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Should NAMA seize or siphon associated healthy assets?

  • 02-08-2010 01:27PM
    #1
    Hosted Moderators Posts: 7,486 ✭✭✭


    I noticed from a recent Daily Mail article that Joe O'Reilly, one of the developers associated with the Dundrum Town Centre is one with distressed loans that are entering the NAMA process:

    http://www.dailymail.co.uk/news/article-1293783/Builder-Joe-OReilly-friend-Fianna-Fail-frolics-sun-NAMA-takes-Anglo-debts.html

    Now, my idea would be: should NAMA be allowed to seize healthy assets that a developer has to ensure payment of their distressed loands or siphon their profit as source, such as O'Reilly's stake in the Dundrum Town Centre. NAMA could then be authorized to demand changes to the running of the healthy asset in order to maximize the payback - for example in the case of a shopping centre hiking parking charges or axeing things like a service desk or concierge. I realize the mechanisms to do so would need some legislation, but would it be worth looking into?


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Comments

  • Registered Users, Registered Users 2 Posts: 4,693 ✭✭✭Laminations


    Red Alert wrote: »
    I noticed from a recent Daily Mail article that Joe O'Reilly, one of the developers associated with the Dundrum Town Centre is one with distressed loans that are entering the NAMA process:

    http://www.dailymail.co.uk/news/article-1293783/Builder-Joe-OReilly-friend-Fianna-Fail-frolics-sun-NAMA-takes-Anglo-debts.html

    Now, my idea would be: should NAMA be allowed to seize healthy assets that a developer has to ensure payment of their distressed loands or siphon their profit as source, such as O'Reilly's stake in the Dundrum Town Centre. NAMA could then be authorized to demand changes to the running of the healthy asset in order to maximize the payback - for example in the case of a shopping centre hiking parking charges or axeing things like a service desk or concierge. I realize the mechanisms to do so would need some legislation, but would it be worth looking into?

    I'd imagine in most cases those running the asset would also have the goal of maximising profit. I'm sure pricing for parking and other such issues have been carefully set after weighing up increased prices vs reduced footfall or in this case car parking.

    If people owe vast amounts of money on one asset while they are making money elsewhere, IF they are not meeting the obligations of their loans e.g. Not even making interest repayments, NAMA or the courts should have the power to seize all they have and leave them to survive on the dole. However if they are meeting their obligations I suppose they can continue living the highlife


  • Registered Users, Registered Users 2 Posts: 9,351 ✭✭✭ninty9er


    The idea of NAMA is that the developer continues to service the distressed loan at the original balance. Joe O'Reill can clearly afford to do so right now, but should that not continue to be the case, the creditor's interest in performing assets can be seized.


  • Closed Accounts Posts: 3,461 ✭✭✭liammur


    NAMA is the worst thing to ever hit this country. Fianna Fail will be forever associated with it.


  • Registered Users, Registered Users 2 Posts: 9,351 ✭✭✭ninty9er


    liammur wrote: »
    NAMA is the worst thing to ever hit this country. Fianna Fail will be forever associated with it.
    Nobody will know that for at least 10 years. Do you know anything about NAMA? Facts I mean, not headlines.


  • Closed Accounts Posts: 18,163 ✭✭✭✭Liam Byrne


    ninty9er wrote: »
    Nobody will know that for at least 10 years. Do you know anything about NAMA? Facts I mean, not headlines.

    Do you ?

    If we can't predict the future, then neither can the FF party, especially since they're the ones who missed the fact that a crash was on the horizon and their leader told people he couldn't understand why the "pessimists" didn't commit suicide.

    Of course we should believe everything they say about the economy and the future, even if it's blatantly obvious that their actions require a re-igniting of an ethos that makes this country far too expensive.

    I'll tell ya what; whenever you come up with someone who has a proven track record of predicting the future, THEN you can claim that NAMA is a good idea.


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  • Registered Users, Registered Users 2 Posts: 9,351 ✭✭✭ninty9er


    I can proclaim it to be a good policy, but I don't state it to be fact. It is my opinion.

    It would be great if only everyone here could stick to opinion without proclaiming unknowns as fact;)


  • Registered Users, Registered Users 2 Posts: 4,121 ✭✭✭RichardAnd


    Liam Byrne wrote: »
    Do you ?

    If we can't predict the future, then neither can the FF party, especially since they're the ones who missed the fact that a crash was on the horizon and their leader told people he couldn't understand why the "pessimists" didn't commit suicide.

    Of course we should believe everything they say about the economy and the future, even if it's blatantly obvious that their actions require a re-igniting of an ethos that makes this country far too expensive.

    I'll tell ya what; whenever you come up with someone who has a proven track record of predicting the future, THEN you can claim that NAMA is a good idea.


    He didn't claim it was a good idea. He simply stated that it's impossible to know if it is a bad idea.


  • Closed Accounts Posts: 3,461 ✭✭✭liammur


    I'll tell u what i know about nama

    1. it's designed to screw the ordinary irish citizen

    2. great for the bankers, developers and ff politicans

    3. all the projections are quickly unravelling at a frightening rate

    4. has the capacity to bankrupt the state


  • Closed Accounts Posts: 18,163 ✭✭✭✭Liam Byrne


    RichardAnd wrote: »
    He didn't claim it was a good idea. He simply stated that it's impossible to know if it is a bad idea.

    It's - at the very least - impossible to know if it's a good idea.

    Add in the FACTS of the matter, which are usually dismissed by FF....these include the FACT that prices are now returning to realistic levels and the FACT that it was sold based on profits and the FACT that it has already run into serious difficulty, and it is far more realistic to label it a bad idea than a good one.

    If it were a good idea, then they wouldn't have had to lie through their teeth in order to sell it.


  • Closed Accounts Posts: 3,461 ✭✭✭liammur


    I would imagine it's only die hard FF people who think NAMA is a good idea. Very much like trying to argue that the country isn't in recession.


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  • Registered Users, Registered Users 2 Posts: 4,121 ✭✭✭RichardAnd


    Liam Byrne wrote: »
    It's - at the very least - impossible to know if it's a good idea.

    Add in the FACTS of the matter, which are usually dismissed by FF....these include the FACT that prices are now returning to realistic levels and the FACT that it was sold based on profits and the FACT that it has already run into serious difficulty, and it is far more realistic to label it a bad idea than a good one.

    If it were a good idea, then they wouldn't have had to lie through their teeth in order to sell it.


    Yes, exactly, it is impossible to know if it is a good idea right now. It's also impossible to know if it's a bad idea. All we can do now is speculate and hope for the best.

    You seem quite set on it being a bad idea and that's fair enough, I don't disagree with you.


  • Closed Accounts Posts: 18,163 ✭✭✭✭Liam Byrne


    RichardAnd wrote: »
    You seem quite set on it being a bad idea and that's fair enough, I don't disagree with you.

    As I pointed out above, the facts support that opinion. I wish they didn't (I'd much prefer FF to actually be right for once than have the country sold down the swanee) but everything about it from day one stinks, and every drip-feed tells us that the story is worse than expected.

    So there you have it; the facts support it being a bad idea.

    There is no fact to support it being a good idea.

    And that is why I have that opinion.


  • Registered Users, Registered Users 2 Posts: 4,121 ✭✭✭RichardAnd


    Liam Byrne wrote: »
    As I pointed out above, the facts support that opinion. I wish they didn't (I'd much prefer FF to actually be right for once than have the country sold down the swanee) but everything about it from day one stinks, and every drip-feed tells us that the story is worse than expected.

    So there you have it; the facts support it being a bad idea.

    There is no fact to support it being a good idea.

    And that is why I have that opinion.


    You know I've read alot of your posts and you seem to be the type of person that believes everyone should share your opinion.


  • Registered Users, Registered Users 2 Posts: 961 ✭✭✭LookBehindYou


    RichardAnd wrote: »
    You know I've read alot of your posts and you seem to be the type of person that believes everyone should share your opinion.

    I share liams opinions on most subjects. If you read his posts you would see that he makes perfect sense.


  • Closed Accounts Posts: 18,163 ✭✭✭✭Liam Byrne


    RichardAnd wrote: »
    You know I've read alot of your posts and you seem to be the type of person that believes everyone should share your opinion.

    Interesting summary.

    However the thread isn't about me, and neither is it about the irony that you were prompted to say the above because I don't agree with you on NAMA.

    I've stated WHY I'm against it, and it's supported by all available facts. Do you think that's unreasonable ?

    Do you not think the fact that the basis for NAMA is a fictional LTEV is flawed, given that everyone knows that the boom and crash was caused by overpriced houses that are now returning to realistic levels, and that that is not reason to be very cautious, especially as everything we've heard about it up to now was based on lies and half-truth ?

    Whether or not I believe everyone should share my opinion is irrelevant if you cannot counter the above facts.


  • Registered Users, Registered Users 2 Posts: 4,121 ✭✭✭RichardAnd


    Liam Byrne wrote: »
    Interesting summary.

    However the thread isn't about me, and neither is it about the irony that you were prompted to say the above because I don't agree with you on NAMA.

    I've stated WHY I'm against it, and it's supported by all available facts. Do you think that's unreasonable ?

    Do you not think the fact that the basis for NAMA is a fictional LTEV is flawed, given that everyone knows that the boom and crash was caused by overpriced houses that are now returning to realistic levels, and that that is not reason to be very cautious, especially as everything we've heard about it up to now was based on lies and half-truth ?

    Whether or not I believe everyone should share my opinion is irrelevant if you cannot counter the above facts.


    You have a tendency to pick through people's posts and only see what you want to see. I never stated my views on NAMA, merely that it's too early to know if it's a good or a bad thing yet you claim I am of a different opinion than you?

    What do I think of NAMA? Well I'm not exactly thrilled by it and the fact that is seems to be depending on house prices going up again is worrying. However, I don't like dwell on things I can do nothing about so I will merely hope for the best. Even though you think it's a bad idea, I'm sure you would rather see it work than not.

    I've had an argument with you before when I stated my intention to vote FF unless I am given a viable alternative. I stated my own beliefs clearly and also said that I respect that you disagreed yet you continued to pull my posts apart as if my disagreeing with you was a thorn in your side. You do seem to be well informed on these thing, perhaps even more than I am but I'm honestly not looking for a fight.

    On this occasion, my views on NAMA and yours probably aren't that dissimilar but I maintain that posterity will have to decide what NAMA did for Ireland. We can only speculate.


  • Registered Users, Registered Users 2 Posts: 802 ✭✭✭Scarab80


    Liam Byrne wrote: »
    Interesting summary.

    However the thread isn't about me, and neither is it about the irony that you were prompted to say the above because I don't agree with you on NAMA.

    I've stated WHY I'm against it, and it's supported by all available facts. Do you think that's unreasonable ?

    Do you not think the fact that the basis for NAMA is a fictional LTEV is flawed, given that everyone knows that the boom and crash was caused by overpriced houses that are now returning to realistic levels, and that that is not reason to be very cautious, especially as everything we've heard about it up to now was based on lies and half-truth ?

    Whether or not I believe everyone should share my opinion is irrelevant if you cannot counter the above facts.

    Ok facts.

    (1) Property prices are returning to realistic levels. Yes they are, but your constant claim that NAMA requires a reinflation of the property bubble is incorrect. If it was correct the loans would have been purchased for 100% of their original value. UK property which makes up about 1/3 of NAMA loans have almost recovered their LTEV already.

    (2) It was sold based on profits. And 2 of the scenarios still show profit. In fact the worst case scenario will at worst be break even at the moment because the discount rate for NPV has fallen from 5.5% to 4.9%.

    (3) It has already run into serious difficulty. I assume you are referring to the performing loans rate being lower than that in the original plan. Fine that has implications but you ignore the fact that the discount applied to loans has gone from an expected 30% to over 50%.

    If NAMA was going to bankrupt the country as you seem to expect we would also expect to see Irish Government Bond rates going through the roof. Yet the investors with no political allegiance, who are putting their money where there mouth is have rated Irish bonds as the best performing of the PIGS over the last year, with current rates back down to 4.9% from over 5.5%.


  • Closed Accounts Posts: 18,163 ✭✭✭✭Liam Byrne


    RichardAnd wrote: »
    I've had an argument with you before when I stated my intention to vote FF unless I am given a viable alternative. I stated my own beliefs clearly and also said that I respect that you disagreed yet you continued to pull my posts apart as if my disagreeing with you was a thorn in your side. You do seem to be well informed on these thing, perhaps even more than I am but I'm honestly not looking for a fight.

    I'm not "looking for a fight" either, however I cannot understand why your reaction to not having a "viable" alternative involves voting for the current unviable one.

    I've said it elsewhere; I'd love if there was a truly ethical, trustworthy and competent alternative. But in the absence of that then the least unethical one will, unfortunately, have to do.
    RichardAnd wrote: »
    On this occasion, my views on NAMA and yours probably aren't that dissimilar but I maintain that posterity will have to decide what NAMA did for Ireland. We can only speculate.

    I'd prefer not to gamble and speculate with amounts of this nature, especially when the government have absolutely no mandate to do so, and have had to lie through their teeth in order to avoid complete uproar.


  • Closed Accounts Posts: 18,163 ✭✭✭✭Liam Byrne


    Scarab80 wrote: »
    Ok facts.

    (1) Property prices are returning to realistic levels. Yes they are, but your constant claim that NAMA requires a reinflation of the property bubble is incorrect.

    If they have almost fallen to realistic levels, then any rise is a reinflation.
    Scarab80 wrote: »
    (2) It was sold based on profits. And 2 of the scenarios still show profit. In fact the worst case scenario will at worst be break even at the moment because the discount rate for NPV has fallen from 5.5% to 4.9%.

    2 scenarios mooted by the same zero-credibility people who claimed that there would be massive profits. Forgive me if I take that with a grain of salt.
    Scarab80 wrote: »
    (3) It has already run into serious difficulty. I assume you are referring to the performing loans rate being lower than that in the original plan. Fine that has implications but you ignore the fact that the discount applied to loans has gone from an expected 30% to over 50%.

    For starters, it wasn't a discount. You can't claim parts 1 & 2 involve realistic levels and still claim that NAMA got a "discount".

    They overpaid for the original assets, and have still overpaid for them.
    Scarab80 wrote: »
    Yet the investors with no political allegiance, who are putting their money where there mouth is have rated Irish bonds as the best performing of the PIGS over the last year, with current rates back down to 4.9% from over 5.5%.

    Ah yes......compare us to the worst performing countries in the EU. Great benchmark.

    Tell me - how is Iceland getting on these days ?


  • Registered Users, Registered Users 2 Posts: 802 ✭✭✭Scarab80


    Liam Byrne wrote: »
    If they have almost fallen to realistic levels, then any rise is a reinflation.

    So if property prices ever go up again it's a bubble??
    Liam Byrne wrote: »
    2 scenarios mooted by the same zero-credibility people who claimed that there would be massive profits. Forgive me if I take that with a grain of salt.

    What massive profits? The original business plan showed a discounted profit of 4.8bn based on rates of 5%, the revised plan 1bn, a large part of this difference based on a change in the discount rate from 5% to 5.5%. The discount rate is now 4.9%
    Liam Byrne wrote: »
    For starters, it wasn't a discount. You can't claim parts 1 & 2 involve realistic levels and still claim that NAMA got a "discount".

    C,mon Liam, you know enough about this to know that the discount relates to the nominal value of the loans not the market value. I'm not saying that they underpaid on the market value of the loans, i'm pointing out that you are cherrypicking your facts, saying perfoming loans amount has fallen but ignoring that the amount paid has also fallen.
    Liam Byrne wrote: »
    Ah yes......compare us to the worst performing countries in the EU. Great benchmark.

    Tell me - how is Iceland getting on these days ?

    If only we could compare ourselves to Germany. But if we could then we wouldn't be having this conversation now would we? We had a property bubble, the banks, regulators and government policy created the situation we find ourselves in. Given that the question is then how to address the problem, therefore it would be nonsensical to compare our bond yields to a country that did not encounter the same problems that we did. There was a time when we were the next Iceland, then the next Greece, now the best performing of the PIGS, progress no?

    How is Iceland getting on? I have no idea to be honest, apart from the fact that they have given up soverignty to the IMF and are unable to raise funds themselves. This despite them having probably the greatest natural energy resource in the world allowing them to attract many heavy manufacturing industries, and the gains from this spread over 300,000 people.


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  • Closed Accounts Posts: 3,461 ✭✭✭liammur


    Without question NAMA is bad (unless of course you are a lawyer etc).

    The real question is, just how bad will it be. Devastating in my opinion, to such an extent that generations will have to pay.


  • Registered Users, Registered Users 2 Posts: 802 ✭✭✭Scarab80


    liammur wrote: »
    Without question NAMA is bad (unless of course you are a lawyer etc).

    The real question is, just how bad will it be. Devastating in my opinion, to such an extent that generations will have to pay.

    How do you arrive at that opinion?


  • Closed Accounts Posts: 3,461 ✭✭✭liammur


    NAMA is acquiring land with virtually nil value associated with it now.

    Getting houses that will have to be floored.

    The banks must really be celebrating this government.

    Where I give NAMA/Government credit for, is how some people have actually bought into the concept.


  • Registered Users, Registered Users 2 Posts: 802 ✭✭✭Scarab80


    liammur wrote: »
    NAMA is acquiring land with virtually nil value associated with it now.

    Getting houses that will have to be floored.

    The banks must really be celebrating this government.

    Where I give NAMA/Government credit for, is how some people have actually bought into the concept.

    Property associated with Tranche 1 NAMA loans had a market value of 7.454bn, consideration paid for these loans was 7.696bn.

    See page 22 here

    The share prices of the banks are certainly not reacting to the billions in profits they are making from these NAMA loans as you suggest.

    Could it be perhaps that you are just a pessimist and aren't basing your opinion on objective facts?


  • Closed Accounts Posts: 3,461 ✭✭✭liammur


    Without NAMA, there would be NO share price for the banks.

    I can't stress that stongly enough.


  • Registered Users, Registered Users 2 Posts: 802 ✭✭✭Scarab80


    liammur wrote: »
    Without NAMA, there would be NO share price for the banks.

    I can't stress that stongly enough.

    So you would prefer for the banks to be nationalised? The loan losses are still there.


  • Closed Accounts Posts: 3,461 ✭✭✭liammur


    I believe they should have been nationalised, old management sacked, cleaned up, and eventually privatised again.


  • Registered Users, Registered Users 2 Posts: 2,629 ✭✭✭ART6


    liammur wrote: »
    NAMA is acquiring land with virtually nil value associated with it now.

    Getting houses that will have to be floored.

    The banks must really be celebrating this government.

    Where I give NAMA/Government credit for, is how some people have actually bought into the concept.

    I have no idea whether NAMA is a good or bad idea since I don't have sufficient grasp of high finance (neither does FF it seems, but.....). However, I do feel that speculation of vast sums of money that you don't actually have, can't afford, and will need to borrow, upon a bet that you are convinced is a winner, is a reckless policy that is for inveterate (and losing) gamblers rather than for governments. Particularly if that bet turns sour and you lose the lot, as the developers and the banks seem to have done. Isn't that procedure the one that got us into this mess in the first place?

    What I can understand is the news reports I have read recently where development land that sold for €500,000 an acre is now on the market as agricultural land for €10,000 an acre. I don't know how much of that is in NAMA's portfolio, but it does seem to give the lie to the suggestion that NAMA will make a profit eventually. Even if the haircut applied to a land purchase loan was 50% then the land would still be on NAMA's books at €250,000 an acre and be worth €10,000.

    Once it has reverted to being agricultural land then, presumably, at some time in the future if the economy returns to boom and the Celtic Tiger recovers from extinction it will have to be re-zoned and new planning consents will have to be sought and granted since existing ones will have lapsed. How long will all those three conditions take to come into effect? More than NAMA's ten year guesstimate perhaps? So what then will be the taxpayer's rate of return on investment be? Certainly much less than any serious investor would consider even in his worst nightmares. Money under the mattress sounds a better bet to me.


  • Registered Users, Registered Users 2 Posts: 4,885 ✭✭✭Stabshauptmann


    Red Alert wrote: »
    I noticed from a recent Daily Mail article that Joe O'Reilly, one of the developers associated with the Dundrum Town Centre is one with distressed loans that are entering the NAMA process:

    http://www.dailymail.co.uk/news/article-1293783/Builder-Joe-OReilly-friend-Fianna-Fail-frolics-sun-NAMA-takes-Anglo-debts.html

    Now, my idea would be: should NAMA be allowed to seize healthy assets that a developer has to ensure payment of their distressed loands or siphon their profit as source, such as O'Reilly's stake in the Dundrum Town Centre.

    A loan is a legal agreement whereby you pledge collateral that the bank can "seize" should you be unable to repay the money borrowed.

    You cannot come along later and change the collateral to suit yourself. That is nothing more than theft by the state, and it would affect us just as bad as the gov defaulting on its debt.

    No one would do business with Ireland Inc.


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  • Registered Users, Registered Users 2 Posts: 4,885 ✭✭✭Stabshauptmann


    Liam Byrne wrote: »

    There is no fact to support it being a good idea.

    .

    Fact: Ireland has not gone the way of Iceland or Greece.


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