Listening to the radio today, 9th April, it seems that both the Minister for Finance and the head of the CIF are in lock step on their line regarding the assets to be acquired by the NAMA.
At around lunch time, Tom Parlon, on Newstalk, said that the assets the NAMA would purchase would not be worthless because they were backed by land, unlike the foreign toxic assets which were just paper. He obviously chose to ignore the fact that the paper in question related to mortgages taken out against houses and land in the US, which have all significantly devalued and which still underwrite may of the original toxic loans.
This evening on Today FM, Minister Brian Lenihan has said exactly the same thing, the assets, unlike the foreign toxic paper assets are not worthless because they are backed by land, again ignoring the underlying asset used to secure the loans that spawned the toxic paper in the first place.
Seems we still have synchronised spinning between FF and their pals.
And also in fairness, some of the equity and mezzanine tranches of some CDOs backed by subprime mortgages were, in effect, backed by nothing as the higher tranche buyers got the rights to the underlying asset.
But this doesn’t take away from the fact that a proportion of the loans is toxic, that is, the short-fall between the realisable value and the cost value (what it cost the bank to give the loan - principle and interest on the bank’s borrowings) is toxic debt. For some land and developments, this will amount to more than 100% of the loan, that is, it would cost money (in site maintenance, development levies, clearance costs etc.) to return the land just to agricultural value. So it is not true to say that none of the C&D loans are toxic.
We also haven’t, I believe, seen the last of the Lynn-type multiple mortgage scam. This could mean that loans are worth nothing as the collateral or underlying asset is already encumbered.
I find it worrying that on the one hand Mr. Lenihan can assure us that the cost will be low, but on the other hand, no valuation has been done.
Yes, on face value, anything that is good for the CIF cannot be good for the taxpayer.
Therefore The Gov must copperfasten in legistlation that those property developers who brought the country to its knees must be held fully accoutable for their debts. The Personal guarantees given by them to their Banks must be fully acted on in due course, otherwise it is all a sham. Persoanl assets outside the family home must be fair game, any hiding of these assets through extended family or limited companies must be treated as fradulance against the taxpayer and a prison sentance must be the penelty.
In the first instance,their greed has created this disaster, if again, in their greed the contimplate the notion of hiding any assets, they must be left in no doubt that the penalty if caught will be time in the Joy.
i’ve finally twigged why tom is on every show, he comes out with a new stat/study and press releases it, thinking back - he has had a new ‘construction centric’ plan virtually every week in the last 6 months.
so it stands to reason that the best way to counter this is equally in the public domain with well carried out research.
The social housing programme in Ireland is better than a lot of comparable countries, as far as I’m aware. There are plenty of 3 bed semis down the country and getting rent allowance doesn’t seem to be a problem. In the UK, you might spend months in a B&B before getting a pad on the 20th floor of a decrepit high rise block.
AFAIK, the Irish banks also have exposure to CDOs from America and dodgy loans from Iceland etc. Not much compared to the C&D loans, probably less than €3bn among all of them, but I wonder will these be taken on by the NAMA too?
If they are, then what BL said above is clearly not correct; if they don’t then what he said before about not bailing out the builders is also clearly not correct.