Let NAMA developers buy back loans at discount, says FG TD

gaius c

Apologies for the Indo link.

THE Government should scrap its ban on NAMA selling back heavily discounted property loans to the developers they took them over from, a prominent Fine Gael TD has said.

Aine Collins, TD for Cork North West, also branded the agency as "far too powerful", and said it threatens to jeopardise Ireland's economic recovery.

The controversial proposal for NAMA developers to be able to buy back their loans at a discount comes as Finance Minister Michael Noonan and his top officials have commenced a mid-term review of the agency's operations. The announcement of the review has come following a period of intense criticism of the agency and its operations in the Dail and Seanad.

There is more...

The trouble I have with this is that if they have the resources to buy back their loans, then they have resources to pay more back on the loans they are currently defaulting on.

Socialise losses and privatise profits!

andrew

To be clear, they wouldn't be selling the *loans* to the developer, right? That wouldn't make any sense; the developer never owned the loan, they owned the property, and the bank owned the loan. So, now NAMA owns the (defaulted upon, written down) loan and the property, and the developer owns nothing (because they defaulted on the loan).

The proposal, then(?), is to let the developer buy the property, the same one which they previously defaulted upon? Is this correct?

It seems slightly weird to arrange it as a buyback as such. In my mind it'd make more sense that the loan goes from 'in default' status to 'in repayment' status. The developer regains ownership of the property, and NAMA begins to get an income stream from the original loan again.

To let them purchase the property again at a lower price than originally, aren't they essentially swapping their original large loan for a smaller one? NAMA still gets the value of the property, so it/the state benefits, but such a swap seems unfair.

jmayo

So aine collins thinks this is a good idea.
Would it have anything to do with her financial services company or her business consultancy company?

Or maybe we should listen to yet another public respresentative who appears to come form the frank fahey school of property investment ?

Her interests include:
property at knocknakilla, Millstreet, Cork
10 Cois Ard, Duagh, Kerry
16 Sheen View, Kenmare, Kerry
proeprty at Lower Laugh. Rathcoole, Mallow, Cork
2 The Square, Millstreet, Cork
Consituency Office, Main Street, Millstreet, Cork
Appartment in Portugal.

I just love it when a public representative who is heavily involved in property investment starts giving property advice.
Maybe she should stick to gracing the laps of her colleagues.:D

And wasn't she the one that told some constituents that it was difficult to survive on 140,000 ?
BTW that would be her 92,000 odd salary and 50,000 odd expenses.

BTW has anyone heard from frank fahey or donie cassidy lately ? :rolleyes:

skafish

jmayo wrote: »

So aine collins thinks this is a good idea.
Would it have anything to do with her financial services company or her business consultancy company?

Or maybe we should listen to yet another public respresentative who appears to come form the frank fahey school of property investment ?

Her interests include:
property at knocknakilla, Millstreet, Cork
10 Cois Ard, Duagh, Kerry
16 Sheen View, Kenmare, Kerry
proeprty at Lower Laugh. Rathcoole, Mallow, Cork
2 The Square, Millstreet, Cork
Consituency Office, Main Street, Millstreet, Cork
Appartment in Portugal.

I just love it when a public representative who is heavily involved in property investment starts giving property advice.
Maybe she should stick to gracing the laps of her colleagues.:D

And wasn't she the one that told some constituents that it was difficult to survive on 140,000 ?
BTW that would be her 92,000 odd salary and 50,000 odd expenses.

BTW has anyone heard from frank fahey or donie cassidy lately ? :rolleyes:

She also owns an office block in Castletownbere, where her tenants include FAS.

On the question of her €140 000, lets not forget she is a member of the PAC. Does that not give her an extra 10K?

Fine Gael...... the acolyte has exceeded the (Fianna Fail) master

realitykeeper

gaius c wrote: »

Apologies for the Indo link.

There is more...

The trouble I have with this is that if they have the resources to buy back their loans, then they have resources to pay more back on the loans they are currently defaulting on.

Socialise losses and privatise profits!

The government should not concern themselves with such matters. Instead it should re-privatize the banks and disown all debts derived from the failed banks.

The banks should have been allowed to fail. True right wingers are in full agreement with socialists on this point.

gaius c

realitykeeper wrote: »

The government should not concern themselves with such matters. Instead it should re-privatize the banks and disown all debts derived from the failed banks.

The banks should have been allowed to fail. True right wingers are in full agreement with socialists on this point.

That's nonsense. Much as they've burned us, we need the banks unless we want to become the European North Korea.

However, saving the banks doesn't mean we had to save their creditors. Debt-equity swaps are a perfectly normal solution to such problems. The bondholders wouldn't have had their bonds redeemed but in compensation, they'd have owned a lovely bank instead. Downside is that the senior management will probably be sacked en masse and new management brought in but is that really a downside?

As Morgan Kelly said:

The ECB can then learn the basic economic truth that if you lend €160 billion to insolvent banks backed by an insolvent state, you are no longer a creditor: you are the owner. At some stage the ECB can take out an eraser and, where “Emergency Loan” is written in the accounts of Irish banks, write “Capital” instead. When it chooses to do so is its problem, not ours.

The Independent should write an article on how successful debt-equity swap has been for them, ensuring their survival as a company.

realitykeeper

gaius c wrote: »

Debt-equity swaps are a perfectly normal solution to such problems. The bondholders wouldn't have had their bonds redeemed but in compensation, they'd have owned a lovely bank instead. Downside is that the senior management will probably be sacked en masse and new management brought in but is that really a downside? The Independent should write an article on how successful debt-equity swap has been for them, ensuring their survival as a company.

Those matters should all have been left to the banks to sort out. The government should not have involved itself beyond threatening to legislate to protect all those who owed money to the banks should the banks carry out their threat to with-hold the deposits of savers. Had the government done that - the bond holders would have had to settle for whatever crumbs were left over.

The taxpayers do not owe the money the banks borrowed. The government should default.

hfallada

realitykeeper wrote: »

Those matters should all have been left to the banks to sort out. The government should not have involved itself beyond threatening to legislate to protect all those who owed money to the banks should the banks carry out their threat to with-hold the deposits of savers. Had the government done that - the bond holders would have had to settle for whatever crumbs were left over.

The taxpayers do not owe the money the banks borrowed. The government should default.

European banks dont fail and never usually do. Name a successful country in the world without a banking system? If Ireland burnt bond holders, it would have had to burn savers. If it burnt savers, who would trust Irish banks ever again? No one meaning that Ireland probably have a totally dysfunctional banking system for several decades.

We cant default now. It would undo the last 7 years of trying to return the economy to normal.

gaius c

hfallada wrote: »

European banks dont fail and never usually do. Name a successful country in the world without a banking system? If Ireland burnt bond holders, it would have had to burn savers. If it burnt savers, who would trust Irish banks ever again? No one meaning that Ireland probably have a totally dysfunctional banking system for several decades.

We cant default now. It would undo the last 7 years of trying to return the economy to normal.

US lets banks fail all the time. Here's a list of some recent ones.

It's a red herring at this stage because it's much too late to turn back. Any future burning is going to be for deposit holders now.

harryr711

hfallada wrote: »

European banks dont fail and never usually do. Name a successful country in the world without a banking system? If Ireland burnt bond holders, it would have had to burn savers. If it burnt savers, who would trust Irish banks ever again? No one meaning that Ireland probably have a totally dysfunctional banking system for several decades.

We cant default now. It would undo the last 7 years of trying to return the economy to normal.

We have a dysfunctional banking system now. Their fees and interest rates are outrageous, and that's if you can even get money off them in the first place.

Sand

hfallada wrote: »

If Ireland burnt bond holders, it would have had to burn savers. If it burnt savers, who would trust Irish banks ever again?

Ireland wouldn't have burnt the bondholders. The banks would have - normal market practise. Investors look to avoid it by negotiating a compromise such a debt-equity swap as suggested. Ireland Inc punched itself in the face by drunkenly insisting it would pay for everything, which removed any necessity for the investors to negotiate.

Our interest in the affairs of "Irish" banks (no such thing as an Irish bank) is minimal - so long as there are banking functions being provided by banks, we're fine. Who cares who trusts Irish banks ever again? They managed to get involved in all sorts of corrupt and illicit tax dodging activities over the years and still found people who trusted them in the markets. The reality is the markets are less emotionally driven than you might believe.

As said though - those debates belong in the past. We were committed to a bad and panicked strategy with little debate or thought and it will be paid for decades to come.

realitykeeper

hfallada wrote: »

If Ireland burnt bond holders, it would have had to burn savers. If it burnt savers, who would trust Irish banks ever again? No one meaning that Ireland probably have a totally dysfunctional banking system for several decades.

We cant default now. It would undo the last 7 years of trying to return the economy to normal.

If the Irish banks had with-held deposits, the state could have retaliated by issuing deeds of ownership to all mortgage holders of Irish based mortgaged properties. Then it would have had to reimburse the savers. This would have been preferable to the situation the country is in now. The last 7 years were spent in pursuit of bad policy.