Two days into the public debate about the implications of the proposed NAMA legislation, I have been extremely disappointed at the approach taken by the government to debating the key questions raised by this policy.
Tag: NAMA
Today’s Irish Times features a very clear and well-argued op-ed by Brian Lucey on the NAMA legislation. Link here.
The Minister for Finance appeared on Morning Ireland today. A strict interpretation of his comments would suggest that NAMA is going to apply a very large haircut.
Well, the legislation is out though I’m not sure we’re really much the wiser. Needless to say, my favourite bits have already been highlighted by commenters in our long-term valuation thread.
(a) a reference to the current market value of the property comprised in the security for a credit facility that is a bank asset is a reference to the estimated amount that would be paid between a willing buyer and a willing seller in an arm’s length transaction where both parties acted knowledgeably, prudently and without compulsion,
(c) a reference to the long-term economic value of the property comprised in the security for a credit facility that is a bank asset is a reference to the value that the property can reasonably be expected to attain in a stable financial system when current crisis conditions are ameliorated and in which a future price or yield of the asset is consistent with reasonable expectations having regard to the long-term historical average.
I could rant on about the craziness of paying according to (c) rather than (a) but it pretty much speaks for itself and, in any case, you already know what I think. What about the rest of you? What do make of paying according to (c) rather than (a) and is there much else in the legislation that you found interesting?
It is clear that when the NAMA legislation is published later today, there will be a lot of focus on the question of long-term economic value and the European Commission’s guidelines for pricing assets transferred to government asset management agencies.
I have written about this issue before and don’t want to repeat myself. However, I’d like to emphasise two issues.