Irish Times NAMA Piece Signed by 46 Economists

i am reading this article with interest. I have one question to clarify things in my own head. The petitioners propose that “certain classes of bondholders also be required to accept reductions in value”. Could someone clarify which classes of bondholders should take this hit?

I’m glad KW posted this. I have a number of problems with the assumptions in the articles.

The assumptions and my questions of them are as follows:

1. Fair economic value will be greatly in excess of market value.

Some assets will be priced at or below agricultural value. Some will be at greater than market value but there is no evidence that it will be greatly above market value. There has been little analysis of the market from 1974 to date and which years might be considered bubble years to be discounted. However, it seems to be generally accepted hat Alan Ahearne has expertise in this area. In those circumnstances how can the word “greatly” be applied with confidence?

2. That there is an “assumption that that in the short term, property and development prices will rise”.

There is no such assumption that I am aware of. The same comments on Alan Ahearne’s expertise apply.

3. The “fair economic value” will “be based on a very optimistic forecast of the Irish economy in the medium term”.

Where is the evidence for this assumption?

4. The State is opposed to “effectively nationalise” Irish banks.

The state is reluctant to 100% nationalise Irish banks. The State has never said it is not willing to take a substantial majority share. The article does not take account of the fact that even if the values are low and a huge capital injection is required, the State may then be able to entice in fresh private equity along with State to avoid nationalising.

5. “It is clear that the Government is determined to pay a price for land and speculative developments greatly in excess of the market clearing price”.

It is not clear for the reasons stated above.

6. “While the precise national accounting treatment of these bonds remains unclear, it is prudent and correct to treat them as State liabilities for whose repayment the taxpayer will ultimately be responsible.”

If certain of the NAMA bonds are only backed by assets and the state only guarantees a portion of bonds (i.e., the most risky) then it is not prudent or correct to consider the all the NAMA bonds as being the taxpayer’s responsibility. NAMA will not be a systemic bank.

7. “It is also highly probable that the agency cannot “pay for itself”.

This is a straight “we don’t believe you” to the Minister and Mr. Ahearne and possibly to the NTMA analysis although we haven’t seen this. It ignores the fact that one performing loan can currently service itself and possibly a number of non-performing loans. What is the basis for this assumption?

8. There will be a “massive transfer of wealth from taxpayers to private risk-takers”.

Buying assets for consideration is not a transfer of wealth. It is a swap. The article reads as if the assets were worth nothing an we are giving away this money for no good reason.

9. NAMA does not provide that “those that have invested in risky capital in the banks (the shareholders and bondholders) must accept that the value of their asset is gravely impaired.”

Because NAMA is getting assets at real discount and because there will be consequent recapitalisation the equity holders will and have accepted their asset is greatly impaired. Hasn’t 90% gone already? The markets may be making some worng assumptions that the Govt will do everything to take less than 50% equity but there are no official statements to back up that assumption. That is not the Government’s fault. The ball-park discount will be announced in the Dail in September but will be subject to NAMA examining each loan.

10. NAMA doesn’t allow that “certain classes of bondholders also be required to accept reductions in value.”

Why are the banks able to buy back sub-debt at a discount so?

11. The State could successfully work “swiftly to float a reorganised banking system anew”.

Can this really be done? How long do people think it would take if we took over the banks today and how much debt would have to be guaranteed in the process? Would the second wave catch us in the meantime? Would we be stuck in the banks until the second wave had been dealt with?

My last comment was not a dig at the people who signed the petition today. It was aimed purely at the point I have made about 10 times on this forum that people should use a clearly distinguishable name for making comments. This blog is read by about 2000 people per day including pretty much every business journalist and I suspect a large number of policymakers. Whatever about confusing my opinions with another commenters, we have had examples here where it looked like, for example, Colm McCarthy had taken a funny turn. This is not fair, in my view, on people who are commenting and who have to rely on their reputation for their credibility. It is unmoderated for very good reason. But I think a short “rules” post would not go astray (no personal insults, no accusations and use identifiers).

Certainly, users should not use names which may be confused with economists who are listed as contributors on the front page. LiamD should change his name for that reason. I would have no problem changing mine if there was a Zhou Enlai (ecommunist) official contributor!

I wish to thank the 46.

But the point is that NaMa is an interference in a monumental mess and there is every likelihood that it will make the situation worse.

Given the egregious lack of comprehension of the scope of what has been happening world wide and also in Ireland, it is obvious that no one among TPTB foresaw this. They still do not see what is inevitable.

Principle, that government should not intervene, is underlined by what this government has accomplished, thus far. Let the creditors deal with the loans and the debtors can sell off the assets. Of developers, banks and other institutions that are over geared. That sucking sound that people could not hear 9 years ago is now evident. It is coming to a lender near you. The lender of last resort will eventually face problems. Even the ECB will run out of credit as people refuse to buy crap. Or is that the real reason for keeping zombie banks alive? To buy it from the ECB? A giant kiting exercise?

Japan, 19 years and counting. Easter Island 1000 years and still no trees!

As one who signed let me indicate my reasoning. Like David I am not a petition signer & vowed many years never to sign a petition on professional grounds. I am far from expert on the subject & am old enough to remember the 365 economists who signed the famous UK petition.
When a petition of Nazi scientists dismissed Einstein’s work he observed that if he was wrong one name would have been sufficient. Unfortunately in the world we live in it doesn’t work that way and it seems to me that on balance of probabilities this article might do some good. Essentially it makes it easier for people, both inside and outside the tent, to take a more sensible position on the price. Lets say that as a result NAMA paid just €1b less that otherwise. Wouldn’t that be a good day’s work?

It is unlikely that the government will do a giant about-turn on NAMA (though it is possible), but the more discussion there is about valuations, the more realistic the valuations will be. The biggest issue with NAMA is the apparent likelihood that banks will be overpaid in advance for assets the value of which is either very low or unknown.

Alan Ahearne was on the radio saying that there are international standards for valuing these kinds of things. As a taxpayer, I was relieved hearing that and I look forward to reading about the fine details of these international standards in government press releases in the coming days.

So it is worth pushing on this issue. The cold light of day is having a big effect on the valuations.

The other big problem for the government is a lack of strategy for how to restructure the banking sector, but that is not something anyone outside the Department of Finance can do much about. It is impossible to force the Minister to have a long-term plan if they don’t want to have one or don’t see the need.

@zhou: maybe the impact will be to help them arrive at a proper price…this would then give them the considerable satisfaction of being able to turn around to us and say: your ivory tower fears were completely off-target. Which I guess we would be happy with.

Or, maybe it will have very little impact at all. The politicians get to decide, not us.

@zhou_enlai : Since I am not convinced that its your real name I decline to respond. I put my name on the line so should you (was it Zhou En lai who said it was “too early” to make a judgment about the French Revolution?)

@KD

I think that’s fair enough.

The comments on the Franch Revolution stand.

EU’s guidance on the valuing of assets, which all EU member states are following:
http://ec.europa.eu/competition/state_aid/legislation/specific_rules.html

Also, the Fed in the US has opted for “a hold to maturity” valuation, Ben Bernanke:
“First, banks will have a basis for valuing those assets and will not have to use fire sale prices. Their capital will not be unreasonably marked down. Second, liquidity should begin to come back to these markets. Third, removal of these assets from balance sheets and better information on value should reduce uncertainty and allow the banks to attract new private capital. Fourth, credit markets should start to unfreeze. New credit will become available to support our economy. And fifth, taxpayers should own assets at prices close to the hold-to-maturity values, which minimizes their risk”.

I note Alan Ahearne’s final statement during his interview that based on any sort of reasonable assumption NAMA will work and I find it hard to doubt him given his expertise and track record.

@LD
I’m very interested to hear your views. Having worked in bond markets, I think there is an urgent need for a proper debate on the funding/liquidity impacts of all the bank resolution options. Many of my former colleagues are saying that they are holding Irish bonds on the assumption of NAMA being passed and they will get out at any sign of trouble, thus leading to very significant increases in funding costs for both the State and financial institutions.

@ Ted McCarthy
State Aid Legistlation?

That cant be right?

I think you should have been looking up the state ‘investment’ legistlation.
We are purchasing loans that have a wonderful longterm economic value.
What do you think this country is? A charity?

Karl Whelan: “As far as I can see, the article says nothing about shifting wealth to developers.”

Perhaps, but this line “All are agreed that Nama on its own is but an enabler of that. A healthy working banking system is not dependent, we suggest, on a massive transfer of wealth from taxpayers to private risk-takers.” Certainly seems to suggest/imply that.

At best, NAMA can be described as an investment by the tax-payer in private risk-takers. Most of the arguments seem to centre around whether it will prove to be a good investment or not, rather than if we should be making the investment in the first place.

@zhou_enlai

As a self-confessed “post-modernist with a deep suspicion of all ideologies” http://www.irisheconomy.ie/index.php/2009/07/13/three-cheers-for-nama/#comments you have battled long and hard for the government’s NAMA option.

Question assumptions, parse and deconstruct away to your heart’s content.

The real issue is one of trust . I, and many other citizens, simply do not trust the banks , developers or this Fianna Fail led government (even the Greens are suspect at this stage) to protect the interests of the ordinary citizen.

I have full confidence in Brain Lucey’s and his co-signatories’ approach to the sorting out of this banking mess which was not created by the vast majority of Irish citizens, but by the reckless few.

I am in favour of an approach to resolving the bank crisis articulated by Richard Bruton in his letter of 25th August to Brian Lenihan. This approach is based “ not on a dogmatic attachment to a particular model, but rather on a set of core principles: protecting the taxpayer from huge, unmanageable risks; minimising and ensuring a fair distribution of the losses associated with reckless lending by the banks and reckless investments by developers; and improving financial stability and credit availability for struggling businesses and families.”

So Alan Ahearne should go off and round up his own posse of economists in support of NAMA. And what then? The pro and anti-Nama factions will slug it out, like small boys on a football pitch, who’ve long forgotten the purpose of the game and are only interested in besting one another? The media would be delighted of course. But while such a spectacle might prove entertaining for the rest of us, it won’t put bread on the table.

At the end of his Morning Ireland interview, Alan Ahearne stated that Nama is ‘not a toy for academics to play with; this is the future of the Irish economy we’re talking about.’ I would sympathise with him in that view, but only if it’s the case that the 46 signatories to the Irish Times article, especially its principal authors, have not already made substantial submissions to the Minister and the Department of Finance on the draft legislative proposals for Nama that were published for public consultation several weeks ago now? One presumes that a detailed and lengthy response to the public consultation has been made?

Nama as a solution to the banking crisis could hardly be described as popular. The concerns voiced in the debates on this forum about Nama, and alternatives or modifications to Nama that might offer greater protection to the taxpayer have been very well-informed and constructive. Both Alan Ahearne and more improtantly, the Minister, are clearly open to constructive suggestions to improve Nama and have pledged to incorporate as many protections as are reasonably possible for the taxpayer within the proposal.

I’ve certainly learned a great deal from the arguments advanced here by all sides and shades of political opinion on the most appropriate mechanisms for resolving our banking problem. It would be a pity if the debate degenerated into the equivalent of a schoolboy row. I also share the concerns of other posters that time is being lost, time we can’t afford anymore.

@Aidan C

I think people are right not to trust banks or developers.

I think the the Government, having made mistakes before, is not in a position to demand the people’s trust (I don’t know if a group of economists would be trusted either). That is the reason the Minister has engaged on an extended consultative process and why there is no question of rushing this bill notwithstanding that out problems are urgent.

My support of NAMA is not ideological. If I were dealing in pure ideology I would probably subscribe to the view that all capitalist investors should be hoisted on their own petard. Unfortunately, I worry that approach might do serious damage to the economic wealth of our nation.

Its only an ivory tower when one is looking at it from the outside…..

Pavement Trauma : no they would be somewhere lurking in capital

A great letter!
One line surprised me…
“We now look to be on course for a Government deficit of close to €30 billion”.
Is this in 2009 or 2010, or on an annual basis? And what evidence would you cite now for a figure some €10bn more than what the government has been suggesting?

It might interest you to know that 10-year Irish underperformed comparable sovereigns by some 7bp in the morning. A large move in such dull trading.
Guesses as to why?
If, as the letter concludes,“the Government should not burden the State with more debt than is absolutely required”, shelving NAMA ought to be excellent for Irish sovereign credit.
But now with the Green Party Minister Eamon Ryan and Alan Ahearne on RTE suggesting a NAMA2, that prospect looks dim. Even the most ardent opponents to NAMA must recognise one advantage… no immediate upfront cost. The next government instead will have to deal with the legacy.

@Brian lucey

Alan Ahern has rubbished the estimated loan values that are suggested in the letter because it would be very difficult to ascertain the value given the complexities of that estimation.
He also seemed to suggest that the government would only pay agricultural prices for agricultural land.
Are Businesses who get agricultural prices not likely to default if they have paid a lot more than that?
Would it not be prudent for developers to move all their good loans in to one company and bad ones in to others and then default on the bad ones?
Is there anything to stop them doing this in Nama legistlation?

Hooray!
One person on the original email has contacted me to say that they disagree with the op-ed ….
46 more and its a tie…

nice work, not a single industry practitioner… it comes across as academics wanting a result from within industry but now willing to consult or garner the opinion the very people they hope to affect. you might want to get a few people who don’t work full time for a university to sign and that would do a world of good towards a petitions credibility.

I have said before that there is a divide when it comes to academia and those in practice, it was brian lucey who assured me that there was no such divide. I guess it’s true except for when it comes to petitions.

on the practitioner front, i was at an interesting talk for the CFA by Stephen Drew head of credit markets at Thames River Capital, formerly head of credit markets worldwide for JP Morgan, his opinion was that you ‘can’t go burning all of the investors or there will be no new creditor willing to back the new institution’, i don’t know how that rests with this forum.

in any case, not getting industry included is an error, it makes the signatories come across like a boxing commentators telling the guys in the ring how they should and shouldn’t fight but not willing to get in the ring themselves. Not every economist works for the state, inclusion in future might be a good idea.

@YM

I don’t think there has been any roll-back by contemplating the necessity for majority ownership. I consider the Minister’s position to have been consistent on this all along.

The Minister has also said that he will announce give the estimated haircuts when he introduces the bill to the Dail. That is not the last minute. Indeed, if the article had been held off for a week or two there might have been a lot more substance to discuss. In the meantime, I don’t think the “spinning” (as you call it) is a satisfactory basis for debate.

karl d.
Give me a comprehensive list for industry and im happy to do what you ask. Problem is there isnt such a list.

I very much appreciate the work Brian Lucey, Karl Whelan and others are putting in. I suspect that you’ve already shifted a few billion of losses away from the taxpayer. At worst, you’ve presented a coherent case that will endure and referenced if needed.

I guess you are right that people have to react to the spinners. As I said before, they may be trying to create a market expectation with which to beat the Minister. However, I don’t think it is substantial enough to form the basis of the assumptions/trenchant criticism of NAMA which I listed in my first post above.

@yog

What’s the big issue with govt taking majority stakes anyway? Happened at RBS and Lloyds / HBOS.

At a general level, don’t expect any radicalism from NAMA.

Secret supply contracts have already been issued, because that is the 19th century routine of the civil service.

An accountant has been appointed Interim MD who has had no work experience outside of the public sector and Lenihan announced in early
May, he would supply an advisory group “shortly.”

@Brain Lucey/KD

It’s unlikely that any wage slave from financial services, would sign a letter.

Stephen Roach of Morgan Stanley is a rare specie in financial services and credit is due to the bank for putting up with his contrarian views rather than hiring a PR merchant, like many in the sector.

Alan Ahearne said this morning on his Radio Interview that 46 academic economists could not possibly understand the complexities of Nama in a real sense.
However , he is quite willing to let a bunch of “so called Politicians” make irrevocable financial decisions for the country when they are untutored in the fine art of international finance.
Who is delusional and irrational?
Mr. Alan Ahearne is not being honest with his contemporaries as we all know who butters his bread!
The old joiners adage-measure twice cut once-should be applied to the Nama set up and consult very widely indeed and for God’s sake LISTEN
Nationalise and Nama-ise at our convenience.

@Veronica

I find your attitude very difficult to understand. Let me pick out three things you wrote.

1. “The pro and anti-Nama factions will slug it out, like small boys on a football pitch, who’ve long forgotten the purpose of the game and are only interested in besting one another?”

Really, honestly, what are you talking about? From a personal perspective, I read this to imply that you think my only interest here is “besting” pro-NAMA advocates? It’s hard not to read this an an unnecessary personal insult.

2. “only if it’s the case that the 46 signatories to the Irish Times article, especially its principal authors, have not already made substantial submissions to the Minister and the Department of Finance on the draft legislative proposals for Nama that were published for public consultation several weeks ago now? One presumes that a detailed and lengthy response to the public consultation has been made?”

I have made my opinions on the draft legislation clear on a number of occasions and, as I have reminded you before, I have put forward alternative plans, updating them so often to reflect events and good ideas from others. Your notion here — that the only useful and acceptable type of commentary is incremental calls for small changes to particular clauses of the draft bill — is one that I would completely reject.

3. “It would be a pity if the debate degenerated into the equivalent of a schoolboy row. I also share the concerns of other posters that time is being lost, time we can’t afford anymore.”

I really don’t understand the “schoolboy” comment. This is serious business and I, for one, have always tried to discuss the issues by focusing on the substance rather than the personalities. (I have, for instance, chided a number of commenters who have been personally rude about Alan Ahearne and have deleted any comments on my posts that insult him. This is not acceptable.)

And as for the time business, one almost gets the impression that you think it is the fault of academics that it took the government all this time to publish draft legislation and then decided to go on holiday for a month. There is plenty of time over the next few weeks for a serious debate and chastising those who engage in it as acting like schoolboys is both mean and silly.

Incidentally, I believe that Alan willl come to regret his “not a toy for academics to play with” line.

Sorry guys I’m back with the subbies and Senior debt holders again. I had another look on the Department of Finance website this afternoon and looked at the FAQs on the current guarantee. The list of covered liabilities under the Scheme includes senior unsecured debt, covered bonds (thought these had there own back-stops in place??) and dated subordinated debt. The department tells the reader that the guarantee is unconditional, irrevocable and ensures the timely payment of the covered liability. I don’t know maybe I am innocent but if I am sitting in London, Paris, Frankfurt and I read this I would think- fine, that’s my sub-debt or my senior debt in Irish domestic issuers covered for the time being…..

The idea of hitting sub-debt holders or senior debt holders now would represent an event of default by the state in my interpretation. There is no point debating the rights or wrongs of last September’s guarantee at this stage as this horse has already bolted, therefore we cannot now turn around and not honour this guarantee. Just reading Karl Deeter’s post re comments from Stephen Drew backs up the point I made earlier, if we go around clobbering all the existing investors they just WILL NOT come back. We would be very foolish to think we can go on as a nation without listening to foreign investors.

@ Ted McCarthy
I spoke to a few people I know in the investment industry today while this was fresh in my mind. The outside world is paying particular attention to our lil nation at the moment apparently. Over the next number of weeks two of the biggest decisions it has ever taken are coming down the track – Lisbon2 and NAMA. I am not going into the ins and outs of Lisbon at the moment as I am sure it will take on a life of its own over the next few weeks (a source of more worry). I am currently worried about the direction we could possibly take in alienating the world’s investors. The impression I have been given today from guys I was in college with and their colleagues (both sellers and buyers of credit) is that they expect to see some kind of progress made on NAMA in the next few weeks. What these guys want to see is certainty (don’t we all), it doesn’t take a genius to work out that Ireland got “a bit” carried away when it came to its own property market but now the international view is that at least our government is being realistic and admitting we have a problem unlike say, Spain, where they keep telling the world “there is nothing to see here, keep walking”. According to one guy at a French bank, his investors are saying that everything they are hearing about NAMA and the new guarantee has been constructive and shows a willingness from the Irish government to be proactive. Investors are now looking forward to September 16th to see how it works. While I think it is accepted that NAMA is not the perfect solution, the best time to really address this issue was back last September not now. Now we have to deal with the cards we have and to a certain extent, dealt ourselves. Wiping out foreign investors to my mind is not the way to do this, we need them to pay for the day to day running of the place aside from anything else. Anyone who thinks they can come up with a single solution to our problem in one go is deluding themselves and that is why I credit BLenihan (difficult to do this) in saying that he was open to suggestions in how to tweak NAMA but ultimately in one form or another it will go through.

LD

“According to one guy at a French bank, his investors are saying that everything they are hearing about NAMA and the new guarantee has been constructive and shows a willingness from the Irish government to be proactive.”

Taxpayers/citizens of Ireland, be very very worried.

Karl,

The lack of detail available makes it difficult to make a reasonable guess at losses. Although 30bn may appear low, 33% recovery rates are not unheard of. The behaviour of NAMAee banks in relation to Zoe Group suggests they’ve found a greater fool.

I expect ‘performing’ versus ‘non-performing’ loan discounts will be a key variable for banks to remain private. This and a mixture of discounts weighted by loan type and lender. For example, an aggregate 70% off development land could be assigned as 90% off Anglo loans and 50% off AIB.

@KW

I am glad you have stopped allowing insults of Alan Ahearne. Some of the comments made by certain people elsewhere are contemptible. We may all come to regret things we have said but let’s hope vicious insults aren’t amongst them.

KW: “This is a fully state-owned bank saying that land values had fallen by 50% to 70% back in March, well before further rounds of tax increases, expenditure cuts and increases in unemployment. By all rights, the Minister should also be focusing his ire on Misters O’Connor, Dukes and Daly as well as Prof. Lucey.”

Alan Ahearne appeared to demonstrate how a 50% drop in property values could easily be accommodated in a 30% haircut. Elsewhere, others have suggested that a 75% mark down for property can be accommodated in a 30% haircut. From Jon Ihle on thepropertypin:

“It goes something like this: imagine a loan of €100m on an underlying asset with a peak value of €133m (in other words a €100m loan at 75% LTV). A peak-to-trough price decline of 70% wipes out the €33m in equity and a further €60m, leaving the collateral value at €40m for a 60% nominal loss on a fully defaulting loan. You would expect NAMA to buy that loan at a discount to €40m and then try to recover some value by either getting the borrower to pay up or selling the collateral at some point.

However, NAMA does not assume 100% default on 100% of loans. In other words, not every loan is going to have a 60% nominal loss. If Goodbody’s numbers are anything to go by, the working assumption is a 33% probability of a loan incurring a total loss (or, put another way, there should be an aggregate 33% loss on loan values – which are NOT the same as asset values – across the NAMA portfolio). So 33% of the 60% nominal loan loss on a peak-to-trough decline of 70% in the underlying asset equals a 20% overall haircut. That doesn’t seem crazy to me, whatever the overall craziness of the NAMA concept.”

http://www.thepropertypin.com/viewtopic.php?p=289229#p289229

Perhaps the assumption of less than 100% default on 100% of loans is what you should be looking at rather than inferring an assumption that property prices will return to early bubble prices?

@Podubhlain

The Minister has never said no nationalisation at any cost. He has said that 100% (“wholesale”) nationalisation of the State banks is to be avoided if possible. I have always seen his comments as allowing for a large equity stake as was done in the UK. Can we hit this canard on the head once and for all?

Brian Lenihan speaking on 26 May 2009:

“I would like to comment on what many commentators seem to be suggesting is an alternative to an asset management agency approach – that is the wholesale nationalisation of the State guaranteed banks. The Government does not accept that the nationalisation of the whole of the Irish banking system will be the short term panacea that many envisage.

The Government believes that it is important, where possible, that the banking sector has a market presence and that it operates within market disciplines and constraints. The Government’s objective is to ensure that the lending needs of the real economy are met. A commercially focused banking system, which includes banks having a market presence, operating within market disciplines and constraints, is best equipped to achieve this aim.

Nationalisation will not in itself make the problems faced by the banks go away. I should remind Members that many of the difficulties relating to managing impaired loans, cleansing the balance sheets of the banks and dealing with legal challenges will also arise in the context of a nationalised banking system and perhaps even to a greater extent. Nationalisation I believe is something we should avoid if possible.

This is not a position held no matter what the cost, but is rather a balanced approach to the existing situation. Indeed I have made clear that if any further capital injections are required from the State for either of the two main banks, these will be in the form of equity capital which would have the effect of increasing State ownership of these two banks.”

@LD
“There does have to be protection for the taxpayer and our kids but there must be a way this can be done without completely alienating the guys who give us the money to pay for our day to day public expenditure”

Do you have a view on the foreign investors who were shareholders rather than bondholders?
At the moment the present view seems to be shareholders know the risks when investing and should get nothing. Many of these investors are international.
On the other hand we must not do anything to upset bondholders who after all also know the risk and charge accordingly.

So the score seems to be shareholders 0%, bondholders 100%.

It isn’t really surprising the international financial community like Nama – they get their money back. That doesn’t mean they’re going to reinvest in Ireland. More likely they’re going to say “phew got our money back. Let’s find somewhere safer for our money.” I don’t think they care too much about the poor Irish Taxpayer.

The reality is we can debate long term economic value of property till the cows come home but we won’t know the real answer till it happens. It could be up, it could be down, it could stay the same. Nobody knows nor can they know with any degree of accuracy. If they are right it will be a fluke.

Presumably all these brilliant advisors on valuations in the DoF are the same ones who saw Irish property values rising forever. Why do we think they’re going to get it right now?

PS I’m an accountant. Fair do’s to the economists for coming out with an opinion. There is nothing stopping other groups from doing the same.

The way I read some of the posts here makes me even more cynical than I thought possible.

The international investors who at the moment are not covered in any government guarantee seem to feel they would get unfair treatment if they are not included by the government guarantee. They seem to feel so strongly about this that they’d even refuse to buy bonds with an actual guarantee.

To the part where I get cynical, they are not even embarrassed about saying this. These people claim to be professionals who are making financial decisions based on facts. Their behaviour would be more indicative of emotional basis for decisions. If I had hired them, I’d let them go as their judgement have been proven to be clouded by emotions.

Do these people claim they did due diligence? If they did, then I’m not impressed by their skill. If they did not, then they should encounter the same caveat empor as any other buyer.

NAMA is being pushed as the one and only solution and that there is no time for a debate. Those arguments fail to convince me of the wisdom of 90bn of spending. I’d like to see the other arguments.

In addition, I believe there is some confusion here. I believe there are those who believe that the incurred lossed can be made to disappear by using a magic solution. Unfortunately there is no such solution. The losses have to be carried by someone. The possible sufferers are:

-the shareholders
-the ones currently not covered by the government guarantee
-the taxpayers

If the shareholders and all the ones not covered by the government guarantee are absolved from losses who will then suffer the losses?

@Jesper,

You forgot the borrowers form banks! They are first in the line. Also, the banks have been able to buy back unguaranteed debt at a discount thereby enforcing losses on the unguarantted debt holders. Shareholders have lost 90% from peak and that is a hell of a lot of hard working Irish people’s savings down the drain. Their shareholding will be diluted post NAMA by recapitalisation. This is not necessarily fully factored in by the market to date so there could be more pain for shareholders to come.

@Zhou
Surely you can recognise that the problem with Anglo Irish bank is not that is 100% nationalised but that it is a completely failed entity that has more in common with a John Grisham novel than an economic entity. Only FF believe that this is a bank of systemic importance and has an actual future outside of liquidation.

The fact that it was nationalised in January is just a measure of the perverse advice which is dictating policy to Lenihan. In December he wanted to put preference capital into Anglo when FG were telling him just to wind it up.

Northern Rock in the UK is a fully nationalised bank and we don’t have Alastair Darling on every second day saying that he cant get for funding for Northern Rock.

Lenihan has no qualms about distorting and ignoring facts.
Maybe we should just blame it on heredity, but he is not to be 100% trusted.

BTW – NAMA will be 100% state owned.

As for NAMA being 100% state owned, are you suggesting that Nationalised banks could or should be funded in the same way as NAMA to the extent necessary to allow them to carry on all the lending required by the real economy?

For those who think that the 46 should have been adding private economists to the list – nothing stopping them from writing their own letter. There’s no monopoly on public service (except the Civil Service, but that’s a whole other debate).

@Zhou
Anglo should never have been taken into public ownership.
We said it loud and clear in December that it should be wound up.
We don’t know what happened on September 29th – it may have been necessary to have extended the guarantee to Anglo. But that is as far as the state needed to go.

You recognise that Anglo is effectively now being wound up but it is costing us taxpayers maore than is necessary. As I have said repeatedly here and elsewhere, a compulsory wind-up of Anglo under special resolution regime powers would have resulted in a 100% lose to the sub-ordinated bondholders as none of their bonds were due to be repaid in the guarantee period.

Every penny Anglo is now using to buy back these bonds at a discount is still a waste of our money and a free gift to those people. In a proper wind-up they would have got nothing.

But then isn’t Seanie Titzpatrick one of the bond holders?

Economists agree/disagree on many issues. Who was it that said if you asked a 100 economists a question, you would get 100 answers, or maybe 200 answers from the two handed economists. The government has clearly chosen the one economist that agrees with their particular views to gain political legitmacy, much the same as their selective quoting of international bodies.

I did not sign the letter to the Times as I did not get the email from Brian Lucey. I would like to think that I have as good if not better paper qualifications in economics and finance than a lot of those who signed. But if I do not I do know that I have a lot more real business experience having run a business here for nearly 30 years, employing many people mostly university graduates, creating wealth and paying loads of taxes in various forms to this shoddy Government who could not organise the proverbial pi**up in a brewery. Over the last 24 months due to the inaction of this Government or maybe just inertia I now like a lot of other business people see my business melting away leaving me limited options including the breakup of great teams of people who now face the dole including myself but I do not qualify for it. It is not academic arguments I am interested in. I want action from this Government to govern this country, implement the Mc Carthy Report and sort the Banks out using NAMA with whatever tweaking is required to save the taxpayer and the country from complete meltdown. There is no sense of urgency from Academics who do not understand how fast the business community is being sacrificed for a media beanfest and noteriety. The Confidence of those of us in business is shattered to the point where it is close to the point of no return. When that happens this country will be a wasteland .

@Henry
I don’t see a problem with it at all. I don’t even see an ideological objection from Mr. Lenihan. More to the point, I don’t think the ECB will see a problem with it either. The question then is what form of cash/paper/navel lint can be used to ‘buy’ the equity stakes? Can NAMA-swap-or-rama bonds be used?

@Stuart
My view on foreign shareholders versus bondholders was summed up in my post at about 11.00 this morning, the sub-debt holders got paid a higher pick-up for taking the extra risk. It was only later I went on the Dept of Finance site FAQs that I remembered fully the implications of the current “irrevocable” guarantee. That is sub-debt holders are covered until September 2010. My view is that these investors “should” have understood the risk they were taking on, the subbies and equity investors took higher risk stakes in the banks. The fact that we (our government) decided to cover the lower tier investors too in the form of sub-debt investors is now a done deal. If I go into BOI, AIB, or whoever, and open a savings account under the terms of the contract I don’t believe I am taking on any particular ownership of the institution (this may be not the same for Building Societies???). Senior bond holders essentially take on the same relationship as my savings account, they rank first along with my account when the money is handed out in the event of anything being left at wind-up stage. The state has now also guaranteed these senior debt holders therefore the suggestion that these guys get knocked-off while my savings account is covered does not sit right with me. The score being “shareholders 0%, bondholders 100%” is a situation that was partially created already by the reaction of the state in September 2008, it is not something I am necessarily proud of as a citizen of this country but as it stands until September 2010 it is something we cannot undo if we mean to maintain any credibility with outside investors. You are right there is the potential these guys could simply cut and run and never come back, it is difficult to know how it will pan out, but I would be fairly certain if we renege on what we have already agreed in the Sept 2008 guarantee there is no hope of seeing them again.

@LD
Many thanks for your views, they are very interesting. I think it ties into the wider point being discussed of the need to get more people in the frontline (i.e. active in bond markets) involved in this blog so as to get a view on how each of the options will operate in reality.

The letter was organised by Trinity College finance professor Brian Lucey and was signed by Dr Karl Whelan of UCD and Dr Alan Ahearne of NUI Galway, among others.

Priceless reporting from the irish Independent today.

Take a bow Fionnan Sheahan, Brendan Keenan and Joe Brennan.

http://www.independent.ie/national-news/lenihan-plan-to-hold-back-badloan-cash-from-banks-1870800.html

I am coming to this thread late and with a slightly tangential comment. This blog and the various contributions to the print and broadcasting media have been invaluable in promoting public discourse on this most important public policy issue. I am wondering, however, if anyone has thought about doing a little more? I am thinking of the town hall meetings currently taking place accross the US on the health care issue. Is there any group out there who could organise meetings to which Government and pro-NAMA speakers could engage in robust debate with those who disagree? This is probably the most important debate that will take place in this country for very many years. It needs to be extended, perhaps?

@Eamonn Moran

Who are these “bondholders”?

http://www.nytimes.com/1994/06/12/weekinreview/ideas-trends-the-bondholders-are-winning-why-america-won-t-boom.html

James Carville said: “I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.”
Wall Street Journal (February 25, 1993, p. A1)

[Original version (democraticunderground.com) – James Carville: “When I die I want to come back as the bond market because apparently it’s more important than the f_cking Pope!”]

@Karl D
“how can they offer such high deposit rates given that they have equal (if not greater) default rates to the other banks? on demand accounts they are paying 1.35% over the next irish bank, over 1.5% more on the 6mth…”

Post hoc (anglo are using the state guarantee to act in an uncompetitive manner)

ergo (therefore)

propter hoc (all nationalised banks, not just vampire zombies, will rape and pillage)

The 46 economists did the country a considerable service if their action served to bring about change in what we have been told so far about NAMA.While some of the refinements suggested by Patrick Honahan and others would most definitely improve NAMA,the core issue is nationalisation or the State acquiring a majority ownership.
The fact is that having invested €7 billion already into 2 banks which had a market cap of c. €2 billion at the time and which only continued to be in busines because of the State guarantee of deposits,we should own most of AIB & BOI already.This was a dreadful transaction in which once again the taxpayer was sold short.
Yes,AIB & BOI will be very profitable going forward and attractive to investors once the toxic problems have been parked. However in any rescue situation,the party who takes the risk which enables survival/turnaround ends up with most of the equity – its called capitalism.

@MOL

I don’t think going over the nationalisation of Anglo as a side issue on this discussion is worthwhile.

On the point of whether it nationalised banks find it hard to raise funds, I admit that I am not in possession of much information for or against the proposition. Similarly, I think you have zero information on which to allege that “Lenihan is lying outrageously”. I respectfully suggest that you should stop making such statements here. If you have info then you could just quote the info or just say you doubt the accuracy of Lenihans remarks.

I also note that Karl Deeter’s remarks indicate that it is more difficult for Anglo to get funds despite its 100% State ownership and the Guarantee. I note you put this down to Anglo being Anglo but I think it is relevant as the only factoid we have.

Whether or not there is a cause of action in relation to happenings at Anglo, I think it is regrettable that there is no legal mechanism for class actions in Ireland.

@BL

Do you think the Minister is wrong in saying Nationalised banks find it harder to raise funds? As a finance guru, what do you base your opinion on?

@brian lucey: actually anglo are not using the state guarantee, what is happening is that their debt is classed in with sovereign and investment funds won’t go beyond certain % holdings on irish debt – thus anglo have to pay over the odds and essentially create a transfer from the taxpayer to the depositor in order to hold the capital they have because the market is not interested.

regarding the survey – you are getting me wrong, i’m not talking about a counter petition of people ‘for’ nama, that list already exists,

government,
imf
esri
oecd
some academics
industry

the counter list (other than your petition) are – broadly…
sinn fein
joe higgins
Fine Gael

i know in which list my trust rests.

what i am saying is that it is a lazy approach to an important and pivotal petition to just mass mail college faculties and not even try to engage with industry, if i was to do such a petition you can be certain i’d be looking to have some academics on mine, but again, i don’t need to do that, the support base speaks for itself.

Jon Ihle on the difficulties for nationalised banks raising cash:

http://www.irisheconomy.ie/index.php/2009/08/27/pro-nama-irish-times-article-from-rory-gillen/#comment-13358

@bg

Is it possible to be anything other than ignorant on how default will affect future borrowing? Is there a market index of this “optimal” level of default?

Also
– are senior bonds a form of subordinated debt?
– are senior bonds and senior debt different things?
– in what form is the “non risk” debt owned by insurance companies et al which the Minister does not want to default on?

@ Karl andBrian
Listening to Newstalk!!
Perhaps both sides of argument have been made now and thats it…
Sort it out between ye, in the pub or outside it.
To break the ice over who buys the first I will offer 10 Euros for the first round of drinks, which may just about buy 2 drinks in dublin.

Al

Alan Ahearne is reported in the Irish Times on 26 Aug 09 as suggesting that “there is no market at present either for land and development or for loans secured by land and development. That is why Nama is being set up. A ‘market price’ does not exist.”

I have two queries about this. First, is it correct to say that there is no market price? Reports of the Liam Carroll examinership application(s) suggests that his companies hope to dispose of most of its residential stock employing what was described as “aggressive marketing and competitive pricing” over a three year period. It was also indicated that the group had already sold 53 units at 2008 prices or higher, generating €11 million in sales.

Secondly, does anyone know what the government thinks is the reason for this alleged lack of a market? The terms of the draft NAMA legislation, and, in particular, the reference to the value that property can reasonably be expected to attain in a stable financial system when current crisis conditions are ameliorated, suggests that the government thinks that the depressed market is caused by international factors. Is this a fair assumption? What if the true cause of the lack of property transactions is that potential purchasers believes that house prices have more to fall, and are holding off buying until then? Such sentiment may, of course, be wrong, but if it were to be correct, and a national property bubble is the cause of the depressed market conditions, would this not undermine the assumption underlying NAMA, i.e. that the “current market value” is artificially low and because of this discrepancy the government is justified in paying “long-term economic value”?

I note that Alan Ahearne’s statement that no one associated with the establishment of Nama has ever said that prices will rise in the short term, and he goes on to state that “for the record, property cycles are 7/9 years in general”. I must be missing something, but surely the entire premise of NAMA is that the value of the property underlying the loans to be purchased by NAMA will rise? If not, how does the government hope to recoup its investment?

long-term economic value of the property comprised in the
security for a credit facility that is a bank asset is a reference to

@ B Lucey
That!, and taxation, taxation, taxation!!!
Al

@ YM & Ahura

The fact that Anglo would have access to no funds without the Guarantee does not mean that funding nationalised is easier than funding privately owned banks. The logic just doesn’t follow. If another bank cannot access funds we will ikely have to nationalise it too.

The rest of Ahura’s post about the flight of deposits from Anglo is interesting although it is not clear that deposits are where the problems the Minister has been referring to arise. Maybe somebody can clarify this.

YM’s statement that “Nationalisation would open up funding for the banks, IMO, both in quantity and in cost” goes even further and says it would be easier and cheaper for AIB /BoI to get credit if the 3 biggest banksin the country were nationalised. I find this hard to believe. I certainly would not offer a lower rate to a banking sector controlled by politicians, particularly when politicians elsewhere in Europe (Iceland & Latvia) are under huge pressure to allow defaults. That is not to mention the fact that the main opposition party in Ireland is promising default on bonds and has been fuzzy as to where it stands on senior debt.

@Gadge
As site cost accounts for about 50% of new house costs, compared with 15% in pre-boom times, NAMA’s control of liquidated land will have a big influence on future house prices.

By seeking to show a positive return itself, it will be aping the the existing land rezoning system, by imposing a stealth tax on property purchasers.

A US Federal Reserve study said that in a similar trend in the US, the future course of home prices — their average rate of appreciation and their volatility — was likely to be determined even more by the course of land prices than used to be the case.

The study also said 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 recent housing boom.

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

On his blog, Dr. Constantin Gurdgiev wrote in July: “…average peak to trough for ‘long term nominal economic value’ is 17.8 years. Again, given our peak at 2007 we have to look forward to NAMA recovering peak valuations at around, hmmm… 2026… But wait – not all corrections were steep enough to match ours… so let’s isolate those that were:

Australia 1980s: 18 years;
Finland 1990s: 16 years;
Germany 1970s: 36 years;
Italy 1981: 29 years;
Japan 1990: 20 years;
Netherlands, 1978: 21 years;
Norway 1987: 17 years;
Sweden 1979: 31 years;
UK 1973: 15 years

http://trueeconomics.blogspot.com/2009/07/economics-27072009-nama-ilandp-rate.html

@zhou
“If another bank cannot access funds we will ikely have to nationalise it too.”

You don’t see any contradiction in your dismissing my point about it being easier to get funds as a nationalised bank than as a struggling private one? If it was not easier, why would we nationalise?

Psst. I think nationalisation in full would be a bad idea. Because I don’t want to expose the state to any further balance sheet risks. Never mind to the risks of incompetent management.

But that doesn’t mean that the banks wouldn’t temporarily find it easier with what would in effect be a long-term guarantee…. tell me any senior debt the banks have managed to issue beyond September 2010 and then tell me that private sector funding is easier and cheaper…

@YM

I see no contradiction. If banks are struggling to get finance then of course nationalisation will help them get finance. However, that doesn’t mean that they will find it as easy to get finance as they would if they were still part owned and their loan book had been cleared up, i.e. in terms of ability to get funds the relationship could still be as follows:

NAME+Recap+Part Private > Nationalised > Pariah Private Bank

On your last point, are you suggesting that a private guaranteed bank is the same as a nationalised bank? It isn’t. The issue is not whether a state guarantee helps. Of course it does. The issue is whether the potential negative effects that 100% nationalisation may have on banks ability and determination to act along commercial lines will outweigh the benefit of that guarantee.

Ireland actually is different to the USA, UK et al in this regard because we would of course have to nationalise our entire banking system. The liability that the state would be taking on, which you and I correctly fear, would also be feared by the market and would affect our credit-worthiness.

I share your reluctance about nationalisation as I too want to see an end to this guarantee and a limit on State liability. The analogy that keeps springing to mind is that Nationalisation is akin to the USA invading Iraq: once you own it you are responsible for it – you can’t just walk away when you discover that things aren’t quite as you expected and people won’t behave as you want them too. Is Brian Lenihan to Brian Lucey what Colin Powell was to George Bush 🙂 ?

@YM

I don’t think I changed the rules. The issue I was focussing on was difficulty in raising funds for banks under NAMA -vs- under Nationalisation. I think Anglo -vs- Nationlised Anglo sent us off in different directions. We shouldn’t fret though – we wouldn’t be human if we didn’t think we had two different conversations!

I agree we desperately need an orderly wind-up mechanism though I don’t know if now is the best time to publish the legislation. Maybe when we are approaching the guarantee deadline moght be better. The banks and bondholders would really have to take us seriously then.

A European wide mechanism would be good. However, one wonders would we have been told that we had to let all the Irish banks go wallop and depend on foreign banks to support the Irish economy? The truth is that nobody is going to bother their b_llocks about Ireland but us. We may well deserve it but self-flagellation isn’t going to put the bread on the table!

I don’t think that a majority state stake will hamper the banks too much as the bankers will work like 10,000 Daley Thompsons (the fact he was a great decathlete is the point before anyone gets stupid) to get to a position where the state can sell off its shares at a profit.

In August 2007 I started a thread on “thePropertyPin.com”, the title of the thread was “Toxic Option Arms” The thread is here
http://www.thepropertypin.com/viewtopic.php?f=11&t=2871&p=22827&hilit=toxic+option+arms#p22827
What I find bizarre is that not one of the leading economist’s in this country,at the time had copped on to the fact that the USA was going to go into meltdown because of this, and flagged the consequences for Ireland that would follow.

@Brian Lucey

No I was not expecting to get the email from you. I do not doubt your bone fides. But what I do believe is the fact that 46 people signed up to a letter having been asked to do so does not necessarily really mean anything but that. My real concern is that academic commentators and probably most of those that signed that letter/article have no hands on experience of business and in particular just cannot understand what is going on at present for the average business in Ireland.The damage being done is enormous due to the lack of definite direction in dealing with the real issues for the economy. Personally I do not favour NAMA but just now it is the only deal out there and bickering by economists about it is causing a greater lack of Confidence in the Irish economy because the Irish Media latch on to anything and make a meal out of it. Witness Yates, Duffy, Browne, O”Toole,Keane etc etc on a daily basis. I sign contracts on a weekly basis and I can assure you that I could draft a few sections for the NAMA Bill to protect the taxpayer and make the Banks pay for their mistakes down the line. In the short term there might be deficits from the NAMA approach but over medium term these deficits can be paid for by the Banks that caused them. The worst case scenario is that the NAMA Bill is abandoned because the Politicians loose their nerve. The second worst scenario is that Lisbon Treaty is rejected. Not implementing the Mc Carthy Report will be the final nail in the coffin for the Irish economy.

@Ray
“The worst case scenario is that the NAMA Bill is abandoned because the Politicians loose their nerve. The second worst scenario is that Lisbon Treaty is rejected. Not implementing the Mc Carthy Report will be the final nail in the coffin for the Irish economy.”
TBH I would probably reverse those but yes all three are vital. However, its not my fault, or any signatories fault, that the govt cant do their job and …..govern
FFS they couldnt even put out a spokesperson on NAMA tonight, the one they had planned to pulling out early afternoon. Open debate my glutenus (very) maxima

Although driven to despair by the government there is one bright spot. Congratulations to the economists who signed the petition. You showed courage and leadership. But what about the economists who didn’t sign? I feel that economists in general did not do enough to warn people about the property market bubble, given the damage its bursting has been caused. You should have chained yourselves to the Galway tent or climbed to the roof of the Central Bank carrying an appropriate banner. I would urge all remaining economists in the universe to sign up with the 46. The preference to appear objective, unemotional and apolitical is outweighed by the damage that Nama as suggested will cause and your previous failure to speak out strongly. The whole process leading to the creation of Nama has been flawed. You do not need expert knowledge of the specific area to see this and speak out on it. If you have bought or rent a property and have lived in Ireland a few years you are more than qualified. The government should make enacting Nama contingent on the approval of a representative panel of economists. If they insist on going ahead with a flawed plan Irish economists should follow the example of the Pakistani lawyers – grab their caps and gowns and take to the streets in protest.

@ Karl Whelan, Brian Lucey,

Just asking again what the expected timeframe would be for your nationalisation proposal – how long would you expect the banks to be nationalised?

There was criticism in the opinion piece that the timeframe of NAMA was uncertain – with Minister O’Dea saying 7 to 10 years – do you think that the nationalisation proposal would have less of a timeframe than NAMA?

If, for argument’s sake, the timeframe for your nationalisation proposal is 10 years (before re-flotation) – how will that affect shareholders?

@YM

I don’t think there will be any shortage of “creative destruction” unless we set up a state owned “good bank” or nationalise 100%. If we do then I suppose it will be hard to rule out political interference (and it be impossible to avoid a perception of political interference even if there is none!).

@KD

I sent off an email to info@mortgagebrokers.ie. It is the only address I could find.

@Zhou

I agree with you about Bank lending and their unwillingness to lend. They say that they cannot find punters to lend to and there is no problem on credit availability. They were saying for a year that they had no problem with bad debts and eventually we got the “goods” on that story. So does anyone think that there is no problem on the availability of credit particularly to business customers. I know from someone in the garage business that 9 out of every 10 car loan applications are rejected by the Banks in that sector. So they are saying if we line up 10 people looking for a €10 -20,000 for a car that 9 are likely to default. The reality is that they have no cash to lend because of non-performing loans and as a result are constricting the entire economy from getting out of recession. NAMA needs to be installed to sort them out yesterday. Tweak the legislation in whatever way necessary to protect the taxpayerover it’s life but for God’s sake get on with it.

Love begins at Zhivagos!!!!!

I just wish to congratulate Karl Deeter and Chow and Lie on their forthcoming nuptials! May they provide many happy small but perfectly formed mortgages! We need more credit

South of Dub

I agree and have asked for responsible non warners to put up their hands so we can stone them, but they all say privately to me that they had no duty to warn people. Which is true. And that the cheerleaders of the bubble would target them. Elliot Spitzer was Governor of NY and drew peoples attention to George Bushes personal involvement in trying to diminish state as opposed to federal safeguards on loans made to people. Predatory lending. Spitzer was one of the straightest american prosecutors, not that that is much of a compliment, but for his action he was outed as a user of a jewish brothel. As a result, he resigned.
All the cheerleaders of the bubble made fun of him. On TV and in print. But he was trying to show what was going on in the states. This entire thing was predicted and many managed it to arrange to take out capital before the peak. They know that as assets fall, that capital has doubled in worth. Tax free. Quite a temptation! Allowing people to be greedy and ignorant is not morally wrong. But encouraging as Bush and others did, while knowing how it would end, as in Katrina, is a tremendous moral evil. But they are wealthy and if you ask nicely, they may give you a job, at mexican wage rates.

Pretty soon, Ireland may be competetive with these rates if capital is destroyed in NaMa.

@Pat Donnelly

Anybody that writes 5 negative posts here at times ranging from 6.22 am to 7.02 am has to be in the business of WUMING

The letter is a great piece. Some are quibbling with detail and technicality, but the substance of it is spot on.

Who can argue with the final para:

“We therefore urge the Government to reconsider its approach to payment for loans to be taken into Nama, to pay no more than current market value – which can be ascertained even in these times – and to require the investors in the banks to bear some of the cost of restructuring the system. Moreover, we also argue that the Government should not burden the State with more debt than is absolutely required.”

Well done!