NAMA revises loan perfomance figures downwards

rte.ie/news/2010/0413/banks.html

So, that’s about a 6.7% difference on 81,000,000,000 euro.
In and around 5,427,000,000 euro.
But sure what’s 5.43 billion euro here or there?

That would be the case if the differential were uniform accross everything,but I think he was referring to the €16bn that has been transferred. Those were meant to be the most “toxic”, if one is beleive those involved.

While I can’t say, I’d say those are the best performing, not the most toxic. These were the ones that had title and deed, I’d say there is a strong correlation between no paperwork and dodgier lending criteria. If I was running the PR element I’d definitely move the best first when the headlines are focusing on you. Then I’d drip the crap out over two years so that when the truth is out, it’s all done and too late for complants to matter.
Ah, the only game in town. We have to get the banks lending to the economy…yadiyada. Next year when the truth comes out,it will be “We were acting on the best advice available at the time”.

It’s hard to know. Politically, I’d say get the worst out of the way. From the point of view of the bank staff, the big developers where the equivalent of IBM - nobody every got sacked for doing business with them. The smaller ones would have a much greater job risk being less well-connected and not too big to fail.

What does argue against that is the sheer scale of what the smaller fellows were doing, the ropiness of it, and how much ‘equity’ in schemes was borrowed - the essentials of the pyramid. Add to this the Fingers loans to the unworthy, but influential and there’s a perfect shitstorm hidden somewhere.

You betcha!

Yes, I think you’re right. I took it out of context.

I was wondering whether this 6+ percent decline was due to the time lag between the estimate (last November?) and the transfer.

No, it’s due to the fundamental shitness of the loans, not the underlying security. The borrowers have not been paying it back and the lenders obscured this fact by rolling up and capitalising interest to make ‘new’ loans appear to be performing. They also booked interest not yet paid as income, thus flattering profits against the minimal provisions they were actually taking. McDonagh said this in committee yesterday.

Is that legal?

I used to think, naively, that surely the banks would not be allowed to do this. But it appears the standard way of dealing with a developer loan was to book interest as income up front, even though it would get paid at the end of the loan. (There are good reasons for not charging the interest immediately on development loans, I hasten to add; I’m struggling to come up with good reasons for counting it as income before it gets paid, though.)

Ditto. I thought that there had been some advances in accounting standards to avoid these situations where income from deals is booked early thereby boosting short term profits but which becomes disastrous if there is any interruption to the pipeline (pyramid?) of such deals. To continue with such practices when it is clear the pipeline has shut down seems even more hard to swallow. Can we add the accountancy profession to the list of dogs that did not bark?

Well the idea can’t be new to you :angry:

thepropertypin.com/viewtopic.php?f=19&t=17099&start=29

I swear to fuck… your hear the claxons, you see the red warning lights flashing, you wait for someone to hit the kill switch…

BOOM!

I have to ask the question, is the reason that so many of the obvious questions not being asked by the media simply down to the fact that what is going on is simply too big and to incredible for most peoples minds to take it all on board in one go and more importantly to parse it for the reality behind the spin?

I am asking this because despite having discussed this in the past and read about it extensively on the Pin, the fact of the head of NAMA saying publicly that only one third of the NAMA bound loans are being repaid shocked me yesterday. Maybe it is that I don’t want the interweb nutjobs to be proved right :nin .

As the OP noted, the 40% performing figure has been out in the open for a long time and the concerns about interest roll up, etc.

I remember that thread well. As I said, I was naive about this. Weirdly, accountancy rules only allow banks to make provisions as problems arise i.e. you can’t just put away money for possible future losses, only for likely losses. The idea is to prevent profit-smoothing. This, combined with pre-booking interest income, has the perverse effect of creating phantom income while keeping the loss cushion at a minimum.

I’m not sure the questions are as obvious as they look in hindsight, but you’re right about the scope and scale of the issues. Put it this way: there are fewer banking reporters than there are banking supervisors at the Financial Regulator - and we have less access. Also, we’ve been lied to repeatedly. Legally, you can’t write: “X said this, but he’s a liar and this is what I believe, without authoritative proof, is really going on.”

The questions were all asked about the time Mr. Lynn did a runner. The questions were all asked about whether the banks had any security, sufficient security, enforcable security, multiple mortgages etc. The questions were asked and there was a lot of pooh-poohing of uninformed speculation, one bad apple nonsense, Ireland is not like the US, etc. etc.

Who has pooh-pooh on their face now?

Oh, that’d be the taxpayer again, wouldn’t it?