Some naive questions on NAMA....

[Question R24U]

Some questions...

1. Why can we not just save BOI, transfer its bad assets to Anglo Irish and leave the rest to the will of the market?

2. If the Bank Guarantee scheme is employed, is the order of hits, the capital reserves, bondholders, the shareholders, and then the taxpayer?

3. Is it not possible to treat the bank guarantee as like buying a crash car - we didn't know how bad it was when we signed up for it. Things are far worse than we thought. We don'd thave €400,000,000,000. Sorry - back to €20,000 depositer guarantee everyone.

4. If the assets are going to rise in value over the next few years - why are venture capitlalists not queing to buy them?

5. If the book value is €90,000,000,000 and "only" pay €60,000,000,000 - over what period do we pay back?

6. Do we get the €60bn from the ECB or international bondholders (ie who do we pay back)?

7. Will NAMA result in more development or will the residential developments simply be filled by immigrants (ie cheap labour)?

8. Can Government Depts, say Health, pick up shiny new office block on the cheap from Nama?

9. Is there any way the NAMA proposals can be improved to result in a reward to the taxpayer or smaller risk to them?

10. Is is too late to row back from NAMA bar nationalisiation?

11. Do we need more than 2 banks to have a functioning banking system?

12. Are there any alternatives, the plans for which are at an advanced stage, would get EU approval and could be costed quickly?

13. Why have banks not pursued developers for the lasy year, while these debtors have been given time to make alternative arrangements?

14. How much wealth be transferred out of Ireland due to Nama?

15. What would be the downside to an October election, November negotiations, in terms of correcting the imbalances in the Irish economy?


Many thanks.

[Question R24U]

1. What evidence does NAMA have that the current market price of these
is not in fact going to decline for a number of years, as would be the
case if Ireland were to follow the common experience of previous
property crashes?

2. Why would a temporary nationalisation of the banks be a bad thing,
given that this would provide the taxpayer with a valuable asset which
could be sold in future years?

3. Why does no independent analyst support the governments view on
NAMA? This includes the Swedish finance minister who ran their bad
bank system, who said to the Irish Times that he “favours the more
severe mark-to-market write-down of assets rather than a ‘through the
cycle’ valuation.”, and that “it (NAMA) does not sound like the right
solution to buy assets from private banks.” It also includes the IMF
who said " Insolvent institutions (with insufficient cash flows)
should be closed, merged, or temporarily placed in public ownership
until private sector solutions can be developed ... there have been
numerous instances (for example, Japan, Sweden and the United States),
where a period of public ownership has been used to cleanse balance
sheets and pave the way to sales back to the private sector", in the
context of saying that the likely losses for Irish banks were such as
to render them insolvent.

4. Why not force the equity and bond holders in Irish banks to take
the first place in the queue to absorb the losses that the banks would
have to book were current market prices to be paid for the loans made.
After all, that’s what risk capital is for?

5. If the state overpays for the loans relative to current market
prices, what, apart from a functioning banking system, does the
taxpayer gain?

6. What percentage of book value of the loans should NAMA pay, given
that current market prices for land and development properties are
somewhere around 30% or less of book value?

7. If NAMA were to pay say €60b for loans that are worth only €30b,
how can this transfer of a full years tax revenue to private
speculators be justified in this economic time?

8. If, as is entirely possible, the loans transferred to NAMA do not
provide sufficient income to meet the coupon payments of the bonds
issues by NAMA, will the taxpayer, at least in the short term, not
have to meet these payments?

(thanks to Libiterian-Right and Brian Lucey)

[Question R24U]

If we fix the banks through NAMA, and venture capitalists/Equity groups/larger banks, buy the big 6 - shutting branches, laying off thousands and refusing credit.....what was in it for us?

[zakalwe1]

Some questions...

1. Why can we not just save BOI, transfer its bad assets to Anglo Irish and leave the rest to the will of the market?

not a bad idea but probably would be shot down under competition rules. it would lead to a monopoly situation as no other bank could survive.

2. If the Bank Guarantee scheme is employed, is the order of hits, the capital reserves, bondholders, the shareholders, and then the taxpayer?

revenue reserves (capital), shareholders, bond holders then taxpayer.

3. Is it not possible to treat the bank guarantee as like buying a crash car - we didn't know how bad it was when we signed up for it. Things are far worse than we thought. We don'd thave €400,000,000,000. Sorry - back to €20,000 depositer guarantee everyone.

trounce irish reputation worldwide and truly kill off irish financial system.

4. If the assets are going to rise in value over the next few years - why are venture capitlalists not queing to buy them?

who's going to lend to them to buy? other banks? interesting that a canadian bank is interested in AIB. canadian and spanish banks have great reserves. banco santander bought into the british market cheaply.

5. If the book value is €90,000,000,000 and "only" pay €60,000,000,000 - over what period do we pay back?

i presume the life of the loan. no-one in the industry has a clue yet. the only hard fact is that there are no hard facts about how nama will work

6. Do we get the €60bn from the ECB or international bondholders (ie who do we pay back)?

EBC i'm led to believe.

7. Will NAMA result in more development or will the residential developments simply be filled by immigrants (ie cheap labour)?

probably neither.

8. Can Government Depts, say Health, pick up shiny new office block on the cheap from Nama?

i'd say they'd have to pay market price from nama and reduce taxpayers exposure to ECB.


9. Is there any way the NAMA proposals can be improved to result in a reward to the taxpayer or smaller risk to them?

yes but then we condemn the banks to a slow death

10. Is is too late to row back from NAMA bar nationalisiation?

probably given we have announced it to the world.

11. Do we need more than 2 banks to have a functioning banking system?

for a market of c4m people, probably not.

12. Are there any alternatives, the plans for which are at an advanced stage, would get EU approval and could be costed quickly?

i can't think of any (bar temporary nationalisation).

13. Why have banks not pursued developers for the lasy year, while these debtors have been given time to make alternative arrangements?

do you know how much they owe? no chance of bad cop making an appearance.

14. How much wealth be transferred out of Ireland due to Nama?

most likely personal wealth of developers but they're long gone already.

15. What would be the downside to an October election, November negotiations, in terms of correcting the imbalances in the Irish economy?

non recourse law being passed. kinda like US presidential pardon on last day of office.

Many thanks.

[Question R24U]

Are damned if we do and damned if we don't?

[Simbo67]

Certainly looks like it.

[Question R24U]

Why can we not put out a tender for a good bank? Its role is to lend to Irish businesses, transfer development debt into mortgage debt, give their valuations if they were to buy the assets and generally keep a banking system going while our native ones go to the wall? If they succeed they get paid a premium. Why does every solution have to be socialist? Ie bailouts v nationalisation.

[Gadfly]

Why does every solution have to be socialist? Ie bailouts v nationalisation.

The choice seems to lie between
nationalising the banks per se
and
nationalising the banks' losses.

The first option is a medium term fix reversible over time, and has been done in recent decades in Sweden and Norway.

If we want to apply the label socialist to the second option, let's call it kamikazi socialism.

[Simbo67]

Thats the crux of it, we either nationalize the risk (aka loss) or we nationalize the banks and all that goes with it.

[bormotello]

Are damned if we do and damned if we don't?

BoI nationalization will be much cheaper and more workable then any other alternatives
20 years without aid to Africa