Nama : Ltev

[bormotello]

With risk sharing there is practically no risk with LTV that we aren’t exposed to anyway.

Unless banks will go bust when time mass repossessions will come

At very best there seems to be a theory that in principle the banks should be punished to the maximum for their reckless lending, at worst there are groups & individuals hell bent on proving themselves right on property all along, regardless of the cost to the economy or the taxpayer.

Controlled collapse of banks as punishment is not so expensive as it looks.
Another good thing that it will take only few months, in best case it will be not more then two.
Main objection so far was that civil servants are not able to do it properly. Unfortunately, it is very strong argument and I cannot find any counterarguments

Well the truth is you can have your principle or you can have the best, least risky and cheapest way out of this for the economy with NAMA & a touch of LTV, but you can’t have both.

NAMA is the most risky way to get out of crisis, because it will freeze resources in property assets, while those money could be used to restore economy
This is paradox – NAMA is designed to restore property market, but it will actually destroy it, because money will be used to gamble and only hope will be new wave of stupid investors, while FG proposal about direct investments into real economy will actually give some support to property prices

[Hal]

This is basic economics 101 Hal.
The 0.5% above ECB isn't any better of a rate than the 10 year fixed rate of 5% it is just a different rate.

Why isn't it any better?

We could issue this type of bond at any time.
We could get this rate any time we wanted in the market.
Therefore we could the recap the banks at the same rate as we purchase the loans.

No we couldn't unless we were betting we could do it every six months for the next ten years. We don't have to go back to the ECB every six months in the hope of renewing the bond.

[Dreaded_Estate]

Why isn't it any better?

No we couldn't unless we were betting we could do it every six months for the next ten years. We don't have to go back to the ECB every six months in the hope of renewing the bond.

It might not be better because it is a variable rate. In five years time the rate could be much higher.

We would never have to go back to the ECB because that is the way the bond is structured.

It is a floating rate bond Hal and there is no restriction on us borrowing all our money like this.

[cyberianpan]

Originally Posted by cyberianpan
I do not know whether the LTEV will be higher than a market value

I'd far rather investigate market value myself... and let private investors guide the price ... perhaps they might also agree with LTEV ... but receiving the collective wisdom of private investors would be useful (as previously said offer them 10% equity in Nama and possibly sell some underlying securities)

cYp

Regardless of whether LTEV is greater than market value, and the strong hint is from the government is that it is, NAMA will ONLY pay LTEV if it is greater than market value.

My understanding was that by "market value purchase" they meant if used as agricultural land rather than residential/commercial

cYp

[cyberianpan]

Bolloxs. And to think once upon a time you were a half-decent poster.

By the very definition of development loans, what is still outstanding on the books at this stage of a bubble is pure bubblicious worthless junk.

You know this. It's been discussed at length! And we have court cases too. The best quality NAMA loans are worth about 7% of book value.

And they've already admitted that NAMA depends on another frenzied property bubble, and that this bubble would need to bring property prices back up to 88% of late-2006 peak prices within 7 years for NAMA to make sense.

Anyone who still supports NAMA, knowing these things, is a traitor to the Republic who deserves to be taken out and shot.

No ifs, ands, buts or excuses.

Support SCAMA and you are an enemy of the Irish people. End of story.

CYP, I declare thee untermensch. You are one of them. You are of the Enemy. Sidey has spoken.

Sidewinder, last time you forgot to take your meds for so long you got banned, thankfully nothing worse happened. I strongly urge you to re-engage with those who care for you, as a politics discussion board can't aid someone as insane as you.

cYp

[SamVimesBoots]

Sidewinder, last time you forgot to take your meds for so long you got banned, thankfully nothing worse happened. I strongly urge you to re-engage with those who care for you, as a politics discussion board can't aid someone as insane as you.

Blah blah blah, yeah go on there ya FF peon, have a good auld sneer and throw a few aspersions around.

Yer the one supporting SCAMA, yer the one hoping for an upturn in property early 2010 by your own words right here, your the one trotting out sneaking regarderism for the criminal cabal that is FF.

But I'm the insane one who needs to be medicated? Yeah, pull the other one, it's got bells on ya muppet.

You have absolutely zero credibility now after your support for SCAMA and bubblehead property obsession has been exposed. Yer one of Them, end of story.

[fgrep]

Another simple question. Surely current market price takes into account future economic value?

[irishpancake]

Within realistic LTV the more we can pay the banks through NAMA funds for their loans the less we have to put in to top them up. We have the NAMA funds at 1.5%, anything else we have to put in will have to be raised on the open market at 4/5+% for a start.

Sorry to go back two days, but since Dreaded_Estate has so comprehensively demolished most of your other points, can I ask you something?

It seems from your quotation above, that you are still trotting out the old "overpaying is good" talking point.

So I take it that you are in favour of the recapitalisation by the back door method, mentioned by new CB Gov. Honohan in his presentation to the Joint Committee (see here)

In some countries asset purchase schemes have also been used in a fourth way — as a covert way to recapitalise banks by paying too much for their problem loans. That is a bad idea because it is a non-transparent subsidy from the taxpayer to shareholders and other creditors that are not guaranteed. In the case of NAMA, the Government has stated that is does not intend to over-pay. There is, however, the risk that NAMA could end up over-paying by accident due to over-optimism. I will mention a variant of the NAMA purchase scheme later that could help to reduce this risk substantially.

Do you have any comment on the above?

Do you think paying for the impaired loans and bank recap should be seperate processes, or do you think getting more bang for your buck by over-paying is the way to go?