If NAMA was an investment proposition, would I invest my own money in it? An emphatic No.
My reservations are:
No benefit to the taxpayer
Paying over the odds for the loans
No guarantee that banks will start lending again
Is stinks of cronyism i.e. high profile developers, banks and Fianna Fail. "Ah sure stick it into NAMA they'll take care of it"
If it works, it benefits everyone.
There is no market so it's impossible to say what is or isn't over the odds. Effectively, NAMA creates the market.
There's no guarantee under any circumstances the banks will lend.
Look around, how does this in anyway protect FF? They've been under more scrutiny if anything.
The whole point of it is to protect the banks. I don't think anyone has ever denied that.
But how does it protect developers? Outside of media misrepresentation, the developers still have the full debt at their agreed loan rates and terms. It's just a different person owns the loan. How does this protect them?
"IF NAMA Works" is the issue, and IF NAMA works would it not benefit the taxpayer more if the actual market values were paid?
NAMA is artificially inflating the market to the ultimate benefit of developers.
Also, isnt the whole point of NAMA to get the banks to lend again? Whats the point in giving the banks €54 billion if they're just going to pay it out in didvidends? If there are no guarantees, whats the point?
Since NAMA was proposed and discussed, the banks have seen share prices increase. On the day details are published: a further increase. However, no system in these current times would ever have a 100% guarantee to work. Something had to be done and as soon as is possible and there weren't too many options left.
Your view of the specific limited returns of NAMA negate the potential overall benefits to the economy and the tax payer of solvent banks and trust of the Irish banking system. Whether you like the bankers or not, we really, really need them.
The developers still have the loans at the old price. While NAMA has created a market price, it only benefits the developers if they can sell and sell at that price. However, even if it were at the NAMA price, they'd still be left with a 30% shortfall that they would have to pay back. They're still in negative equity and the old terms of their loan still applies. Again, how does this bail out the developers?
Ultimately the point of NAMA is to get the banks up and offering credit again. But it's not like you can walk into the bank immediately and get that loan for a car. The banks have still taken hits the last 18 months and it still needs other banks to have faith in the Irish Banks. This method was seens as more likely to achieve this confidence than nationalisation.
The point about how important the bankers are, this is the problem, people think that the banks are an institution like the Catholic Church that must be saved at all costs. Let the banks fail, new ones will come in and take their place. This happens in other economies all over the world and Ireland should be no different. This would put a real market value on the assets and the government can buy up as much assets it likes for alot less then what NAMA proposes to do without the risk to the taxpayer.
The increase in share price is of benefit to the shareholders not the taxpayer.
A 30% loss is better than a 60% loss.
The point about how important the bankers are, this is the problem, people think that the banks are an institution like the Catholic Church that must be saved at all costs. Let the banks fail, new ones will come in and take their place. This happens in other economies all over the world and Ireland should be no different. This would put a real market value on the assets and the government can buy up as much assets it likes for alot less then what NAMA proposes to do without the risk to the taxpayer.
The increase in share price is of benefit to the shareholders not the taxpayer.
A 30% loss is better than a 60% loss.
The point about how important the bankers are, this is the problem, people think that the banks are an institution like the Catholic Church that must be saved at all costs. Let the banks fail, new ones will come in and take their place. This happens in other economies all over the world and Ireland should be no different. This would put a real market value on the assets and the government can buy up as much assets it likes for alot less then what NAMA proposes to do without the risk to the taxpayer.
And who, after previous bailouts, is also a shareholder of these banks? Would that be us?.
You're right, and kudos for spotting that, but it's still a massive loss if they were to sell now. They still owe the original loan in total. There has been no watering down of their debt or liability. And that's all on the basis they could sell now to anyone.
Banks all over the world are looking to pull out and restrict their operations. None are in any position to suddenly enter a new market.
So we let the banks fail. We lose all our savings. We have no means of receiving or making payment.
Business can't get credit. Shops can't get stock...
just how long do we let that go on before the banks come in?
The banks fail, we fail. It may not sit easy with you or even me, but the banks are absolutely essential. The repercussions for their actions can follow. But right now it's in everyones interest to bite that bullet and urge for revenge and get things back on track.
I am interested in whatever facts we can be sure of in NAMA, as against putative gains or losses. The one fact I can ascertain, is that we will borrow 54 billion at a rate of 1.5% ( I know, I know, the amount borrowed may be less or more, but let's stick with this figure). That means 810 million to be paid over the next year in interest.
Correct, NAMA pays this interest to the banks. They sell interest earning loans, and receive NAMA bonds, which pay them interest.
Mr. Lenihan says 40% of the 66b. (77b. less 9b. in rolled over interest) are performing loans. NAMA people cannot say what rate of interest is being applied, it varies with each loan but let's say 5%. So 5% on 26.4 b. should come to over 1.3b. and would cover our ECB interest.
I am confused here. ECB have nothing to do with it. NAMA pay the 1.5% (variable) interest to the banks, who hold the bonds.
There is a fat chance that the 60% who are in default of interest will not start to pay it; with the market in decline, the 40% good guys will be struggling to keep up their payments so there is no guarantee at all that we will continue to be covered for our ECB interest payments
Again, here, what do you mean? NAMA collects interest income from the borrowers and pays interest on the NAMA bonds to the banks.
- which we cannot default on. And the 1.5% rate is only guaranteed for 6 months; don't interest rates usually rise in a depression?
Well the ECB and euribor rates are expected to rise as the eurozone economy slowly recovers.
Can anyone explain why there is 9 billion in rolled over interest? Based on 60% non-performing i.e. 39.6b. at average of 5% interest, wouldn't that mean that these have not been paying interest at all over the last 4 years or thereabouts? Just how long has this crisis been building up?
Also, the "associated loans" of which 9 b. is rolled over interest - what are they all about? It wouldn't be for the 25% deposits supposed to be paid by the developers, would it?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?