing, what is backing it? Is it property, TAX returns, assets?

Nick

A bond is an agreement by the issuer, the government/NAMA in this case, to pay the people who buy a bond an agreed amount over the lifetime of the bond. The ones the banks will be getting from NAMA are more like IOUs which can be cashed in with the ECB. They are really more like cash but by making them bonds the Govt is not handing out any money and so is putting off payment. This comes back to this 40% of loans which in theory will pay the interest the Govt/NAMA will have to pay to cover the issuing of bonds by NAMA. This is the simplest summary I could find on bonds.

http://en.wikipedia.org/wiki/Government_bond

is_that_so · 18-09-2009 10:22am

Amhran Nua wrote: »

No, NAMA is where we are being dragged.

Dragged, ended up. It's just a matter of semantics. It is unlikely at this point that anything other than the NAMA solution is going to be used to address the mess.

Amhran Nua wrote: »

It would be a very easy matter to include legislation based on the total, the maximum amount of exposure of NAMA to bad loans, with repayment schedules graded based on the amount due. By making the banks solely responsible for this shortfall you ensure both honest valuations and the vigorous pursuit of bad debts by the banks, who will be managing the loans. There is no reason to exclude this from the legislation, and plenty of reasons to include it.

The great thing about all this is the banks are meant to start lending after NAMA -why would they, they've just been handed years of profit.

NAMA is not yet legislation. There are still at least three weeks till we get the final vote and therefore scope to make all kinds of amendments. As for the banks well things will change for them. Aside from being smaller, a lot of the smaller ones are likely to be forced into this "third force".
In theory we/NAMA are supposed to have some influence on their evolution. Not sure that we will but a good overhaul/punishment of the banks would go some way to convincing people that this isn't just another cosmetic exercise to helps banks make even more money.

MeatProduct · 18-09-2009 10:28am

is_that_so wrote: »

A bond is an agreement by the issuer, the government/NAMA in this case, to pay the people who buy a bond an agreed amount over the lifetime of the bond. The ones the banks will be getting from NAMA are more like IOUs which can be cashed in with the ECB. They are really they are more like cash but by making them bonds the Govt is not handing out any money and so is putting off payment. This comes back to this 40% of loans which in theory will pay the interest the Govt/NAMA will have to pay to cover the issuing of bonds by NAMA. This is the simplest summary I could find on bonds.

http://en.wikipedia.org/wiki/Government_bond

Thank you, so it seems the security is on taxes. So, as has been made clear, it is the tax payer that is paying for it. However, does that mean that me, as a flesh and blood person, is liable to pay this? Does it make me, as an Irish tax-payer, personally responsible in the payment of this?

What is the legal situation here? Who does the ultimate responsibility fall to? I'm curious as I can't imagine the goverment would be doing this if the ultimate responsibility were to fall to them.

What if I as a citizen of Ireland didn't want to be party to this, is there a means of emancipating myself from the desicions and legal obligations of the goverment placed upon me?

A lot of questions. I have tried to find some answers but the mostly apply to the US and I'd like clarity on the Irish situation.

Nick

is_that_so · 18-09-2009 10:39am

The NTMA looks after bonds.

Link

The idea of NAMA is the "assets" passed to it, will over time take care of it all and pay off the loans. That's the real risk and why people are talking about paying for this for generations.

MeatProduct · 18-09-2009 11:05am

is_that_so wrote: »

The NTMA looks after bonds.

Link

The idea of NAMA is the "assets" passed to it, will over time take care of it all and pay off the loans. That's the real risk and why people are talking about paying for this for generations.

From your link it states that NTMA is a government agency. Does this mean it is government owned or that it just acts as an agent for the goverment and may be a private company.

Not that I give this website any weight but NTMA came up as a listed company.

Nick

Amhran Nua · 18-09-2009 11:07am

is_that_so wrote: »

It is unlikely at this point that anything other than the NAMA solution is going to be used to address the mess.

Unfortunately I think you may be right in that. What this means is that any future government should start making plans to unravel the shambles that is NAMA as it stands now.

is_that_so wrote: »

NAMA is not yet legislation. There are still at least three weeks till we get the final vote and therefore scope to make all kinds of amendments.

But didn't Lenihan already state it wouldn't be included in the legislation?

is_that_so · 18-09-2009 11:18am

MeatProduct wrote: »

From your link it states that NTMA is a government agency. Does this mean it is government owned or that it just acts as an agent for the goverment and may be a private company.

Not that I give this website any weight but NTMA came up as a listed company.

Nick

It looks after our national debt and the raising of bonds,the National Pension Fund, fairly successfully IMO, is a part of the Central Bank and reports to the Minister of Finance. As agencies go it is probably one of the most independent and one of the better ones.

Amhran Nua wrote: »

Unfortunately I think you may be right in that. What this means is that any future government should start making plans to unravel the shambles that is NAMA as it stands now.

But didn't Lenihan already state it wouldn't be included in the legislation?

Yep but he has also invited amendments from all parties. The legislation in a few weeks time will look different. How much is hard to say.

NAMA - How can it be profitable for Irish tax payer?

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