Banks telling shareholders NAMA discount will be only 20%

[MsAnneThrope]

It was just a thought.

I think you are getting to a salient point where you are recognising (you may have already, I'm figuratively speaking) that those who made the most gains from the bubble i.e. the developers aka the guys in hoc with the toxic debt, are still minted and could pay your retrospective tax. However, if we recognise they have the money to pay the tax, then they have the money to repay their loans. Most of them will have cash generating business through retail park rentals, office block rentals, hotels and a raft of other businesses that generate cash for them. Plus the amount of personal assets owned by them is astounding. The might of CAB should be set upon them to dig out all the assets they have and secure the toxic loans against these assets, personal and private and the EU should agree a format across the Region that any assets belonging to these people in other EU countries should not pose any difficulties because they are in another country. A freezing order should be placed on all assets and/or a lien attached to them by the Irish government. The leins should remain in place on each developer personally until the full amount of the original loans are paid back, and not any written down value of the assets attached to those loans.

We dont need NAMA to do all of this and we certainly dont need to issue bonds, doubling our national debt to cover the purchase of those assets with a further 20bn in recapitalisation funds when the banks balance sheet goes belly up after the loans are taken from them.

Interesting post Watcher1. I think this is worthy of its own thread "An alternative approach to NAMA" or something. Would you consider opening that and expanding on your post there? Someone posted here yesterday that as soon as the guarantee was announced impaired debt at Anglo went from €2 bn to €26bn virtually overnight. If this is true then essentially the developers are walking away from their obligations. If their assets were frozen instead and not released back to them until they discharged their debts it would give them the necessary motivation to cough up. And avoid all the potential valuation and legal shenanigans at NAMA.

[121.5]

not really. That's like saying that telling lies to your mammy is the same as murder.

To default on our debt would be to literally break a legally-binding contractual agreement with our creditors.

To end a guarantee is simply to end a guarantee. It's not a contract, it's more like an election promise. People can be disappointed, but they'll be laughed out of court if they sue.

Defaulting on our loans is to block off funding for a long time. But to rescind a guarantee is, at worst, to cause a temporary crisis in our internal payments system. Within months, new banks will be up and running, and our long-term ability to repay debt will be proven to be back. Once people see there is no inherent problem repaying the national debt, our bonds will once again be over-subscribed, as all the recent bond issues have been.

good post.

[DCon]

Not really. That's like saying that telling lies to your mammy is the same as murder.

To default on our debt would be to literally break a legally-binding contractual agreement with our creditors.

To end a guarantee is simply to end a guarantee. It's not a contract, it's more like an election promise. People can be disappointed, but they'll be laughed out of court if they sue.

Defaulting on our loans is to block off funding for a long time. But to rescind a guarantee is, at worst, to cause a temporary crisis in our internal payments system. Within months, new banks will be up and running, and our long-term ability to repay debt will be proven to be back. Once people see there is no inherent problem repaying the national debt, our bonds will once again be over-subscribed, as all the recent bond issues have been.

If this is the case (and I believe it may be), why are Lenihan and Cowen trying to extend the Guarantee rather than end it?

[Watcher1]

Actually the developers weren't the ones who made most of the big bucks from the developments. Syndicated private investors (often clients of the same bank) put up the majority of the equity in many cases.

Also retail Joe Soaps made large killings selling on houses in the same period



Most developments were done by special purpose companies - these companies had limited liability and as noted above it was often syndicated investors who had the largest equity stake. So , excluding where the banks actually extracted personal security from those involved[SIZE=1]*[/SIZE], there is very little recourse to chase natural persons. I've studied a few of the "loan" agreements for large developments: and they are very complex and seem quite tight to me.

The only way to get back the fake bubble money would be a constitutional amendment for an extraordinary retrospective tax

cYp
[SIZE=1]* and where they did there was a scurry to transfer assets to spouses & trusts[/SIZE]

I would imagine that it will be easier to implement legislation to go after the money than it would to implement a retrospective tax, but then that is only my view.

[powderfinger]

bump.