Every week now, the Sunday newspapers compete with each other for overyhyped stories on the implications of NAMA. This one from the Sunday Tribune about the plans of a wily group of “solvent developers” has to be the best so far. Titled “Solvent developers to compete with Nama”, the story goes as follows:
Some of the country’s cash-rich developers are putting together war chests and are planning to compete with the National Asset Management Agency (Nama) when it tries to buy their debts from the bank.
At least two development groups have put funding of between €200m and €300m together as they don’t want their investment property loans in particular transferred to Nama, and hope to be in a position to buy their own loans at a significant discount.
Buying the loans, said a senior industry source, would effectively mean that the developers would take control of the properties at today’s prices rather than ones agreed at the peak of the market.
Most likely, this “plan” is either the product of the overactive imagination of said industry source or perhaps has been misinterpreted by the intrepid Tribune reporter.
Still, if there is any chance that this plan could be put into effect, let me be the first economist to recommend that it be extended beyond developers to the whole Irish public. I’m solvent and I’d love to get my mortgage cut in half (i.e. buy my loan at a significant discount.) I’m sure our readers would too. Perhaps we should set up a lobby group and get a senior industry source to brief the Tribune about it?
Note: The Merriam-Webster online dictionary defines solvent as “able to pay all legal debts”. (I’m assuming the Tribune aren’t referring to the second meaning of the word, which is something “that dissolves or can dissolve” but now that I think about it, I’m not so sure.)