Labour's analysis of the draft NAMA bill

[DCon]

http://www.labour.ie/download/pdf/pr...e_taxpayer.pdf

The risks to the Irish exchequer are enormous and irreversible. Overpayment by NAMA for these loans
will impose a huge financial burden on the State, yet it is clear that this is the inevitable consequence
of the current Government’s approach

This legislation will give rise to litigation and that its interpretation will be a matter for courts to decide
for years to come. The lack of specificity as to the meaning of “current crisis conditions” and the
potential difficulty for any court at a future time to work out what the expression means – in
particular, the meaning of the word “current” when embodied in a statute that is always speaking in
the present tense – seems to undermine any attempt to give legal meaning and effect to the notion
of “long-term economic value”.
What will a court in 5 years time define as the “conditions” that identify the “current crisis”?

[droghedasouth]

copied from irisheconomy.ie

Very good - albeit it written from a lawyer perspective.
I love the way they point out the role of the existing state Valuation Office which would be the ideal mechanism for valuing all these NAMA properties if we are forced down the NAMA road where valuation is everything - I would love to see someone challenge Minister Lenihan on this.

I do however wish they would tell us what would happen to our favourite subordinated bondholders in their alternative nationalisation process.

[goosebump]

http://www.labour.ie/download/pdf/pr...e_taxpayer.pdf

The risks to the Irish exchequer are enormous and irreversible. Overpayment by NAMA for these loans
will impose a huge financial burden on the State, yet it is clear that this is the inevitable consequence
of the current Government’s approach

This legislation will give rise to litigation and that its interpretation will be a matter for courts to decide
for years to come. The lack of specificity as to the meaning of “current crisis conditions” and the
potential difficulty for any court at a future time to work out what the expression means – in
particular, the meaning of the word “current” when embodied in a statute that is always speaking in
the present tense – seems to undermine any attempt to give legal meaning and effect to the notion
of “long-term economic value”.
What will a court in 5 years time define as the “conditions” that identify the “current crisis”?

I can't believe that Labour would publish a document quoting David McWilliams.

FFS.

Anyway, the key to this document is the following passage:

"The alternative to NAMA is temporary public ownership/nationalisation of two key banks i.e. Bank of
Ireland and AIB. With this approach, the State acquires the shares in the banks. The bad property loans
are written down or transferred to an asset recovery vehicle – an Asset Recovery Trust – and the bank
is then recapitalised. In re-capitalising the bank, however, the state is investing in an entity that it owns,
and it stands to gain when the bank is re-privatised. A crucial feature of the nationalisation approach
is that it dramatically reduces the risks involved in having to value the bad loans."

Labour also seem to have allied themselves to the belief that the equity in state-owned (run?) banks will automatically increase in value to sufficient levels for the State to recoup its investment, which is estimated at 950-1000%.

ie

BOI is currently valued by the markets at €2.4bn with a share price of €2.40.

BOI needs a €20bn recap, which means that the BOI share price, while it is state-owned, has to get to €20.

How likely is that, given that at the height of the boom, the highest the BOI share ever got to was €18.40?

[Dreaded_Estate]

I can't believe that Labour would publish a document quoting David McWilliams.

FFS.

Anyway, the key to this document is the following passage:

"The alternative to NAMA is temporary public ownership/nationalisation of two key banks i.e. Bank of
Ireland and AIB. With this approach, the State acquires the shares in the banks. The bad property loans
are written down or transferred to an asset recovery vehicle – an Asset Recovery Trust – and the bank
is then recapitalised. In re-capitalising the bank, however, the state is investing in an entity that it owns,
and it stands to gain when the bank is re-privatised. A crucial feature of the nationalisation approach
is that it dramatically reduces the risks involved in having to value the bad loans."

Labour also seem to have allied themselves to the belief that the equity in state-owned (run?) banks will automatically increase in value to sufficient levels for the State to recoup its investment, which is estimated at 950-1000%.

ie

BOI is currently valued by the markets at €2.4bn with a share price of €2.40.

BOI needs a €20bn recap, which means that the BOI share price, while it is state-owned, has to get to €20.

How likely is that, given that at the height of the boom, the highest the BOI share ever got to was €18.40?

You keep repeating this line even though it is completely false goosebump.

If you nationalize the banks you own the 100% of the shares PLUS you own the loans.

With NAMA you own the same loans but only x% of the shares (x<100)

The first option is always worth more to the taxpayer than the second.

[cyberianpan]

I'm pleased to see that Joan remains on the ball and hasn't joined the spoofers:

Joan Burton said that if the National Assets Management Agency paid a discount of only 15 per cent to 25 per cent for distressed assets, as has been suggested by the stockbroking community there would be a huge risk involved for the taxpayer.

[COLOR="Red"]“If the discount is less than 50 per cent we will need chapter and verse as to the reasons why,” said Ms Burton.[/COLOR]

Well stated- she doesn't know all the facts- and is making it clear that Nama will have to divulge full reasons/data if it seems risky based on what she knows.

A much smarter line of attack than spoofy Lucey et al.

cYp

[droghedasouth]

@goosebump

It so tiresome when someone like you repeats the same lies over and over again.

I am not an LP groupie but I really despise people who consider repetitive lying bout their proposal a form of debate.

But then it is common to the Namapostles from Cowen/Lenihan down.

[Hal]

@goosebump

It so tiresome when someone like you repeats the same lies over and over again.

I am not an LP groupie but I really despise people who consider repetitive lying bout their proposal a form of debate.

But then it is common to the Namapostles from Cowen/Lenihan down.

Why don't you keep your irisheconomy affectations for sharing with the other "46" groupies and why don't you have something to say in reply to goosebump other than the singularly childish accusation of "lies" without showing any reason why they would be "lies"

[Hal]

If you nationalize the banks you own the 100% of the shares PLUS you own the loans.

And you own 100% of the liabilities, including the full cost of all the bad loans and not just until next September but forever until you can sell them to some other schmuck or pay the full bill, no risk sharing there + a default to any bondholders is now a state default.

[DCon]

And you own 100% of the liabilities, including the full cost of all the bad loans and not just until next September but forever until you can sell them to some other schmuck or pay the full bill, no risk sharing there + a default to any bondholders is now a state default.

If nationalisation is so bad why were FF so keen to nationalise Anglo? Or is that confidential?

[Hal]

If nationalisation is so bad why were FF so keen to nationalise Anglo? Or is that confidential?

No, it's common sense, but for you that has a lot in common with something "confidential" in that you wouldn't know much about it either way.

They nationalised Anglo for the reasons stated at the time, they had no choice.