Bad loans to NAMA 'should be valued at current market price'

Hey! it wouldn’t be a bail out if they banks didn’t get more than they deserve!

Hey! That’s why Bank of Ireland shares are up 12 times from their low of a few months ago.

(should have bought some - bugger!)

Ah now flash, 20 20 hindsight an all that. Sure you could buy some now if you really wanted. :wink:

I wouldn’t worry too much, odds are they’ll tank again sometime soon. This NAMA thing is unlikely to be plain sailing.

But it looks like a winner for the banks and large developers. NAMA’s primary function will be to ensure certain elite individuals escape their obligations at huge cost to the taxpayer. It cannot be anything else with FF in charge - like handing over a chain of off-licences to a bunch of alcoholics it will be open to abuse by those involved. Certain well-connected individuals will massively enrich themselves at our expense. Sure, FF draw will up legislation that will “protect the taxpayer” but that won’t be worth a damn.

We know FFs contempt for the rule of law already. Sean Fitzpatrick has committed as clear a case of corporate fraud and market abuse as you will ever see. Those that held shares (many through pension funds) were defrauded. Yet hardly anyone seems to care. Sean F and David Drumm are free to walk the streets instead of being banged-up like Madoff. If Anglo was American, things would be very different, but your average Joe hardly cares and FF know this. NAMA will be no different. Some folk will moan a little, but that’s it.
Perhaps we should just accept the rules now and see how we can make the best of it - 'cause we sure can’t change anything. XX

Bloxham Stockbrokers estimating the discount will be less than 25%:

The proposed transfer of impaired assets from banks to the National Asset Management Agency will probably be at a discount of less than 25 per cent, according to a survey by Bloxham Stockbrokers.

Some 73 per cent of clients surveyed by Dublin-based Bloxham said the discount will be below 25 per cent. One third expects it to be less than 20 per cent.

The majority of respondents also think AIB and Bank of Ireland will have to raise equity in the next 12 months and would support such a move, according to the survey, published today.

irishtimes.com/newspaper/bre … king42.htm

The interview with Brian on Newstalk this morning said it all. It revealed that he has failed to grasp the fundamental problem of whats happened here, by saying that NAMA will hold the assets until the property market returns to ‘normal’ at which point it will sell and not crystallise the losses that would arise if a firesale happened now. Brian, in one sentence, confirmed that they still consider the property market circa 2003 through 2007 to be ‘normal’. Complete head buried in sand stuff.

Get those dimwits out of control now ffs.

It beggars belief that the Government hasn’t a clue about property. The property market is not going to turn round for years to come. Meanwhile, who’s going to maintain and protect all the unwanted property?

I feel so depressed hearing this.

A few months ago, I was thinking about dipping my toe in the water and considering buying a house in the next year (if price right, etc. etc. etc.). Now, I feel like emigrating.

There effectively is no property market at the moment. That is not normal.

Saying that one will wait until the property market returns to normal in no way implies that 2003 to 2007 was normal.

I hope that makes sense to you.

Past form is what they are being convicted on Negative Covenant.

Hope that makes sense to you.

Using quotes to imply a state of mind that the accuser assumes rather than the quotes evidence makes plenty of sense to me. It’s an all too common human trait to ignore the facts when they don’t support your preferred position.

Yep, it sure is… :laughing:

What makes you say that? Have the various property price indices and market commentators shut up shop because there are zero transactions?

Property transactions may not be occuring at the levels (either in price or volume) that many people would like, but that hardly constitutes a non-existent market.

It seems to me that people in authority had no problem using market prices for valuation purposes when the market was on fire but once the market crashed, they warn us that it would be wrong to use “firesale” prices.

All the while, the state - though the Revenue Commissioners - insists that for tax purposes, market valuation is the way to go:
“The valuation of “property” is not an exact science. Nevertheless, it is normally possible,
once all the relevant facts about an asset are known, to say with confidence that its market
value lies within a certain price range.”

revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-and-corporation-tax/part-19/19-02-08.pdf

You generally need a certain volume of transactions to be sure that the market value is real.

The property market could come back to normal and values could decrease.

However, if one sold the assets now there is no market or lending to pay for them. Accordingly the assets could only be sold now at absolutely rock bottom fire-sale prices. They would not achieve what might be considered “market value” basedon current transactions (if transactions of development land or new developments exist at all).

How do you define “normal”? How long will it take to achieve “normal” prices? Then you need to adjust the “normal” purchase price of this debt for the cost of funding it over the period you’ll have to hold it for. If Cowen et al are talking about 10yrs, the interest carry cost is very significant.

“The mark-to-market accounting rule, which requires assets to be valued at market prices, is defended by investor advocates and some lawmakers as giving a clear picture of the assets held on banks’ books. But the banking industry, which has been forced to write down billions of dollars’ worth of hard-to-value assets in illiquid markets, has pleaded for a suspension or modification of the rule.”

reuters.com/article/topNews/ … me=topNews

I think normal is assessed in terms of transaction volumes and liquidity for lending rather than in terms of prices. I don’t have a link but I think I read or heard on a podcast that you need to get up to about 30% volume transaction compared to peak. I am not willing to swear to that thought. I have read so much that I am not sure where I saw it. I am not suggesting values will recover. I think any assumption to that effect in assessing the real economic value could be lethal. That is of course why the Minister keeps saying that the valuation issue is absolutely crucial.