NAMA Discount

[Dreaded_Estate]

All the talk about the government buying loans from the banks at a discount is a complete fabrication.
The government is trying to confuse the public into believe that they are buying the assets at deeply discounted values and could make a fortune over time.

But according to section 58 the government will pay what the asset is worth or they will pay a little bit more.

Every 1% decrease in property prices from their current levels we will lose another €700m or so

Rather than move the economy away from its reliance on construction NAMA means we are doubling down and betting the country's future in the prospects of a vastly oversupplied market.

[Dios]

I think more important is the oft repeated assertion by several posters here that the banks would repay to NAMA whatever funds they couldn't reclaim from developers, while retaining the assets. Any word on that particular section, as it makes the valuations largely moot?

[Hal]

I think more important is the oft repeated assertion by several posters here that the banks would repay to NAMA whatever funds they couldn't reclaim from developers, while retaining the assets. Any word on that particular section, as it makes the valuations largely moot?

If & when it becomes necessary any losses for NAMA will be made up from the banks by way of a levy. Lenihan as said this several times including in the recent IMF report and again on Thursday.

The levy would be to make up the difference between what NAMA pays the banks and whatever is eventually realised from the loans & assets.

[one acre capitalist]

That is not in the legislation though.

If your goal is to regenerate lending it is a dumb idea. If banks think there will be a levy, they will prudently build a reserve to pay it. Therefore they will restrict lending.

For NAMA to work requires total risk tranferrance of the problem loans to the public sector. That is why price at which the assets transfer is vitally important.

[Dios]

That is not in the legislation though.

If your goal is to regenerate lending it is a dumb idea. If banks think there will be a levy, they will prudently build a reserve to pay it. Therefore they will restrict lending.

For NAMA to work requires total risk tranferrance of the problem loans to the public sector. That is why price at which the assets transfer is vitally important.

Nail on the head. Is it in the legislation? And if it is in the legislation, how will this help achieve the ultimate goal of NAMA which is to restart lending? If its there, its absolves the taxpayer of all liability, which is at least something.

If its not in the legislation, its torches and pitchforks time as far as I'm concerned.

[Hal]

That is not in the legislation though.

If your goal is to regenerate lending it is a dumb idea. If banks think there will be a levy, they will prudently build a reserve to pay it. Therefore they will restrict lending.

For NAMA to work requires total risk tranferrance of the problem loans to the public sector. That is why price at which the assets transfer is vitally important.

The levy won't be applied for at least 5 years, but maybe not for 10 years depending on when NAMA wraps up it's business and when applied it will be spread over as many years as is necessary to make it affordable for the banks. It is not something they would be concerned about now.

Risk sharing with the banks is vital to the process and means the price paid by NAMA is not the crucial factor it would otherwise be.

[Dios]

The levy won't be applied for at least 5 years, but maybe not for 10 years depending on when NAMA wraps up it's business and when applied it will be spread over as many years as is necessary to make it affordable for the banks. It is not something they would be concerned about now.

Risk sharing with the banks is vital to the process and means the price paid by NAMA is not the crucial factor it would otherwise be.

Can you reference the exact section of the legislation containing the details on this risk sharing, please.

[Hal]

Can you reference the exact section of the legislation containing the details on this risk sharing, please.

The levy is not part of the legislation, it doesn't need to be. Any Government can impose a levy on any section at any time for any reason.

[Clanrickard]

Any Government can impose a levy on any section at any time for any reason.

Not good enough. The last time they bailed out AIB we all paid for it and got nothing back. I'd like to see it written in black and white because I don't trust FF farther than I could through them.

[Dreaded_Estate]

The levy is not part of the legislation, it doesn't need to be. Any Government can impose a levy on any section at any time for any reason.

So if the government can impose a levy at any time then it could do so with or without NAMA. If the levy therefore has nothing to do with NAMA.

Why the resistance to putting in place a risk sharing mechanism that can be put into the legislation, doesn't stop undo all the work