NAMA to save the share/bondholders, cost the taxpayer €40b

[BodyofEvidence]

Yesterday a discussion on a ST article saw a figure of up to 40b being mooted as the cost of NAMA (http://www.politics.ie/economy/71401...ml#post1693817)

Today we see a kite being flown that would leave the shareholders and bondholders take all the upside and the taxpayers (paying the 40b above) get sfa...
Let banks recoup some losses, IMF top expert tells NAMA - Irish, Business - Independent.ie

Steven A Seelig, who is adviser at the Monetary and Capital Markets Department at the IMF, has been giving "invaluable" input to the committee, sources say. He believes something like NAMA would be the IMF's preferred option for the Irish situation.
Mr Seelig has recommended a scheme whereby the banks could recover several billion euro from NAMA on loans whose value has been recovered. He said this system worked well in the Indonesian banking crisis of 1997 -- one of the worst ever recorded.
There is a widespread view that NAMA will estimate the long-term value of the banks' €90bn development loans at around €70bn. Under this scheme, NAMA would then pay €63bn for the loans, with the banks able to get back the €7bn if it turned out the loans did have value.

Welcome to FUBAR land

[MsAnneThrope]

There is a widespread view that NAMA will estimate the long-term value of the banks' €90bn development loans at around €70bn

There is also a "widespread view" that Fianna Fáil would get re-elected if there was a GE in 2009

NAMA will be a very bad deal for taxpayers and future generations.

Winners:

Gold medal to Bankers
Silver medal to Developers
Bronze medal to Bank shareholders
Two-fingers medal to taxpayers

[MortgageBroker]

they used to come up with wild cost estimates for the RTC in the US back in the 90's too, all the detractors said it would cost half a trillion and take 20 years to work out, in the end it was a success and wrapped up in 6 years costing about a fifth of that. Just get NAMA started and start the heavy lifting.

if losses are realised then the banks will pay back (with interest) from future cash-flows. The nationalisation solution is a total myth.

Irish Mortgage Brokers | Mortgage Brokers Dublin

[youngdan]

I have said from day one that NAMA would value the 90 billion at 70 billion. That is the whole idea of NAMA. I said value had no bearing whatsoever on the figure. The figure is derived from the need of the banks.

[Dreaded_Estate]

they used to come up with wild cost estimates for the RTC in the US back in the 90's too, all the detractors said it would cost half a trillion and take 20 years to work out, in the end it was a success and wrapped up in 6 years costing about a fifth of that. Just get NAMA started and start the heavy lifting.

if losses are realised then the banks will pay back (with interest) from future cash-flows. The nationalisation solution is a total myth.

Irish Mortgage Brokers | Mortgage Brokers Dublin

We meet again
Bank nationalisation and NAMA aren't mutually exclusive you can have both at the same time.
And in most situations this is exactly what has happened internationally including in the often referred to Swedish example!

[MortgageBroker]

We meet again
Bank nationalisation and NAMA aren't mutually exclusive you can have both at the same time.
And in most situations this is exactly what has happened internationally including in the often referred to Swedish example!

I don't often look to the swedish example simply because the swedish example wasn't an attempt to nationalise over 2/3rds of the banking system! if you do that effectively (bearing in mind the remaining lenders are based in other countries) then you end up with - in working reality - closer to 100% of the system owned by the state.

effectively banks are shutting up shop and working to survrive in their own home countries, thus FA and UB have severely cut back lending, KBC are using LTV to reduce lending, BOS just joined today with rates and LTV's. the pool of 'irish lenders' willing to lend to 'irish people' would be totally nationalised and the end result is pure state control of all working banks.

sorry but no thanks.

i have a good pdf on the swedish solution, pm me your email and I'll send it on.

[H.R. Haldeman]

Seems to me that basically every penny NAMA gets back will be from selling land and/or property to some 3rd party. My question is, who exactly are these 3rd parties? Who, over the next 10 or 15 years, is going to give the state €70b for these assets? And once they have paid that €70b, how do they propose to get that money back - presumably by developing the land and selling the property on it?

I think this is the huge, massive, enormous elephant in the NAMA room. For NAMA to work we essentially need some form of new property boom. Or, at very least, a fully functioning, profitable, healthy property market with decent prices being achieved. I don't see such a thing being possible within 10 years. We have simply built too much already for there to be enough people to hoover up new properties.

[cyberianpan]

Seems to me that basically every penny NAMA gets back will be from selling land and/or property to some 3rd party.

Nama are taking on performing, part-performing & non performing loans

So it is clear that at least some of the money will come as loan repayments

Furthermore part/non-performing loans can be re-financed to get them performing again (and I'm talking fundamental re-financing, not voodoo interest rolling)

Yes there will be some fire sales of property assets - and I hope these happen asap

cYp

[SPN]

For NAMA to work we essentially need some form of new property boom. Or, at very least, a fully functioning, profitable, healthy property market with decent prices being achieved.

For NAMA to work, we need to get this portfolio of property speculation off the Banks' Balance Sheets and into a Property Management Company where it can be dealt with appropriately.

This allows the Banks to start borrowing again.

What happens NAMA, and the "value" of the "assets" is immaterial. That is just a paper-trail exercise.

Getting the Banks back to a position where they can borrow - and therefore lend into the real economy - is the objective here.

[patslatt]

Seems to me that basically every penny NAMA gets back will be from selling land and/or property to some 3rd party. My question is, who exactly are these 3rd parties? Who, over the next 10 or 15 years, is going to give the state €70b for these assets? And once they have paid that €70b, how do they propose to get that money back - presumably by developing the land and selling the property on it?

I think this is the huge, massive, enormous elephant in the NAMA room. For NAMA to work we essentially need some form of new property boom. Or, at very least, a fully functioning, profitable, healthy property market with decent prices being achieved. I don't see such a thing being possible within 10 years. We have simply built too much already for there to be enough people to hoover up new properties.

If necessary,tax writeoffs for buying the toxic unsold properties from NAMA could help create a market.