NAMA and the constitution!
Article 6 Section 1
“All powers of government, legislative, executive and judicial, derive, under God from the people whose right it is to designate the rulers of the State and, in final appeal, to decide all questions of national policy, according to the requirements of the common good.”
“To decide all questions of national policy, according to the requirements of the common good” And how on in Gods name is NAMA by any stretch of the imagination for the common good? Article 33 section 1
There shall be a Comptroller and Auditor general to control on behalf of the State all disbursements and to audit all accounts of moneys administered by or under the authority of the Oireachtas
“To control on behalf of the State all disbursements” and how exactly does he intend to fulfill his statutory function in this regard? is he going to control NAMA disbursements as he must and can he sign off on figures which are blatantly wrong or at best mere guesstimates which expose the tax payer to billions of Euro in losses.
Article 45 Section 2 subsection iv
“That in what pertains to the control of credit the constant and predominant aim shall be the welfare of the people as a whole”
Not the welfare of bankers, bond holders or developers who have embraced NAMA with religious zeal for obvious reasons.
Article 45 Section 4
“The State pledges itself to safeguard with special care the economic interests of the weaker sections of the community”
This surely is good news for ordinary mortgage holders who, presumably even before the banks are sorted, must according to our constitution be safeguarded “with special care”
Finally, Article 28 states
“The Taoiseach shall keep the president generally informed on matters of domestic and international policy”
And has he bothered to keep you informed? When was the last time he discussed SPV’s with you?

The irony is that Davy publishing this may make it less likely to happen as the application of a writedown bell curve (in the sense of university results) would be a tad obvious now!

Davys have came up with a price that the assets “must” be worth in order for the banksters to emerge from this with their independence and capabilities to make future huge profits intact.

And then suggesting that is the value NAMA should pay, irrespective of how much the shit is worth…

Its saying the banks need to screw the taxpayer for X and then they can walk away and wash their hands of the mess they have created… And get back to making huge profits and bonuses.

Which is very different to actually putting a fair value (short or long term) on the assets.

“Latest media speculation on NAMA
Scott Rankin

There were a few more snippits on NAMA over the weekend. The Irish
Independent reported that Minister for Finance, Brian Lenihan, will meet senior executives from the UK banks on July 29th to discuss NAMA. While NAMA legislation, which will possibly be published on July 29th or 30th, will be drafted in a way that does not preclude overseas lenders being involved, the conditions for inclusion will be sufficiently arduous as to effectively eliminate them from participating.
In The Sunday Tribune, there was speculation that the discounts to be paid on loans would be far greater than the 15-20% that we and others have speculated on, possibly averaging 27-28%. The article quoted ‘experts’, rather than NAMA officials it would appear. There is always the risk this could be the case of course.
However, one should also keep in mind what the Minister indicated last week: that based on the information he has seen to date, it was ‘not inevitable’ that the process would result in the state taking majority ownership of ALBK and BKIR. As we said last Friday, working off a minimum core equity of 5% post-NAMA, the haircut that would give the state 50% ownership in BKIR is around 26% (our model has 16%); for ALBK, it is around 18% (our model has 20%) assuming M&T is sold but Poland is retained (note BZ stocks is up 5% year-to-date now).”

so to summarise Mr Rankin….

1) well, the legislation might ALLOW the foreign banks to come in but sure they wont. To which my question is this : ACC can get 70c on the euro by coming into the scheme. They can whistle dixie until they get a judgement mortgage by staying out. Scott, the onerous conditions would want to be fierce onerous altogether before the lads in Rabo head office would walk away from that

2) Soi-disant experts say one thing while insiders say another. Scott prefers to believe the insiders, who are of course totally unbiased. Scott, the experts are working on publically traded debt figures and information coming out on the commercial courts. See frinstance http://trueeconomics.blogspot.com/2009/07/economics-25072009-nama-presentation.html and of course the very article on which this comments.

Its entirely probable that the banks will be “saved” from nationalisation, to the snide and shallow mutterings of “hah, thatll show them experts”, but at what cost to the taxpayer who seems to have nobody at the table articulating her views.

The title says it all… The thought of Anglo being a white knight to anyone or anything is laughable.

Lets assume this is true and Anglo are fronting some cash in this… That is some of OUR cash. (Borrowed by us to keep these scumbags in overpaid jobs)

What is their real agenda? Why are they doing this?

We know Anglo are morally bankrupt and if it wasnt for crooked or incompetent politicians they would be actually bankrupt also…. So why, are they loaning for property development when they are overexposed to exactly this type of ‘investment’

Could it be to maintain the fiction that values havent collapsed 80% and pay off ACC so Anglo etc can pass on ‘assets’ at grossly inflated prices to NAMA? With the tazpayer as usual carrying the can.

Regrettably, it appears Brian Lucey is spot on. In an “exclusive” in the Sunday Independent today, Jody Corcoran sets out just how much we are about to overpay.
He states that the 90b of assets are worth 30b and we are about to pay 60b as the so called “long term economic value” of the impaired assets. So we lose an immediate 30b with the prospect of a further loss of up to 30b over ten years. Add on the interest cost and the State is facing a bill of epic proportions.
Jody Corcoran obviously has sources for this information; it appears we are being conditioned.
Can any accountancy or legal experts inform us as to the legitimacy of the concept of “long term economic value” being used in valuing assets being acquired by the State. If you tried this in the High Court you would be very quickly shown the door.

Excuse my cynical view of the world Maurice but I will believe it when I see it.

Bloomberg reports that the bondholders who put up $2 billion in financing for CIT Group Inc. last weekend, made an instant $100 million on an investment analysts say is almost risk free.

CIT, the 101-year-old commercial lender struggling to retire $1 billion of debt maturing next month, agreed to pay a 5% fee to the creditors and annual interest of at least 13% - - 25 times Libor - - the London Inter-bank offered rate. On top of that, the New York-based company pledged assets worth more than five times the amount of the loan as collateral.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aiJwhWb4QleU

Even if CIT fails, the bondholder group will probably make money because of the collateral. The lenders have “virtually 100 percent assurance” they’d be able to recoup all their money in a bankruptcy, said Sameer Gokhale, an analyst with Keefe Bruyette & Woods Inc. in New York.

So no Santa Clauses there!

Irish land value

The State will have a direct interest in maintaining a corrupt land development system in a country with plenty land, at a time when it seeks to make the economy more competitive.

It’s not an accident that Irish housing size is among the smallest in Western Europe, even though there is a large percentage of detached houses.

As for Zoe, I recall passing the Gas Works development near the Dart Barrow Street station in 2006 and seeing bicycles on the balconies. The pattern during the boom was to provide minimum storage space and less car spaces than units.

The apartment market will take years to recover.

In 2006, the National Roads Authority said the cost of land for roadbuilding in Ireland, accounted for 23% of project costs compared with an average of 12% in the EU.

Nama will have data on the small number of owners of the landbanks in the Dublin area for example.

Bernard McNamara bought the Burlington Hotel and adjacent Allianz building in 2006 for €388 million. Also in 2006, a consortium led by Bernard McNamara and including the State-owned Dublin Docklands Development Authority, paid €412 million to buy the former Irish Glass Bottle factory in Dublin.

When will funding for developments to complement the site costs, be available? Ditto for Dunne and Grehan in Ballsbridge.

Site costs as a percentage of total selling costs were about 15% before the boom.

As in the US, site costs moved towards 50%.

A Fed study says it took a full ten years for the real land price index to return to the level at its previous peak in many cities. In a number of large cities — including Los Angeles, Philadelphia, Providence, RI, and Sacramento — real land prices did not reach their 1990 peaks until 2001 or 2002, well into the current housing boom.

So with domestic funding impaired for at least a decade and the UK also struggling with debt, how will the debts be repaid if projects cannot be completed?

Fed study:

http://www.federalreserve.gov/Pubs/feds/2006/200625/200625pap.pdf

Summary of Morgan Stanley report on various scenarios for Ireland:
Legacy of banking crisis likely to be long-lasting if not permanent increase in net public indebtedness

http://www.finfacts.ie/irishfinancenews/article_1017250.shtml

@Joseph
You asked:
And is Brian Lenihan’s comment last night - ” it is not inevitable that the Nama process would result in the State taking a majority share position in the two largest banks, AIB and Bank of Ireland” - the clearest indication yet that the haircut won’t be too severe and therefore they won’t have to pump further money in to recapitalise the banks?
NO.
You need to process this statement through a LenihanTranslator.
“not inevtable”= this outcome is by far the most likely.
It is actually the clearest indication yet that the ACC action has forced the authorities hand over NAMA, forcing a realistic valuation on many near worthless assets.

@Karl.
Your hint:
In interpreting the various answers put forward, it might be helpful to keep in mind that AIB has over €24 billion in pure development loans and has core equity capital of about €8 billion.
Absolutely on the money.

http://galwaytent.blogspot.com/2009/07/dutch-bankrupt-poolbeg-polder.html

Right beside the ZOE/Fabrizia site on Sandymount Strand is the 450 million Euro and NAMA-ready Irish Glass Bottle site. Do our Downtown Niggers(*1) use their disposable cellphones to do business with Anglo-Irish Bank and the Dublin Developers Autocracy (DDDA)? Or is it exclusively with NAMA?

A few hundred metres from these spec-sites is Europe’s, and Africa’s, largest planned waste-to-toxins incinerator - to be run by a New Jersey outfit which has been fined for dioxins pollution and six thousand other violations.

The Purple and The Pinstripe of the Banana Republic.

“it is clear that we are being set up for the biggest wealth transfer in the history of the state = to banks that are reported to be ready to then buy back the pref shares so the state is left with tiny stake”

Oh crikey - I had forgotten about their ability to ultimately reduce the %holding the taxpayer has and reduce their stake. We just can’t let them get away with this. In the words of my Dutch neighbour “what am gonna do?”.

It is a pity the bank shareholders would not launch class action suits against the careerists and cronyists who caused the problem. It is also a pity that none of the opposition parties has chosen to launch an action on behalf of the taxpayers against the government over NAMA, or against the regulators over their failure to regulate.

1000 employees of the Central Bank of Ireland plus the Financial Regulatory Authority (IFRSA). What have they been doing for the past decade ??? Why doesn’t McCarthy start with them instead of picking on welfare recipients ????

Brian Lucey - if you are The Brian Lucey, from TCD, then thanks for your sterling work in exposing the fraud that is NAMA. Your critique of NAMA is ’spot-on’. NAMA is a system whereby the massive losses in the property market are transferred from the corrupt, cronyism, banks to the PAYE taxpayer. The media are in on the scam, because when it is over the banks will spend a fortune trying on ‘brand awareness building’ in the media. Lenihan’s has talked about ‘joined up thinking’. This means that banks who do not want to be part of the corrupt little consensus of saving AIB and BOI from a severe humiliation, are going to get ‘accomodated’. (The PAYE taxpayer will fund this - in the best interest of the taxpayers - well this is the sort of spin that is produced, because it is directed at the greatest fear in the public mind).

NAMA is a semi-state ploy to safe the Ballybrit Tent Boyos. NAMA is unconstitutional. McAleese, of the pretend smile, was very disturbed about the Criminal Gangs Act. Maybe she would prefer if West Dublin grew into one massive no-go area, like has been happening for the last two decades. But McAleese had no reservations about signing the Bankers Bailout, and the Builders bailout into Law. In fact she couldnot make it happen fast enough. So much for upholding the Consitution.

The entire NAMA thing is completely unconstitutional. Read Article 45 of Bunreacht na hEireann. It is a complete farce.

This government has no mandate. In fact, based on recent election results the Green Party have absolutely no mandate - not even a mandate to sit in the audience of a micky-mouse Urban District Council. Yet we have idiots talking about the ‘SMART Economy’. We have liars talking about the ‘Knowledge economy’. The hypocrisy of these crooks is breathtaking.

This country would have been much better off if Anglo Irish Bank was allowed to fail. In the process it would have resulted in the failure of Irish Life (the Permo) also - thanks to that corrupt loan between the two of them when Anglo was going under. And INBS and the EBS would have also failed. The state would have been forced to fork out 20 billion Euro to dpositors. AIB and BoI would have been forced to fire their bloated hierarchies (full of neophytes and cronies). AIB and BoI would also have been forced to sell their shares in all the other companies in the ISEQ where they are minority shareholders. But it would have been over. And that is the key. Thanks to Lenihan, it will never end for another forty years.

I hope you enjoyed the boom.Because your children will be paying for it for a very long time !!!

1) Purchase at mark-to-market value
2) Make a non-binding commitment that for each bank, any net profits from NAMA sales of that banks assets will be returned to the bank at some future date (2030?) minus some percentage for NAMA costs etc. [I am working on the assumption that a non-binding commitment like this will not show up as an asset for the bank!?! A binding commitment would keep uncertainty regarding the value of the commitment on the banks books I presume...]

3) Recapitalise the banks as neccessary. [I think it is better to seperate recapitalisation from the value of these assets for various reasons: Overpaying for assets allows banks to quickly forget that we recapped them as we ‘got’ something for our money - overvalued assets. Secondly, using NAMA to re-cap will allow banks to get rid of really bad assets without ever needing to admit how bad they really are (as NAMA will overpay by an uncertain amount)….

Some people claim that it doesnt really matter how big the discount is because we have to recapitalise the banks anyways if we get a decent discount….

That is ignoring who benefits from the high price paid to the banks…The net may be the same but I guarantee that the price paid will make or break certain individuals.

The ACC case clearly shows that instead of a 20% haircut, the correct value of the assets is around 20%, i.e. an 80% haircut. They bring this up in a court case and within 48 hours suddenly they are allowed into NAMA… I presume the quid pro quo will be to stop the cases and get in line to shag the taxpayer.

Who benefits?

My guess is that the game is now rigged so the state picks up NAMA, A few years go by and NAMA reports it needs a bailout as ’sure everybody knew’ we overpaid to save the banks. Meanwhile, the banks are not quite healthy as they still owe bondholders billions….

Who are these bondholders?

Is there a guarantee that none of these have any connection to the debts in NAMA? Or connections to guaranteed banks?

I suspect that along with internation bondholders there are dirty tricks being played in the halls of Anglo etc and the regulator to ensure golden circles have been protected.

If Seanie Fitzpatrick and his ilk are bondholders….

Everybody knows the dice is loaded, everybody rolls with their fingers crossed.

I still recon the consiquences of these actions will be less bad than the consiquences of trying to keep the current show on the road.