# Hurray for accBank?



## canicemcavoy (21 Jul 2009)

Is it a good thing that accBank are breaking the cosy Irish banker/developer cartel and actually getting these guys to pay up the money they own?


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## mercman (21 Jul 2009)

canice , I don't suppose the thought ever occurred to you that the Banks set the rules at the beginning, shoved the money at developers and on realising their own mistake, have now chosen to make the customers, and developers suffer.


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## canicemcavoy (21 Jul 2009)

mercman, I don't understand your point. How are accBank's customers suffering more than the customers of Irish banks?

In fact, as far as I'm aware, Rabobank (accBank's parent) is Ireland's only AAA rated bank, which can only be good for its depositors. Perhaps there is a link between this and their tough line on getting their loans repaid?


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## callybags (21 Jul 2009)

mercman said:


> canice , I don't suppose the thought ever occurred to you that the Banks set the rules at the beginning, shoved the money at developers and on realising their own mistake, have now chosen to make the customers, and developers suffer.


 
This post, to me makes no sense.

The bank are not making anyone suffer.

They are only seeking to get repaid monies which is has been lent out.

They are completely within their rights to take whatever measures (within the law, I hasten to add) to recover their money if the borrower does not comply with the terms of the loan.


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## mercman (21 Jul 2009)

callybags said:


> They are only seeking to get repaid monies which is has been lent out.



I'm not disputing your point. However the Bankers prostituted the money to their customers. And the more lean the Bank the harder they tried to gain market share. In the case of the ACC, always known as the Farmers Bank - well they are getting their just deserts. 

The same Bank launched a Property Syndicate early 2008 for European Continental Properties which they simply HAD to buy. They then railroaded large clients in to taking shares of the Syndicate. The values are now well down but no doubt if asked the Bank will blame others.


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## canicemcavoy (21 Jul 2009)

mercman said:


> I'm not disputing your point. However the Bankers prostituted the money to their customers. And the more lean the Bank the harder they tried to gain market share. In the case of the ACC, always known as the Farmers Bank - well they are getting their just deserts.
> 
> The same Bank launched a Property Syndicate early 2008 for European Continental Properties which they simply HAD to buy. They then railroaded large clients in to taking shares of the Syndicate. The values are now well down but no doubt if asked the Bank will blame others.


 
Mercman, why do you see it as reasonable that - say, an unemployed working class person from Summerhill is chased by banks for their debts, but when they attempt to chase billionaire developers, they are "prostitutes" and "getting their just desserts"?

What exactly do you mean by "railroaded", for example? How did they force people to invest? By 2008, the peak had well passed.

Your attitude suggests that foreign banks should never loan money in this country to businesses again, since, if they do, they are criticised for wanting it back.


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## mercman (21 Jul 2009)

canicemcavoy said:


> What exactly do you mean by "railroaded", for example? How did they force people to invest? By 2008, the peak had well passed.
> 
> Your attitude suggests that foreign banks should never loan money in this country to businesses again, since, if they do, they are criticised for wanting it back.



Like all Banks that were offering 'products', they invited them to dinners and Golf Outings. Showed them the product, loaned them the money to Invest, and that was it. I saw both sides of the equation - the 'must have purchase' of the properties and the 'must invest' smiley faces coaxing people to invest.

I quote the saying 'Don't go to parties that you're not invited to'. I never said that foreign Banks should not lend to business customers. They just simply did not know what they were doing, and because they chose not to be part of the Government's NAMA package and the Loan to Values went askew they panicked, with the result of pure Panic in the Commercial Property market.


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## canicemcavoy (21 Jul 2009)

mercman said:


> Like all Banks that were offering 'products', they invited them to dinners and Golf Outings. Showed them the product, loaned them the money to Invest, and that was it.


 
Sorry, but you originally said they were "railroaded" into buying property. Now you're saying that salesmen invited them to dinner and showed them a product. How is this "railroading"? By any standard, it's a normal sales tactic.  Did a free dinner makes these men lose reason? I'm stumped.



> I saw both sides of the equation


 
What was your part in the equation?



> because they chose not to be part of the Government's NAMA package and the Loan to Values went askew they panicked, with the result of pure Panic in the Commercial Property market.


 
Perhaps they have seen that NAMA is going nowhere, and Rabobank want to retain their image.


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## Complainer (21 Jul 2009)

While there is a certain 'fair-play-to-ya' feeling about what ACC/Rabo are doing, this is tempered by the knowledge that it could be one leg of the house-of-cards of builders/bankers that is ready to come toppling down. I'm not sure that this is in anyone's interests.


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## mercman (21 Jul 2009)

And I stand by what I said. People used to unfortunately trust bankers. If a Bank was offering product customers were of the belief that the Bank knew what they were selling. How mistaken they were ?? These are the facts. Hopefully others that will read this post will confirm the point.

I am unwilling to discuss my part of the equation on a Public Forum. Suffice to say that all avenues took a short cut on the purchase of the properties.

Rabobank which are a large reputable Bank more like want to minimise their losses rather than retain their image. They havew not signed up to join NAMA so they are doing a Solo run on these cases.


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## Complainer (21 Jul 2009)

It is interesting to look back on the timing of AIB's sale of their Ballsbridge HQ, around the peak of the market.


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## Afuera (22 Jul 2009)

Complainer said:


> It is interesting to look back on the timing of AIB's sale of their Ballsbridge HQ, around the peak of the market.



But surely nobody could have seen it coming? 



> AN outgoing AIB boss yesterday insisted there was no clear warning of the devastating downturn -- and also claimed the public was partially to blame for the economic collapse.


http://www.independent.ie/national-news/public-to-blame-for-economic-collapse-1831828.html


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## z109 (22 Jul 2009)

Yes, canice, I think it is to be welcomed. If nothing else, establishing that distressed prices are currently 75% down from the value of the loans issued (never mind from the original valuation put on the asset) should give us all pause for thought as to what NAMA will pay for bank loans.


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## csirl (22 Jul 2009)

Could be useful for setting the benchmark prices for NAMA. If they are 75% down, then that's what we should pay. 

My opinion, let the developers collapse, lets have the fire sale of property and get this thing over with asap so we can move on. People forget that while the fire sale is bad for the developers, its great for whoever purchases the assets - could help establish a new generation of entrepreneurs who got their break by being able to purchase cheap premises. Remember Ryanair post 9-11 - became the biggest airline in Europe by buying during the airline industry fire sale.


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## Sunny (22 Jul 2009)

csirl said:


> Could be useful for setting the benchmark prices for NAMA. If they are 75% down, then that's what we should pay.
> 
> My opinion, let the developers collapse, lets have the fire sale of property and get this thing over with asap so we can move on. People forget that while the fire sale is bad for the developers, its great for whoever purchases the assets - could help establish a new generation of entrepreneurs who got their break by being able to purchase cheap premises. Remember Ryanair post 9-11 - became the biggest airline in Europe by buying during the airline industry fire sale.


 
Defeats the purpose of the whole exercise. If they were to pay 25% for the loans, the banks would be left insolvant and require more capital from the taxpayer anyway. There is no way around the fact that NAMA are going to pay over the odds for some loans and hope for the best.


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## canicemcavoy (22 Jul 2009)

csirl said:


> Could be useful for setting the benchmark prices for NAMA. If they are 75% down, then that's what we should pay.


 
In an ideal and fair country, this is, of course, exactly what should happen.

Unfortunately, we don't live in that country. It's not in the government's interest to cripple their main donors, especially people who know where bodies may be buried. NAMA, in its present form, will allow banks and developers to get away without putting their houses in order.


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## Setanta12 (22 Jul 2009)

NAMA will also allow homeowners to retain soem value in their own home.

Consider a house sold by a developer in 2008 who's gone bang in 2009. 

If the unsold house next door to the house sold in 2008 is 'fire-sold', then its price/value will have plummeted.

A steady manageable decline of asset-values is what is required, which is what NAMA is tryign to achieve.


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## z109 (22 Jul 2009)

Setanta12 said:


> NAMA will also allow homeowners to retain soem value in their own home.
> 
> Consider a house sold by a developer in 2008 who's gone bang in 2009.
> 
> ...


Really? Try selling it at that 'value'.

There is only price for homeowners who want to sell. Otherwise you are talking about cost. Value for something you have agreed a price on is a nonsense concept (it is too late to worry about value when you have already agreed the price and borrowed the money to pay for it).


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## canicemcavoy (22 Jul 2009)

Setanta12 said:


> A steady manageable decline of asset-values is what is required,


 
Actually, a steady managable increase in property prices was what should have happened but unfortunately, despite repeated warnings, it is far too late for that. To be honest, I'm not sure why a steady decline is better than a simple sharp shock. Is the Japanese situation - house price decline for 17 years in a row - really a better alternative? (Not a rhetoric question, I'm genuinely curious!)

On a tangent, is it true that Eddie Hobbs sold his house in 2007 and sat on the cash? Perhaps he's not completely a spoofer in that case.


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## csirl (22 Jul 2009)

Sunny said:


> Defeats the purpose of the whole exercise. If they were to pay 25% for the loans, the banks would be left insolvant and require more capital from the taxpayer anyway. There is no way around the fact that NAMA are going to pay over the odds for some loans and hope for the best.


 
Who says the taxpayer has to stump up? How about letting these banks go bust? Plenty more banks in the world who'd be only too happy to take the customer base (the solvent part) off their hands.


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## Sunny (22 Jul 2009)

csirl said:


> Who says the taxpayer has to stump up? How about letting these banks go bust? Plenty more banks in the world who'd be only too happy to take the customer base (the solvent part) off their hands.


 

Do you think Ireland evern registers on most foreign banks radars? If it did, BOI and AIB would have been bought over years ago during the boom. Any foreign banks here are already looking for the exit as quickly as possible and do you really think a Country the size of Ireland should be dependent on foreign banks for their banking system?


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## Shawady (22 Jul 2009)

What is there to stop NAMA chasing up developers to repay their loans?
Is it the case that NAMA is going to buy all the bad property debts off the banks and that it will then own it?
What are they going to do with all this over-priced proprty then - sit tight and hope that the market picks up and we might make a small profit?


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## Sunny (22 Jul 2009)

Shawady said:


> What is there to stop NAMA chasing up developers to repay their loans?
> Is it the case that NAMA is going to buy all the bad property debts off the banks and that it will then own it?
> What are they going to do with all this over-priced proprty then - sit tight and hope that the market picks up and we might make a small profit?


 
Pretty much sums it up as far as I can tell


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## canicemcavoy (22 Jul 2009)

Shawady said:


> What are they going to do with all this over-priced proprty then - sit tight and hope that the market picks up and we might make a small profit?


 
As far as I understand, that is what they plan to do - perhaps someone can contradict me (I hope so!).

NAMA appears to be founded on the assumption that there was no property bubble; that, essentially, what we are seeing is an unforeseen unexpected blip in a linear increase in house prices, and that therefore, everything will be back to normal relatively quickly. This is a huge assumption on which to stake billions of taxpayer's money.


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## Guest116 (22 Jul 2009)

No, I dont think anyone has said prices will "get back to normal relatively quickly". Nama will be ongoing, they are looking 10-20 years into the future.


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## csirl (22 Jul 2009)

Sunny said:


> Do you think Ireland evern registers on most foreign banks radars? If it did, BOI and AIB would have been bought over years ago during the boom. Any foreign banks here are already looking for the exit as quickly as possible and do you really think a Country the size of Ireland should be dependent on foreign banks for their banking system?


 
I think this is more down to the stranglehold that BOI and AIB have on the customer base - traditionally it has been very difficult for a new bank to build up sufficient customers and branches to compete with them.

You mention buy outs, and yes its true, as long as both are operating, the only way to compete in Ireland is to buy one of them. But, given their reliance on property investment, you could understand why foreign banks have been reluctant to buy them in recent years. If any had, they'd have been left with a load of liabilities.

Now, if one of them were to go bust, it opens the market up. Loads of unattached customers, bank premises for sale at cheap prices. A lot more attractive to any foreign bank wanting to move into Ireland.

There are banks in emerging economies around the world that would give their right hands to have a meaningful shot at setting up a large network in an EU country. We should be trying to attract them.


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## Sunny (22 Jul 2009)

I see the line of foreign banks lining up to buy the failed Icelandic ones!


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## z109 (22 Jul 2009)

Sunny said:


> I see the line of foreign banks lining up to buy the failed Icelandic ones!


Maybe not, but look at the reconstituted banks! In addition, the forced/negotiated debt to equity swaps are effectively selling the banks to their debt holders for less than the face value of the debt. Will they be able to efficiently able to perform the utility banking functions (the lubrication of the economy with money)?


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## csirl (22 Jul 2009)

Sunny said:


> I see the line of foreign banks lining up to buy the failed Icelandic ones!


 
Nobody will buy an existing basket case bank.

But, in the long term, Iceland needs banking services and now that all the domestic competition is gone, someone will fill the void.


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## Duke of Marmalade (22 Jul 2009)

Eddie Hobbs on radio says Rabo's game is to force the government to buy back ACC in a sort of blackmail or else it will collapse the whole deck of cards.

The timing is interesting, getting their attack in before NAMA. I can't work out what their game is, they couldn't have possibly expected to get repaid in full whilst the other banks are forced into big write downs. But how can NAMA make ACC take the sort of writedowns that the other banks will have to take? It seems to me that ACC can insist on full repayment or else they can force LC into liquidation which would mean the balloon is up. I'm afraid it looks like Rabo is blackmailing the Irish financial system, and that means us.


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## goosebump (22 Jul 2009)

What are the implications for the developers if ACC/Rabo get their way?

The property assets will be acquired and sold to then highest bidder and the loans will be written down.

What happens the developers then? Do they just walk away? Is there any claim on their personal assets?

If not, surely they'd be happy to just cut their ties with the banks and the property market and head off to the golf course.

I don't see why they'd be resisting this.


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## smiley (22 Jul 2009)

Duke of Marmalade said:


> I'm afraid it looks like Rabo is blackmailing the Irish financial system, and that means us.



Yes, i agree. I didnt like the look of this the second the news broke.

If they are going to play dirty like this i shall not be doing business with them anymore.


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## z109 (22 Jul 2009)

smiley said:


> Yes, i agree. I didnt like the look of this the second the news broke.
> 
> If they are going to play dirty like this i shall not be doing business with them anymore.


Shame on those foreigners wanting their money back.

Really, what do you expect banks to do? Act like ours and have the taxpayer pick up the bill? And do you think there was any other option for ACC? Frozen out of NAMA, they were expected to take the full loss and walk away like good little minnows.


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## canicemcavoy (22 Jul 2009)

smiley said:


> Yes, i agree. I didnt like the look of this the second the news broke.
> 
> If they are going to play dirty like this i shall not be doing business with them anymore.


 
Oddly enough, I've heard two people say today that they're more willing to put their money in a bank that seems to be so concerned about its rating; given that both the government and developers are so unpopular, I think accBank's tactics may play well among Irish people.


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## Lord Snooty (31 Jul 2009)

mercman said:


> canice , I don't suppose the thought ever occurred to you that the Banks set the rules at the beginning, shoved the money at developers and on realising their own mistake, have now chosen to make the customers, and developers suffer.


Oh please! You don't have clue. Nobody put a gun to anyones head.


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## mercman (1 Aug 2009)

Lord Snooty said:


> Oh please! You don't have clue. Nobody put a gun to anyones head.



You are correct. But the banks set the rules and have changed them half way through the game. This worldwide recession is well voiced to being the caused by the creation of Bank's greed - nothing else.


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## smiley (2 Aug 2009)

mercman said:


> But the banks set the rules and have changed them half way through the game.



I dont believe this. A legal contract is a legal contract. I imagine the developers have broken their contractual obligations, therefore the banks are entitled to get their money back.

This is what happens to over-leveraged people & companies in recessions. They get wiped out.


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## mercman (2 Aug 2009)

smiley, I am not disputing this for a second. But the manner in which the Banks were lending money to all and sundry was criminal. Threw it out in bucket fulls. For what ?? The Bankers personal Greed. And once upon a time ACC Bank was for farmers -- very big ones at that. They were then taken over by a foreign Bank - not to service the farmers but on a cheap ticket into a maret what they thought as a Cash Rich Ireland. Now they have woken up and realised their bad dream and want to exit stage right.They offered the incentives to the ACC staff which lent the money and the rest will remain history.

Sure they are right in looking for their money. But let no one say that they had to; were forced to; or encouraged to do so. The Bankers made it look all so easy. They themselves forget or hoped that this doomsday would never come or if so they would be well out of here by then.

So in reality it is not Hurray for accbank - it maybe should read Shame on you accBank or The Bankers.


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## diarmuidc (2 Aug 2009)

mercman said:


> So in reality it is not Hurray for accbank - it maybe should read Shame on you accBank or The Bankers.



NO! Shame on the people who took out money to buy over priced land and shame on the people who gave them the money. Both are equally culpable. Now there is clearly no "change the rules" half way through, as this was park of commercial contract, so the banks are well within their right to try and get their money back. 

You are trying to paint Liam O'Caroll as some old vunerable pensioner who had €1bn loan thrown at him.


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## mercman (2 Aug 2009)

diarmuidc said:


> You are trying to paint Liam O'Caroll as some old vunerable pensioner who had €1bn loan thrown at him.



Nope I am not. But in the same manner as ACC are chasing him for a lessor amount of millions, the Banks have millions of Euro of Debt which they lent without guarantee or other security. It is fairly evident that in LCs case there was no personal gain whatsoever. If Customer A is trying to expand their business, they approach the Bank. What happened in Ireland was the Banks were chasing the customers, providing corporate entertainment, offering holidays etc etc to get a part of the action. This is pure fact cos I know, but luckily I personally steered away from it.


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## diarmuidc (2 Aug 2009)

mercman said:


> It is fairly evident that in LCs case there was no personal gain whatsoever.


 I must be misunderstanding you. LC was investing €1bn for no personal gain?



mercman said:


> This is pure fact cos I know, but luckily I personally steered away from it.


Luckily? You are still trying to slant it in sort of some sort of exploitation which you just dodged by the grace of the gods.


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## Mumha (2 Aug 2009)

smiley said:


> I dont believe this. A legal contract is a legal contract. I imagine the developers have broken their contractual obligations, therefore the banks are entitled to get their money back.
> 
> This is what happens to over-leveraged people & companies in recessions. They get wiped out.


 
All noble and correct, just don't attempt to pull the most outrageous fraud on the Irish people by making us pick up the bill for the difference.

I applaud the actions of ACC bank, even though their actions are self motivated. It is not for nothing that the Dutch are known as the Scots of Europe (for their pecuniary tact). They are only doing the best for themselves.


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## Bronte (3 Aug 2009)

Yes hurray for ACC bank, I wonder why they are the only bank not playing ball? What is the logic behind their actions? Logically if they wait for NAMA they will get more of their money back than if there is a forced sale of Carroll's property. 

If there is a forced sale of his property that will surely set a real market value. 

My opinion now of this whole mess is that the banks should be allowed to fail.  Instead we will have NAMA making a totally false high value on assets that are impossible to value, then the price they will set will drop further for years to come and NAMA will then sell them to the current lot of failed developers who will be loaned the money to buy them back from surprise surprise the current corrupt bankers.  What a nice cosy circle.  The bankers, developers and bank shareholders will be the net gainers along with FF, all the best of friends.  Hurray.  A lovely merry go round and everyone back in the FF Galway tent in 20 years time.


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## Concerned (3 Aug 2009)

Bronte said:


> If there is a forced sale of his property that will surely set a real market value.
> 
> My opinion now of this whole mess is that the banks should be allowed to fail. Instead we will have NAMA making a totally false high value on assets that are impossible to value, then the price they will set will drop further for years to come and NAMA will then sell them to the current lot of failed developers who will be loaned the money to buy them back from surprise surprise the current corrupt bankers. What a nice cosy circle. The bankers, developers and bank shareholders will be the net gainers along with FF, all the best of friends. Hurray. A lovely merry go round and everyone back in the FF Galway tent in 20 years time.


 
Hi,
Nobody enjoys the fact that the country is run by a cartel, but allowing the banks to fail is in nobody's interest. Similarly, allowing the developers' assets to be fire- sold would be an unqualified disaster for the average home owner and for the future of consumer spending in Ireland.

It is true that in 2006/2007, house prices were crazily high, but the current valuations are similarly crazy. Any house that is selling at the moment is at a price determined not by any measure of intrinsic value, but by the constricted credit supply. 

At the bottom of the American property crash, you could buy a house in Detroit for $10,000. This is no more a real- world valuation than €400,000 for a semi- d in Balbriggan. 

Let's not forget that house prices and consumer spending are two sides of the same coin. If the developers assetes were fire- sold, house prices would really collapse. As home owners we will all have to claw back our personal equity at a rate of 3% per annum, and it's quicker to claw back a 30% drop than 80%.

Every percentage drop in house prices is another period of time it will take individual Irish people to recover from this crisis. Some young civil servants may get a cheap house out of the scenario, but I think only a very small pool of us possibly could benefit relative to the potential damage to the business community who tend to be more endebted. 

As a relatively young homeowner I'm already in serious negaive equity. What ACC bank want to do to our economy will flood our property market with under- priced houses and we will all suffer. I want to borrow in the future, I want to develop my small business and employ people. How will I do this if I am in even deeper negative equity.

The NAMA recipe is flawed, and it protects the same panel of favourites who helped cause the problem, but I really don't see a real alternative. This is an Irish problem, and the Government have cooked up an Irish solutution which deserves a chance to work. 

Of course the Banks, foreign and domestic, deserve their money back; but not at the expense of our government's ability to effectively implement a solution to this situation.


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## mercman (3 Aug 2009)

Concerned, a well thought out and lucid post. This is your first post -- welcome to AAM.


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## Complainer (3 Aug 2009)

Concerned said:


> Hi,
> Nobody enjoys the fact that the country is run by a cartel, but allowing the banks to fail is in nobody's interest. Similarly, allowing the developers' assets to be fire- sold would be an unqualified disaster for the average home owner and for the future of consumer spending in Ireland.
> 
> It is true that in 2006/2007, house prices were crazily high, but the current valuations are similarly crazy. Any house that is selling at the moment is at a price determined not by any measure of intrinsic value, but by the constricted credit supply.
> ...



Interesting but flawed post. The flaw is that it assumes that large number of residential property owners are in or near negative equity. The reality is that a relatively small number of people (those who purchased from 2006/2007 onwards) are in negative equity, plus those who remortgaged to support other investments.

For those of us who are not in negative equity, it doesn't make a whole lot of difference whether our house is valued at €820k or €520k. It's still just a paper figure.


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## mercman (3 Aug 2009)

Perhaps, but the most vulnerable at the top or the bottom of the spectrum are in serious disarray. Couple with this the equity portion of properties was used for further lending. And now the LTVs are wreaking Havoce as the Banks are calling in time to justify their own inability to manage correct lending.


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## sunrock (3 Aug 2009)

Everyone is saying we should get our costs down.Now if these 3 bed semis were put on the market at todays cost of constructon and add about 10k for the site...I think 120k would be about right for a house in a town or city suburb. Irish workers wouldn`t need sky high wages to afford ahouse and then our whole cost structure could be more competitive.It is human nature for those who bought expensive houses back in 2007 to want houseprices to remain high. Also our gov.and banks and developers want house prices to remain sky high and to make workers  pay  these exorbitant prices.....which they now can`t so we have a standoff.


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## Bronte (4 Aug 2009)

Concerned said:


> Hi,
> Nobody enjoys the fact that the country is run by a cartel, but allowing the banks to fail is in nobody's interest. Similarly, allowing the developers' assets to be fire- sold would be an unqualified disaster for the average home owner and for the future of consumer spending in Ireland.


 
I'm still not convinced that the banks failing would not be a good thing.  Similarly I'm not convinced that a massive property devaluation would be a bad thing.  Anyone not in negative equity or who is near the end or the mortgage would not have any problem.  Those in negative equity who have lost their jobs might be better off if the bank took the house off them.  In many cases they would be able to walk away from debt of 100 or 200k and start again and now be able to save and buy a house at a much more realistic price.  Maybe someone can point out the benefits of a young couple on a 35 year mortgage, with job losses, wage cuts and tax increases spending the next 20 years struggling to just get back the negative equity?

In relation to your example 10K for a house in Detroit is it's real value at that time as is 400K for the 3 bed semi d in Dublin.  Real value is what a property can be bought for at any given time.


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## Sunny (4 Aug 2009)

Bronte said:


> I'm still not convinced that the banks failing would not be a good thing. Similarly I'm not convinced that a massive property devaluation would be a bad thing. Anyone not in negative equity or who is near the end or the mortgage would not have any problem. Those in negative equity who have lost their jobs might be better off if the bank took the house off them. In many cases they would be able to walk away from debt of 100 or 200k and start again and now be able to save and buy a house at a much more realistic price. Maybe someone can point out the benefits of a young couple on a 35 year mortgage, with job losses, wage cuts and tax increases spending the next 20 years struggling to just get back the negative equity?


 
Tell me how someone in this Country can walk away from debt of €100 or €200k? Look up the draconian personal bankruptcy laws in this Country and see why even going down that road is probably not an option.


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## Bronte (4 Aug 2009)

If you lose your job and have no assets what have you to lose?  The banks cannot get blood from a stone.


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## diarmuidc (4 Aug 2009)

Concerned said:


> Hi,
> Similarly, allowing the developers' assets to be fire- sold would be an unqualified disaster for the average home owner and for the future of consumer spending in Ireland.


Absolutely not. If something is worth €100k, then pretending it's worth €200k for the next 15 years does not make sense unless you want to put Ireland through a Japan styled Lost Decade (which in reality is still ongoing).


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## Bronte (12 Aug 2009)

I see the Supreme Court has upheld Judge Kelly's decision.  What is the next step now for Zoe Developments?


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## TheBlock (12 Aug 2009)

Bronte said:


> I see the Supreme Court has upheld Judge Kelly's decision. What is the next step now for Zoe Developments?


 
Can a deal be done between Zoe's creditor banks where ACC has first call on it's loan to Zoe and only after this has been paid in full the other banks start getting their loans repaid. The last thing the AIB,BOI and other creditor banks is a firesale of Zoes properties. 

The question is who is next in line?


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## steviel (12 Aug 2009)

What gets me about the whole thing is the incredible arrogance of Carroll (and by extension all the other big developers) in that he can go to the Supreme Court (the SUPREME court!!) with absolutely NO evidence supporting his case, refuse to give details of valuations, and provide no supportive bank witnesses and try to bully the court into submission by stating only that if he doesent get what he wants then the repercussions will be disastrous!!  Who do these guys think they are!!

As someone on Newstalk eloquently said this morning, the court's verdict was a very long winded way of saying:  "You want us to do what, now?!?"


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## Bronte (12 Aug 2009)

I believe Carroll did not give up to date valuations because of what Kelly said about the link between the estate agents and Kelly.  Probably the estate agents would not play ball now and give an up to date valuation that would suit Kelly.  

I am wondering if the other banks will pay off ACC?


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## canicemcavoy (12 Aug 2009)

Concerned said:


> It is true that in 2006/2007, house prices were crazily high, but the current valuations are similarly crazy. Any house that is selling at the moment is at a price determined not by any measure of intrinsic value, but by the constricted credit supply.


 
There's nothing "crazy" about current evaluations; they're still overpriced. Comparing rents and purchase prices of houses, you still cannot make even a small yield.

As VOR says, we have two contradictory ideas being held by people: the idea that we can become more affordable and competitive by lowering salaries, while simultaneously bailing out banks and developers and artificially propping up property prices. Irresistable force meets immovable object.


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## VOR (12 Aug 2009)

diarmuidc said:


> Absolutely not. If something is worth €100k, then pretending it's worth €200k for the next 15 years does not make sense unless you want to put Ireland through a Japan styled Lost Decade (which in reality is still ongoing).


 

Agreed. I am delighted with the actions of ACC. If there is a fire sale it will devalue all property. That much is true. However, this will also help to bring a sense of reality back to the market.
Is it not better to have c.40% (just a guess) of mortgage holders in negative equity than have 100% of property owners and potential property owners sitting on overpriced homes. A correction had to happen and this is a natural part of it.

Secondly, as there is no demand the market is being artificially propped up by a slow down in supply. This trickle trickle focus of the banks is unhelpful to our economy in the short and long term.

The faster we get to the bottom of the housing market, the less pressure we will have on salaries which in turn will lead to the country returning to a more competitive position. 

If you are in doubt, have one look at the commercial prices in Berlin vs Dublin where Dublin is 33 times more expensive. Or even New York v Dublin (36% more expensive). http://www.finfacts.ie/irishfinancenews/article_1017361.shtml
You might argue that commercial and residential are two different markets but they essentially are linked by the cost of acquisition of land, the cost of labour and the cost of material. 

So I for one will take a long term view of this whole mess and say that we should applaud any action that reduces the cost of land and property in general. You might say that many hundreds of thousands of people will be stuck in negative equity and unable to spend. Well, so be it. If they had put their money in tulips and the bottom fell out of that, would you hold the same concerns for them? Probably not. Imagine if they had borrowed at 5 and 6 times their salary to purchase the tulips? 

The rest of us may now be able to buy a reasonably priced bunch of flowers for the wife!!!


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## Duke of Marmalade (12 Aug 2009)

VOR said:


> If you are in doubt, have one look at the commercial prices in Berlin vs Dublin where Dublin is 33 times more expensive.


I found that hard to believe and I was right. The link refers to rents in Dublin being 760 per annum whilst those in Berlin are 23 per annum, that's 33 times alright, except if you download the actual report, page 17 shows that Berlin's rate is in fact per *month*.


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## canicemcavoy (12 Aug 2009)

Duke of Marmalade said:


> I found that hard to believe and I was right. The link refers to rents in Dublin being 760 per annum whilst those in Berlin are 23 per annum, that's 33 times alright, except if you download the actual report, page 17 shows that Berlin's rate is in fact per *month*.


 
So it's only 3 times? Phew.


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## VOR (12 Aug 2009)

Duke of Marmalade said:


> I found that hard to believe and I was right. The link refers to rents in Dublin being 760 per annum whilst those in Berlin are 23 per annum, that's 33 times alright, except if you download the actual report, page 17 shows that Berlin's rate is in fact per *month*.


 
Very good spot Duke. Apologies for the error. On that basis it is €276 v €760 p.a.


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## Shawady (12 Aug 2009)

canicemcavoy said:


> There's nothing "crazy" about current evaluations; they're still overpriced. Comparing rents and purchase prices of houses, you still cannot make even a small yield.
> 
> As VOR says, we have two contradictory ideas being held by people: the idea that we can become more affordable and competitive by lowering salaries, while simultaneously bailing out banks and developers and artificially propping up property prices. Irresistable force meets immovable object.


 
Agree with this and VOR's comments.
Negative equity is not an issue if your house is where you plan to make your home for the foreseeable future.

The one thing that bothers me is that government is going to need reasonable price rises in the future to make NAMA work yet there is no evidence to suggest this - in fact probably price should drop.
Would I be cynical to suggest the government know this will not work but they will be long gone and not have to worry about it?


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## VOR (12 Aug 2009)

Not cynical at all. Governments have always preferred the "pay later" model.


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## Bronte (12 Aug 2009)

Shawady said:


> Would I be cynical to suggest the government know this will not work but they will be long gone and not have to worry about it?


 
Nope, they'd never do that.


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## Shawady (12 Aug 2009)

The head of Irish Assocation of Investment managers has warned against the government underpaying for the 90 billion loan book.
He states “An excessive haircut, with any taint of political motivation, any sense of ‘let’s stick it to these guys,’ would erode confidence.”

What about the government just paying the banks what the loans are now actually worth.


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## TheBlock (12 Aug 2009)

Shawady said:


> The head of Irish Assocation of Investment managers has warned against the government underpaying for the 90 billion loan book.
> He states “An excessive haircut, with any taint of political motivation, any sense of ‘let’s stick it to these guys,’ would erode confidence.”
> 
> What about the government just paying the banks what the loans are now actually worth.


 
I'm Flip Flopping on this quite a bit as I'm no economist and don't know what's best, but this type of lets stick together and screw as much from the tax payer as possible **** is starting to get to me.

What about you try to sell the loan book on the open market then mister head of the "Irish Association of Investment Mangers". This confidence you speak of very high at the moment is it?


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## Chancer (14 Aug 2009)

ACC's tack is simply this: In order to get LCs group into administration, the Irish banks had to pay off all the unsecured creditors and pool the resulting extra risk among themselves. ACC wants them to do it the same favour. They'll have to buy out ACC as the dissenting secured creditor, so ACC gets 100% payback. The Irish banks will lend LC another 100m odd and sell the loan on to, you guessed it, NAMA. So effectively NAMA and the Irish banks between them are giving ACC 100% for its bad LC loans, even though nominally NAMA isn't even covering ACC. Clever old Rabobank, think I'll deposit some dosh with them! (Don't think ACC is blackmailing whole system, just the ejjit Irish banks who are being ordered around by an eejit Irish government)


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## DrMoriarty (14 Aug 2009)

Shawady said:


> The head of Irish Assocation of Investment managers has warned against the government underpaying for the 90 billion loan book.
> He states “An excessive haircut, with any taint of political motivation, any sense of ‘let’s stick it to these guys,’ would erode confidence.”





			
				Mandy Rice-Davies said:
			
		

> “Well, he would, wouldn't he?”


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