Tag: NAMA

McDonagh and Bacon at Dail Finance Commitee

All you NAMAphiles out there will be interested to know that Peter Bacon and Brendan McDonagh (interim Director of NAMA) appeared today before the Oireachtas Joint Committee on Finance and Public Service. (Updated stories now report that the Minister for Finance also attended.) So set your Sky Plus for Oireachtas Report!  Seriously, though, I will post a link to the full text of the meeting as soon as it is put up. Meanwhile, I can leave you with this interesting excerpt from the Irish Times breaking news report:

Mr McDonagh made a similar point today to the Committee saying: “We believe the Government is basically interested in keeping banks listed and relies on Nama to trigger a change of market sentiment”.

JPMorgan Chase analysts wrote in a note today: “We thus see sizeable chances of a smaller haircut to avoid further capital needs”.

Update: Here‘s the full text of the meeting.

Correction: It turns out that Mr. McDonagh did not say the line that the Irish Times had attributed to him (the updated version of the story no longer contains this quote.)  I had scanned the transcript to see did he say this line, which appeared a strange one to me.  In fact, this line is also an excerpt from the JP Morgan note.  Apologies for misleading readers by relying on our so-called paper of record.

A Prediction Market for Irish Toxic Assets?

Alan Holland of UCC has a paper proposing a prediction market to forecast prices for “toxic assets” to be transferred from Irish banks to the National Asset Management Agency (NAMA).

Abstract below and the full paper is available here.

Abstract

We propose the development of a prediction market for forecasting prices for ‘toxic assets’ to be transferred from Irish banks to the National Asset Management Agency (NAMA). Such a market allows market participants to assume a stake in a security whose value is tied to a future event. We propose that
securities are created whose value hinges on the transfer amount paid forloans from NAMA to a bank. In essence, bets are accepted on whether the price is higher or lower than a certain quoted figure. The prices of the securities indicate expected transfer costs for toxic assets and they increase or decrease in line with market opinion. Prediction markets offer a proven means of aggregating distributed knowledge pertaining to fair market values in a scalable and transparent manner. They are incentive compatible
(i.e. induce truthful reporting) and robust to strategic manipulation. We propose that a prediction market is run in parallel with the pricing procedure recommended by the European Commission. This procedure need not necessarily take heed of the prediction markets view in all cases but it may offer guidance and a means of anomaly detection. An online prediction market would offer everybody an opportunity to ‘have their say’ in an open and transparent manner.

NAMA Purchases of Good Loans

On today’s RTE Radio News at One, David Murphy made a point about NAMA that I’ve heard many times recently but that I’m having great difficulty understanding.  Murphy explained that the government bonds issued to purchase loans for NAMA would imply a large interest bill and that the idea behind NAMA purchasing good property loans as well as bad was so that the good loans could help to pay the interest on the NAMA bonds.

Let me explain why I don’t understand this.

Continue reading “NAMA Purchases of Good Loans”

Another NAMA view

The Irish Independent reports the views of a senior IMF official on NAMA here.

Honohan on Banking Policy

Patrick Honohan offers his views on the various policy options here.