Mikel wrote: » You're relying on the Gov to come up with an intelligent well thought out plan which is workable, and on the banks not ballsing it up. I think you would need a Phd in game theory to figure out what everyone's incentives would be The practicalities would be a nightmare alright, what is impaired and what are they worth for a start..... Then there's trying to get them repaid. What if you owe 50m and you know that 1. Your debt is owed to the 'bad bank', so your debt is 'toxic' so probably already considered written off. 2. The directors of the bank are not repaying their own loans, so why should you?
-mr.x- wrote: » it would be excellent for the banks
LostinBlanch wrote: » Not sure if any of you guys were listening to Marian Finucane show this morning, at least I think it was her show, but some economist on it, I think it was Jim Power, came out and said that AIB had bad debts of €23billion and BOI had €15 billion. He wouldn't name his sources but wouldn't back down either. So make of that what you will.
daveirl wrote: » This post has been deleted.
7:17a: What investment of the past year would you take back? Buffett laughs and says there are several. He cites ConocoPhillips [COP 36.36 1.00 (+2.83%) ] and the Irish banks he mentioned in his letter to shareholders. He concedes he makes lots of mistakes, but hopes his successes make up for the errors.
-mr.x- wrote: » of course it would be good for the banks . the banks would have no longer to worry about their bad deaths and could continue opperating normally.they would not have to worry about nationalisation.they would be more or less free from the crisis
Hanley wrote: » Was that a very clever play on words.... or do you not know what you're talking about? How would the freedom from the threat of nationalisation make the more free? And thus far, how has maintaining the status quo in how the banks are being run allowed them to operate "normally"? That is of course if "normal" banking entails just stuffing your hands in your pockets and sticking your tongue out?
-mr.x- wrote: » if the government took on the banks bad DETHS
-mr.x- wrote: » the government are afraid that the 3.5Bn will not be given out in loans and instead stored away for the stormy day. if the government create the bad bank then the "banks" wont have to worry about the stormy day the government will. the banks would almost certainlly be free from nationalisation if the bad bank was created because the government would have already made their decision on the banks.
-mr.x- wrote: » to be honest ive explained myself perfectly
-mr.x- wrote: » to be honest ive explained myself perfectly. anyway i never said it would be great for the irish taxpayer but i it would defo instill alot more confidence in the banks.however it may be a better option for the government than nationalisation. now if you dont understand that its you that dosent have a clue
Compak wrote: » Banks absorb first 10-20% and pay government 2.5% per annum of absorbed debts sounds reasonable levy to me. A further equity stake could also be taken. I think fact is if soultion were easy we would not be still wallowing in this mess. Nationalisation is no simple answer. You only have to look at Anglos current CDS.
Hanley wrote: » Could you expand on this a bit? I'm genuinely interested in the dynamics of how it would work!! Right now, the simplest way I see of doing it; Class all the loans the bank holds into certain degress of impairment. Maybe in 5-10% increments. Pay 50% of the impaired amount up front, and the balance over a 5 year period in proportion to how much is recovered. That is, if "all" of the loan is recovered (all of the original impaired amount - say 80% of actual loan value for example), the bank gets it back. If more than the impaired value is recovered, the bank and government spilt the proceeds, as a reward to the gov for bearing the burden of the liability. Figure out some way to class the outstanding balance payments the gov will pay on the impaired loans as a contingent assets, and bob's your aunties husband - a bad bank with minimal balance sheet and income statement impact. Not sure how well the market would respond to these vague contingent assets tho. And I still haven't really tackled the issue of valuation. A 100k loan of which 20% is impaired is obviously not going to be bought by the government for 80k because that's just too much of a risk. Maybe a standard percentage of the impaired loan amount is paid, which is adjusted downwards the greater the degree of impairment??
Compak wrote: » My suggestion was not for a bad bank but bad debt cover.
To make a bank would be a lot more complicated though lot more clear cut for market as banks are free of them. You are right how do you class loans? what price are paid? how do you ensure you are not being taken advantage off.I think banks would be doing well to sell them for 50% prob 40%.
-mr.x- wrote: » A divident you twit, they will obiously pay them back an amount each year.
Mikel wrote: » Dammit, almost progressed into an adult conversation there..... Yes, yes you have. Why are you wasting your time with us fools? Get yourself round to the Dept of Finance pronto. Your country needs you!
Hanley wrote: » What have you explained? You've said it would give more confidence to the banks to lend, and the to investors as regards the sector as a whole. In theory it would. Now, try to explain the practical matter of how a bad bank would be formed, how the government would value assume the banks liabilities, the implications the valuations and size of the impaired loans would have for the rest of the banking sector, what would happen down the road to these impaired loans and the likely impact on the cost of government debt. Very pseudo-intelligent argument by the way - "If you don't understand, you don't have a clue". If you understood what you were saying, you'd be capable of making it understandable for pretty many anyone. Even the mentally challenged, like myself.
Hanley wrote: » Divi-what? Explain how you propose a payment like that would work..... The government buys the death/deth/debt off the bank, and in return the bank pays them a set amount year on year? How does the government value how much to pay? How do they calculate what the yearly payment by the bank should be? And why does it make sense to relieve the bank of one liability, and then saddle them with another?
