Comments on: NAMA, EU Guidelines and Pricing of Assets

By: The Irish Economy » Blog Archive » Why Larger Losses on NAMA are Likely

Wed, 07 Jul 2010 11:10:39 +0000

[...] that will likely be shelved. Note, my opposition to a post-dated levy isn’t new. I said in April 2009 that it was “a pretty terrible idea” and also wrote at length about it in [...]

By: The Irish Economy » Blog Archive » When The Levy Breaks

The Irish Economy » Blog Archive » When The Levy Breaks — Sat, 10 Oct 2009 15:17:59 +0000

[...] of the income stream paid back to you is going to be below the original €20. I calculated in my first post discussing the levy in April, that with an interest rate of 5%, an income stream of this sort [...]

By: The Irish Economy » Blog Archive » The NAMA Levy

The Irish Economy » Blog Archive » The NAMA Levy — Tue, 11 Aug 2009 15:11:17 +0000

[...] as I noted the day after Bacon’s NAMA proposals were released, the idea of relying on a post-dated levy to [...]

By: The Irish Economy » Blog Archive » Germany’s Bad Bank Plan

The Irish Economy » Blog Archive » Germany’s Bad Bank Plan — Mon, 18 May 2009 11:33:26 +0000

[...] course, as I have noted before, one has to be very careful about what actually constitutes being paid back. Paying back a [...]

By: Paul Power

Paul Power — Thu, 09 Apr 2009 11:35:18 +0000

Can anyone tell me if all the toxic loans were fully secured when made?

By: Owen C

Owen C — Thu, 09 Apr 2009 09:38:12 +0000

Bacon report for NAMA

http://www.ntma.ie/Publications/2009/NAMAsummary6April09.pdf

By: Owen C

Owen C — Wed, 08 Apr 2009 20:09:24 +0000

@BrianB : but whats the market value of some of these loans, especially ones that are still technically ‘performing’? You could say 50 cents and i could say 75 cents, and it’d be difficult to call one us categorically wrong. When you’re dealing with a number like 80bio, then the govt deciding to pay a few cents more per loan could equal the difference between solvency and nationalisation. My guess is state aid hidden in the illiquid pricing, recouped via the levy over the longer term.

By: Brian Barrington

Brian Barrington — Wed, 08 Apr 2009 19:04:57 +0000

In case it is helpful: the EU law issue is about state aids. Nothing in EU law prevents payment at current market value since that could not be regarded as a state aid. Payment above current market value could be a state aid, and it is only this that EU law is concerned with. The Commission guidance is clear that payment above current market value may be allowed in certain circumstances. But payment at current market value is clearly legal too.

By: Brian Lucey

Brian Lucey — Wed, 08 Apr 2009 15:57:55 +0000

@owenc : this is the question…

By: Owen C

Owen C — Wed, 08 Apr 2009 13:48:59 +0000

I think the problem is that a fair pricing right now would be highly likely to leave the banks either (a) insolvent or (b) without enough regulatory capital to continue operating as is. At least a long-dated levy would essentially allow the banks to repay the capital loss over a long time-line, without hitting core capital levels right now. This would basically let the government fudge the already vague transfer pricing vs state aid debate for a few years.

Now im not necessarily against declaring the banks insolvent and nationalising them, im just saying that if the government already has some idea of what the transfer price is gonna be, and if they knew that this would therefore leave the banks insolvent, then why proceed with NAMA if they’re ultimately gonna nationalise them pretty soon anyway? Ergo, I’m assuming that the transfer price is ABOVE insolvency-causing levels, that this is therefore too high relative to reality, and that we come back at a later (5yrs+) date to recoup it?