Reading the latest statement of Taoiseach Brian Cowen that NAMA was being established on the best international advice I cant help thinking that Orwellian doublespeak is creeping into Irish reality.
White is black , black is white , misinforamtion is truth and NO ALTERNATIVE is the solution.
Overpaying is called discount to "long term economic value".
"International advice" is selective quoting of what the IMF says.
But the IMF says that NAMA is part of a solution FOLLOWING nationalisation , and yet Cowen selectively quotes only the bit that says that NAMA is part of the solution , forgetting that its the second element of a plan that requires first nationalisation.
"RecentFund advice in this regard is: “Insolvent institutions (with insufficient cash flows) should be closed, merged, or temporarily placed in public ownership until private sector solutions can be developed ... there have been numerous instances (for example, Japan, Sweden and the United States), where a period of public ownership has been used to cleanse balance sheet sand pave the way to sales back to the private sector.”6 Having taken control of the bank, the shareholders would be fully diluted in the interest of protecting the taxpayer and thus preserving the political legitimacy of the initiative. The bad assets would still be carved out,but the thorny issue of purchase price would be less important, and the period of price discovery longer, since the transactions are between two government-owned entities. The management of the full range of bad assets would proceed under the NAMA structure"
As for the European commission , they say that the transfer of assets should be at prices close to the "real value" and that somehow is equated to this bogus notion of "long term economic value" that the government is trying to sell us.
PS Orwell actually used the terms doublethink and newspeak, but merging them you can get
doublespeak.
Saturday, August 22, 2009
Thursday, August 20, 2009
NAMA, FT and the IMF
Martina Devlin (of the "Ship of dreams", "The hollow heart" and "Temptation" fame, http://www.martinadevlin.com/) puts pen to paper again to support NAMA.
http://www.independent.ie/opinion/columnists/martina-devlin/solution-isnt-perfect-but-its-no-time-for-bickering-1864597.html
There is a lot of hot air in there, but I ll just concentrate on the idea that the FT (yes the Financial Times!!!) and the IMF have endorsed the NAMA plan.
I think you will agree with me that an endorsement of the NAMA by the FT is marginally more credible than turkeys voting for Christmas (hint: they don't!)
FT is a owned by a company that tries to sell papers to investors traders and the like, so you
would have hardly expected FT to say to their readership that they are toast if they have invested in the insolvent Irish banks (not good for business to piss off your readers)
As per the IMF endorsement, the Orwellian propaganda really excels itself here.
IMF explicitly says that NAMA only follows a nationalisation in order to avoid the pricing issue.
I wonder where did Ms Devlin got her ideas to write this piece!
http://www.independent.ie/opinion/columnists/martina-devlin/solution-isnt-perfect-but-its-no-time-for-bickering-1864597.html
There is a lot of hot air in there, but I ll just concentrate on the idea that the FT (yes the Financial Times!!!) and the IMF have endorsed the NAMA plan.
I think you will agree with me that an endorsement of the NAMA by the FT is marginally more credible than turkeys voting for Christmas (hint: they don't!)
FT is a owned by a company that tries to sell papers to investors traders and the like, so you
would have hardly expected FT to say to their readership that they are toast if they have invested in the insolvent Irish banks (not good for business to piss off your readers)
As per the IMF endorsement, the Orwellian propaganda really excels itself here.
IMF explicitly says that NAMA only follows a nationalisation in order to avoid the pricing issue.
I wonder where did Ms Devlin got her ideas to write this piece!
Monday, August 17, 2009
An alternative proposal to NAMA
I want to outline here a possible alternative to NAMA and try to answer a number of objections that supporters of NAMA put.
Temporary State ownership first with a NAMA type structure to receive and fund the bad loans until their eventual disposal over time.
Non-Guaranteed Subordinated debt holders participate in the absorption of some of the capital losses via debt exchanges (debt for debt ).Partial compensation of shareholders through the issuance of well out of the money warrants. Losses would therefore borne by the taxpayer, the equity holders and the bond holders together.
Basic premise.
Irish banks are severely undercapitalised due to bad loan losses and therefore need to be freed of these losses, be recapitalised and grow again.
The losses are real, but who shoulders these losses is very important. In the proposed legislation the losses are significantly paid by the taxpayer. In the alternative solution of nationalisation +NAMA the losses are shared with the shareholders and the bondholders.
This is a more fair solution that is a least as efficient as NAMA in addressing the problems.
Common Objections to Nationalisation.
Nationalisation simply means a change in the ownership of the bad loans:
Yes it does, and this is exactly the intention!
With NAMA the taxpayer will have the downside (the losses).
With nationalisation the taxpayer will be the owner of the banks and therefore when the banks return to profitability the taxpayer will have the upside as well.
This is a strictly superior solution to NAMA alone
Nationalisation does absolutely nothing about the bad loans
The losses on these loans are real, they are not going away either way and nobody is denying these facts.
However, after nationalisation the bad loans will be segregated into a NAMA type structure and the rest of the bank will be allowed to operate unencumbered by them. This is the so called Swedish model, and this is the model that the IMF is suggesting as well.
The sequence of events is critical: Nationalisation occurs before the setting up of NAMA, not after.
Nationalisation doesn't guarantee any free flow of credit.
Neither does NAMA, does it?
But nationalisation has the advantage that safeguards the interest of the taxpayer through ownership of the banks.
It therefore seems to me that Nationalisation (plus NAMA) is a strictly superior choice to NAMA alone.
With NAMA, valuations are not yet decided and will have to be decided in accordance with European Commission guidance.
A number of points here:
A) NAMA will pay more than the current market price: This is not speculation, this is in the Bill. (Paragraph 58).
This by definition introduces ambiguity and disagreement
I might consider that the current market value is unduly low, and you might think that the projections of the "long term economic value” are unrealistically high.
If we can have a mechanism that helps us avoid this disagreement, then we can avoid the risk of overpaying or underpaying.
The IMF solution (nationalisation first and then NAMA) explicitly addresses this issue:
"The bad assets would still be carved out, but the thorny issue of purchase price would be less important, and the period of price discovery longer, since the transactions are between two government-owned entities."
To me this is unambiguously superior solution, and a much less contentious one.
b) "In accordance with European Commission guidance": This might provide cover on the legality of the proposed legislation but does not address the issue of the efficiency of the solution nor the issue of the potential superiority of an alternative solution.
Moreover, the European commission talks about the real economic value of the bad assets.
But does this mean the so called “long term economic value” or the current market price?
It seems that NAMA supporters all of a sudden have converted to the “markets are irrational” mantra, conveniently so...
Nationalised banks are prone to political interference
This is a very funny line of attack by the opponents of nationalisation that always point out that the main weakness of a nationalized bank is political interference and the politicization of the credit provision.
The question that needs to be asked of the government and the supporters of NAMA is the following: "Is the political class in Ireland able to set up a nationalised bank at an arms-length relationship to the government?”
If the answer is no, isn’t this an admission that the government and the whole Irish political class is corrupt? Isn’t there a question of its own legitimacy then?
If a Fianna Fail TD claims that nationalised banks are political and corrupt, then isn’t this an own goal of huge proportions?
The government has given a guarantee to all bank liabilities, so we can’t ask the bondholders to share the losses.
This is partially true and misleading for a very precise reason.
The government has given a temporary guarantee that expires on 29th September 2010.
Under the alternative solution (Nationalisation + NAMA) all bank liabilities maturing before that day will be repaid. Under no conditions will the Irish State default on any of its obligations.
BUT
There are over 30 billion of bond issued by Irish banks maturing after the expiration of the guarantee.(Though some of them are covered bonds that cannot be involved in a debt restructuring).
Why shouldn't the holders of these bonds asked to share the burden?
The international capital markets will react badly to a nationalisation and will raise the cost of funding for the Irish government.
Not true!
The cost of funds for the Irish government rose dramatically when the state guarantee was given in September. When international market saw that the Irish government was taking over a liability of tens of billions of euro they become jittery and stopped lending to Ireland at low rates.
We have already seen evidence that international bondholders have come to terms with the prospect of realizing partial losses on their Irish bank bond holdings. We have seen a good take up of the discounted debt buybacks offered by the Irish banks, which effectively crystallised losses for these investors. The fear that international bond investors will not return to the Irish bond market is grossly overstated by the government. The attempted solutions to this crisis vary between countries and are still evolving – the idea that bondholders should share some of the pain is not a new discussion.
If now the government reverses course and says that not all of these losses will be paid by the state and that some will be paid by the bondholders of the Irish banks, then the credit strength of the Irish government will improve and our cost of borrowing should actually fall.
It’s time to stop the scaremongering by people that have a vested interest in having bondholders get away for free and have taxpayers pay all the losses.
I have been in the international capital markets for over 15 years and I strongly believe that the Irish state will be much better off if it asks bondholders to contribute to the losses.
A word of history to and this long post
When AIB inherited huge liabilities in the Eighties after it bought the Insurance Corporation of Ireland (ICI), the State took over ICI and bailed out AIB and ensured that their depositors' money was not put at risk. However, to see that this was made possible an insurance levy was applied to every insurance premium taken out in the country. The levy was just 2%, but it still exists today. We are still paying for the estimated IR£180 Million + bailout after 27 years.
AT the time, our then Taoiseach, Charlie Haughey had this to say:
"It would be an absurdity, an unacceptable injustice and totally ridiculous if the general public, the great majority of whom have never benefited one iota from banking profits and many of whom have had very unhappy experiences at the hands of bankers, were asked to step in and take up an additional burden because of someone else's mistakes, mistakes made in this very specially privileged sector of our economy."
NAMA IS NOT A ONE WAY STREET AND THERE IS A BETTER SOLUTION.
Temporary State ownership first with a NAMA type structure to receive and fund the bad loans until their eventual disposal over time.
Non-Guaranteed Subordinated debt holders participate in the absorption of some of the capital losses via debt exchanges (debt for debt ).Partial compensation of shareholders through the issuance of well out of the money warrants. Losses would therefore borne by the taxpayer, the equity holders and the bond holders together.
Basic premise.
Irish banks are severely undercapitalised due to bad loan losses and therefore need to be freed of these losses, be recapitalised and grow again.
The losses are real, but who shoulders these losses is very important. In the proposed legislation the losses are significantly paid by the taxpayer. In the alternative solution of nationalisation +NAMA the losses are shared with the shareholders and the bondholders.
This is a more fair solution that is a least as efficient as NAMA in addressing the problems.
Common Objections to Nationalisation.
Nationalisation simply means a change in the ownership of the bad loans:
Yes it does, and this is exactly the intention!
With NAMA the taxpayer will have the downside (the losses).
With nationalisation the taxpayer will be the owner of the banks and therefore when the banks return to profitability the taxpayer will have the upside as well.
This is a strictly superior solution to NAMA alone
Nationalisation does absolutely nothing about the bad loans
The losses on these loans are real, they are not going away either way and nobody is denying these facts.
However, after nationalisation the bad loans will be segregated into a NAMA type structure and the rest of the bank will be allowed to operate unencumbered by them. This is the so called Swedish model, and this is the model that the IMF is suggesting as well.
The sequence of events is critical: Nationalisation occurs before the setting up of NAMA, not after.
Nationalisation doesn't guarantee any free flow of credit.
Neither does NAMA, does it?
But nationalisation has the advantage that safeguards the interest of the taxpayer through ownership of the banks.
It therefore seems to me that Nationalisation (plus NAMA) is a strictly superior choice to NAMA alone.
With NAMA, valuations are not yet decided and will have to be decided in accordance with European Commission guidance.
A number of points here:
A) NAMA will pay more than the current market price: This is not speculation, this is in the Bill. (Paragraph 58).
This by definition introduces ambiguity and disagreement
I might consider that the current market value is unduly low, and you might think that the projections of the "long term economic value” are unrealistically high.
If we can have a mechanism that helps us avoid this disagreement, then we can avoid the risk of overpaying or underpaying.
The IMF solution (nationalisation first and then NAMA) explicitly addresses this issue:
"The bad assets would still be carved out, but the thorny issue of purchase price would be less important, and the period of price discovery longer, since the transactions are between two government-owned entities."
To me this is unambiguously superior solution, and a much less contentious one.
b) "In accordance with European Commission guidance": This might provide cover on the legality of the proposed legislation but does not address the issue of the efficiency of the solution nor the issue of the potential superiority of an alternative solution.
Moreover, the European commission talks about the real economic value of the bad assets.
But does this mean the so called “long term economic value” or the current market price?
It seems that NAMA supporters all of a sudden have converted to the “markets are irrational” mantra, conveniently so...
Nationalised banks are prone to political interference
This is a very funny line of attack by the opponents of nationalisation that always point out that the main weakness of a nationalized bank is political interference and the politicization of the credit provision.
The question that needs to be asked of the government and the supporters of NAMA is the following: "Is the political class in Ireland able to set up a nationalised bank at an arms-length relationship to the government?”
If the answer is no, isn’t this an admission that the government and the whole Irish political class is corrupt? Isn’t there a question of its own legitimacy then?
If a Fianna Fail TD claims that nationalised banks are political and corrupt, then isn’t this an own goal of huge proportions?
The government has given a guarantee to all bank liabilities, so we can’t ask the bondholders to share the losses.
This is partially true and misleading for a very precise reason.
The government has given a temporary guarantee that expires on 29th September 2010.
Under the alternative solution (Nationalisation + NAMA) all bank liabilities maturing before that day will be repaid. Under no conditions will the Irish State default on any of its obligations.
BUT
There are over 30 billion of bond issued by Irish banks maturing after the expiration of the guarantee.(Though some of them are covered bonds that cannot be involved in a debt restructuring).
Why shouldn't the holders of these bonds asked to share the burden?
The international capital markets will react badly to a nationalisation and will raise the cost of funding for the Irish government.
Not true!
The cost of funds for the Irish government rose dramatically when the state guarantee was given in September. When international market saw that the Irish government was taking over a liability of tens of billions of euro they become jittery and stopped lending to Ireland at low rates.
We have already seen evidence that international bondholders have come to terms with the prospect of realizing partial losses on their Irish bank bond holdings. We have seen a good take up of the discounted debt buybacks offered by the Irish banks, which effectively crystallised losses for these investors. The fear that international bond investors will not return to the Irish bond market is grossly overstated by the government. The attempted solutions to this crisis vary between countries and are still evolving – the idea that bondholders should share some of the pain is not a new discussion.
If now the government reverses course and says that not all of these losses will be paid by the state and that some will be paid by the bondholders of the Irish banks, then the credit strength of the Irish government will improve and our cost of borrowing should actually fall.
It’s time to stop the scaremongering by people that have a vested interest in having bondholders get away for free and have taxpayers pay all the losses.
I have been in the international capital markets for over 15 years and I strongly believe that the Irish state will be much better off if it asks bondholders to contribute to the losses.
A word of history to and this long post
When AIB inherited huge liabilities in the Eighties after it bought the Insurance Corporation of Ireland (ICI), the State took over ICI and bailed out AIB and ensured that their depositors' money was not put at risk. However, to see that this was made possible an insurance levy was applied to every insurance premium taken out in the country. The levy was just 2%, but it still exists today. We are still paying for the estimated IR£180 Million + bailout after 27 years.
AT the time, our then Taoiseach, Charlie Haughey had this to say:
"It would be an absurdity, an unacceptable injustice and totally ridiculous if the general public, the great majority of whom have never benefited one iota from banking profits and many of whom have had very unhappy experiences at the hands of bankers, were asked to step in and take up an additional burden because of someone else's mistakes, mistakes made in this very specially privileged sector of our economy."
NAMA IS NOT A ONE WAY STREET AND THERE IS A BETTER SOLUTION.
Write to your TD campaign gaining speed
Good news from the Tribune.
http://www.tribune.ie/news/article/2009/aug/16/tds-and-senators-bombarded-by-emails-campaign-oppo/
It seems that TDs are finally noticing that people dont want NAMA to happen.
But what I find infuriating is that some FF and government members still call this an anonymous campaign!
There are 3900 people with their names and pictures on Facebook
http://www.facebook.com/home.php#/group.php?gid=233861925262&ref=mf
It shows how detached and insular out TDs are: they are shocked that the Irish citizen calls them to order , and they want to present that as some sort of shady campaign against what really?
Paranoia and siege mentality of the guilty?
http://www.tribune.ie/news/article/2009/aug/16/tds-and-senators-bombarded-by-emails-campaign-oppo/
It seems that TDs are finally noticing that people dont want NAMA to happen.
But what I find infuriating is that some FF and government members still call this an anonymous campaign!
There are 3900 people with their names and pictures on Facebook
http://www.facebook.com/home.php#/group.php?gid=233861925262&ref=mf
It shows how detached and insular out TDs are: they are shocked that the Irish citizen calls them to order , and they want to present that as some sort of shady campaign against what really?
Paranoia and siege mentality of the guilty?
Sunday, August 16, 2009
What the Canadian Bank interest in AIB tells us about NAMA
On Thursday it was announced that CIBC has an interest in buying a stake AIB but only after the NAMA clear out has gone through. The media heralded the CIBC interest as proof that NAMA is the right course of action. This conclusion could not be further from the truth. What does CIBCs interest in AIB tell us about NAMA? It tells us what we should already know at this stage, the taxpayer is going to massively overpay for severely impaired assets, and hence incur instant losses and be on the hook thereafter. Whilst bank stakeholders old and potential new ones are left with a clean slate and only upside exposure.
Let us be clear on this, CIBC does not want to buy a stake in AIB today at just over 2 euro. They want to buy it after the taxpayers pay a ludicrous price for the banks worst performing assets. AIB in an integral part of Ireland's banking system and it will be again be profitable in the future. AIB, stripped of its worst assets for more than they are worth, makes AIB at 2 euro be a spectacular proposition for any investor. Of course, CIBC are interested! CIBC have practically zero downside in taking a stake in AIB after the asset transfer, practically zero. It is both shocking and laughable that the media interpret this as a massive positive shift in sentiment of foreign investors towards Ireland. We as taxpayers are being asked to pay a massive premium so private investors can have a free option on the viable and profitable parts of our banking sector.
There is no denying that action needs to be taken on our banks and there is no denying that this will incur a cost to the taxpayer. However shouldn’t it be the taxpayer as the entity that is lumbered with all the risk, be the ones who get opportunity to recoup some of their losses through ownership of the banks? Why is temporary nationalization of our banks NOT being proposed by our government? Surely this should have been the natural conculsion of our government if they want to minimize the absolute cost to the taxpayer. Again and again our government shows a clear preference toward protecting the interest of a small few bank stakeholders over the current and future health of our nation.
Let us be clear on this, CIBC does not want to buy a stake in AIB today at just over 2 euro. They want to buy it after the taxpayers pay a ludicrous price for the banks worst performing assets. AIB in an integral part of Ireland's banking system and it will be again be profitable in the future. AIB, stripped of its worst assets for more than they are worth, makes AIB at 2 euro be a spectacular proposition for any investor. Of course, CIBC are interested! CIBC have practically zero downside in taking a stake in AIB after the asset transfer, practically zero. It is both shocking and laughable that the media interpret this as a massive positive shift in sentiment of foreign investors towards Ireland. We as taxpayers are being asked to pay a massive premium so private investors can have a free option on the viable and profitable parts of our banking sector.
There is no denying that action needs to be taken on our banks and there is no denying that this will incur a cost to the taxpayer. However shouldn’t it be the taxpayer as the entity that is lumbered with all the risk, be the ones who get opportunity to recoup some of their losses through ownership of the banks? Why is temporary nationalization of our banks NOT being proposed by our government? Surely this should have been the natural conculsion of our government if they want to minimize the absolute cost to the taxpayer. Again and again our government shows a clear preference toward protecting the interest of a small few bank stakeholders over the current and future health of our nation.
Thursday, August 13, 2009
Huge Positive Development againt NAMA
A special convention has been requested by 4 constituencies within the Green party to re examine the party’s stance on NAMA.
A party source was quoted today saying the aim was to alter or stop NAMA in its tracks and put forward a motion to demand a no vote from green TDS.
IF the vote goes ahead a two thirds majority will be required for it to succeed and Green TDs will be ordered to vote No To NAMA.
More on this later
A party source was quoted today saying the aim was to alter or stop NAMA in its tracks and put forward a motion to demand a no vote from green TDS.
IF the vote goes ahead a two thirds majority will be required for it to succeed and Green TDs will be ordered to vote No To NAMA.
Wednesday, August 12, 2009
Liam Carroll and NAMA
The Supreme court yesterday rejected the attempts of a group of companies controlled by Liam Carroll to get court protection from their creditors, and now there is a risk that a liquidation will follow.
http://courts.ie/Judgments.nsf/bce24a8184816f1580256ef30048ca50/c736d2e7b220d4e58025760f005afc45?OpenDocument
Nobody seems to know what will happen next and how the different players will act ( the government, the banks , ACC Bank).
However one thing is clear: the propaganda has already started.
A spokesperson for the Minister of Finance said that the decision will have no effect on NAMA, without giving any more explanations.
RTE in their reporting yesterday evening are already speculating on a number of things.
One is the possibility that the main Carroll creditors ( essentially AIB and BOI) will pay off ACC and then get on with the plan to stuff NAMA with another 2.8 billion of bad loans( this is the total amount that the Carroll group has borrowed).
It is quite amazing to imagine that AIB which is owed over 500 million by Carroll will pay off another bank first , just with the intention of stuffing NAMA then. Indeed if this were to happen it would be a clear proof that the banks will roll over these losses to NAMA.
Even more extraordinary was the idea that the people responsible for the liquidation of the Carroll group "when appointed [..]might decide that it might be better off to wait for NAMA, that they might get a better deal"!!
This is a clear admission that NAMA will pay OVER THE ODDS for worthless assets!
And then the inevitable scaremongering followed, that if Liam Carroll's property portfolio is liquidated there will be sever repercussions for the property market, again implying that NAMA is the only way to avoid the pain.
This is an utterly false reporting , NAMA will just take the losses from the banks and give them to all of us, but the losses are real and no amount of accounting trickery can avoid reality.
This type of reporting and scaremongering is what keeps people from reacting to NAMA, in the hope that someone else will pay for the mess. The reality is that we will all pay for the mess , unless if we demand that the people responsible pay and these are the banks , the bank stakeholders and the developers.
http://courts.ie/Judgments.nsf/bce24a8184816f1580256ef30048ca50/c736d2e7b220d4e58025760f005afc45?OpenDocument
Nobody seems to know what will happen next and how the different players will act ( the government, the banks , ACC Bank).
However one thing is clear: the propaganda has already started.
A spokesperson for the Minister of Finance said that the decision will have no effect on NAMA, without giving any more explanations.
RTE in their reporting yesterday evening are already speculating on a number of things.
One is the possibility that the main Carroll creditors ( essentially AIB and BOI) will pay off ACC and then get on with the plan to stuff NAMA with another 2.8 billion of bad loans( this is the total amount that the Carroll group has borrowed).
It is quite amazing to imagine that AIB which is owed over 500 million by Carroll will pay off another bank first , just with the intention of stuffing NAMA then. Indeed if this were to happen it would be a clear proof that the banks will roll over these losses to NAMA.
Even more extraordinary was the idea that the people responsible for the liquidation of the Carroll group "when appointed [..]might decide that it might be better off to wait for NAMA, that they might get a better deal"!!
This is a clear admission that NAMA will pay OVER THE ODDS for worthless assets!
And then the inevitable scaremongering followed, that if Liam Carroll's property portfolio is liquidated there will be sever repercussions for the property market, again implying that NAMA is the only way to avoid the pain.
This is an utterly false reporting , NAMA will just take the losses from the banks and give them to all of us, but the losses are real and no amount of accounting trickery can avoid reality.
This type of reporting and scaremongering is what keeps people from reacting to NAMA, in the hope that someone else will pay for the mess. The reality is that we will all pay for the mess , unless if we demand that the people responsible pay and these are the banks , the bank stakeholders and the developers.
Tuesday, August 11, 2009
Email Your TD Campaign
Please take part in the email letter campaign which aims to put a stop to the current proposed NAMA legislation going through on the 19th September. We urge you to take part in this campaign by simply sending the attached draft email to your TDs.
The NAMA legislation proposes to allow the government to purchase 90 billion of bad loans from the Irish banks at prices above market prices. They are also proposing that NAMA does not fall under the freedom of information act so this colossal transfer of the taxpayer’s money to the banks will happen in a completely secretive and unaccountable way.
If this bill goes through it’s a done deal that the taxpayer will be made unnecessarily overpay for bank assets by a huge margin. The government is clear on this; they are putting the bank stakeholders ahead of the Irish taxpayer by making such an absurd proposal. This is the appropriation of both current and future taxpayer’s money for the benefit of a small number of bank stakeholders that willingly chose to take stakes in our banks.
Overpaying for these assets will have disastrous consequences on services in Ireland for decades to come; because of this, it is completely unacceptable for our TDs to merely vote along party lines on NAMA. The current and future health of our nation should be the main priority of our TDs and not party loyalty. This letter campaign is to demand accountability from our representatives in the Oireachtas. We have attached a draft letter to this effect on the blog that you can use and with all the email addresses of our TDs. Could you please CC NoToNama@gmail.com so we can keep a log of emails sent and thus ensure that TDs respond to our protests.
Already services have been slashed nationwide and PAYE taxes hiked in order to deal with the current economic reality. We are all familiar with the health care services that continue to be cut nationwide the re-introduction of third level fees was quick to be put forward as a cost saving initiative. An Bord Snip Nua has just proposed another 3 billion in cutbacks, at the same time the government is proposing to pay 15 billion over the odds for bank assets. The government has unambiguously shown a clear preference to slash investment in the future productive capacity of Ireland in order to bail out a select few bank stakeholders and builders.
We as a nation need to demand accountability and a fairer solution for the taxpayer to the banks current woes. All it will take is 3 minutes of your time to do this by sending an email to your TD. Please copy this entry and forward it to as many people as possible.
The NAMA legislation proposes to allow the government to purchase 90 billion of bad loans from the Irish banks at prices above market prices. They are also proposing that NAMA does not fall under the freedom of information act so this colossal transfer of the taxpayer’s money to the banks will happen in a completely secretive and unaccountable way.
If this bill goes through it’s a done deal that the taxpayer will be made unnecessarily overpay for bank assets by a huge margin. The government is clear on this; they are putting the bank stakeholders ahead of the Irish taxpayer by making such an absurd proposal. This is the appropriation of both current and future taxpayer’s money for the benefit of a small number of bank stakeholders that willingly chose to take stakes in our banks.
Overpaying for these assets will have disastrous consequences on services in Ireland for decades to come; because of this, it is completely unacceptable for our TDs to merely vote along party lines on NAMA. The current and future health of our nation should be the main priority of our TDs and not party loyalty. This letter campaign is to demand accountability from our representatives in the Oireachtas. We have attached a draft letter to this effect on the blog that you can use and with all the email addresses of our TDs. Could you please CC NoToNama@gmail.com so we can keep a log of emails sent and thus ensure that TDs respond to our protests.
Already services have been slashed nationwide and PAYE taxes hiked in order to deal with the current economic reality. We are all familiar with the health care services that continue to be cut nationwide the re-introduction of third level fees was quick to be put forward as a cost saving initiative. An Bord Snip Nua has just proposed another 3 billion in cutbacks, at the same time the government is proposing to pay 15 billion over the odds for bank assets. The government has unambiguously shown a clear preference to slash investment in the future productive capacity of Ireland in order to bail out a select few bank stakeholders and builders.
We as a nation need to demand accountability and a fairer solution for the taxpayer to the banks current woes. All it will take is 3 minutes of your time to do this by sending an email to your TD. Please copy this entry and forward it to as many people as possible.
Monday, August 10, 2009
Dail votes do matter, NAMA can be defeated!
NAMA is not a done deal , even if the pessimists try to present it like that!
The government does not have a majority in the Dail after the recent move by the two Sligo TDs to resigned the Fianna Fail whip.
Here are their contact details
Jimmy Devins , FF, resigned whip, Sligo North Leitrim jimmy.devins@oireachtas.ie
Eamon Scanlon,FF, resigned whip,Sligo North Leitrim eamon.scanlon@oireachtas.ie
They just made their move because of reduction of services in Sligo , so they should be open to the idea that IF NAMA goes through then even more social services will inevitably be cut , as money flows into the banks and not to needed services.
There is also a number of ex Fianna Fail TDs that are now independent , that could be pushed into a NO vote on NAMA.
Joe Behan , Independent, ex FF, Wicklow joe.behan@oireachtas.ie
Jim McDaid, independent, ex FF Donegal North East jim.mcdaid@oireachtas.ie
Jackie Healy-Rae, independent , ex FF Kerry South.Jackie.Healy.Rae@oireachtas.ie
Michael Lowry , Independent, ex FG Tipperary North, michael.lowry@oireachtas.ie
The vote in the Dail can be very close, and all pressure should be put on the TDs that can swing to a NO vote.
Sunday, August 9, 2009
Write a letter to all your TDs
Send a letter via email to all your TDs.
E-mail addresses of TDs are usually of the form: firstname.surname@oireachtas.ie
Here are the links of contact details of the majority of our TDs by party:
http://www.fiannafail.ie/people/listing/tds/
http://www.labour.ie/peopleandplaces/
http://www.finegael.org/people/d/
http://www.greenparty.ie/ga/people
Here is a is a full list TD names and email addresses and some suggested questions for the letter courtesy of Brian Lucey
http://brianmlucey.googlepages.com/namapetitionandoireachtasemails
Below we propose a draft letter, but the important thing is to write and express the opposition to NAMA. It is imperitive that you CC NoToNama@gmail.com on the email so we can keep a log of the letters sent to the TDs and thus insure that the TDs respond to our protests.
Draft Letter to Send to All our local TDs.
Dear XXX
As my representative, I am writing you to express my opposition to the proposed NAMA legislation and I urge you to vote against it. I also ask you to demand that the Minister for Finance makes public the detailed regulations of the proposed valuation methodology before the legislation is debated in the Dáil .
NAMA, as it is currently proposed, will overpay for bad loans that Irish banks have made to property developers around the country.
The proposed legislation says that NAMA will pay no more than the “long tern economic value” of these assets and clearly states that this value is greater than the current market value of these assets and loans. (Section 58.4.ii of the Draft NAMA Bill 2009: “a greater [than the current market] value [...] that NAMA considers appropriate in the circumstances”).
A recent case in the high court demonstrated how far current market prices have fallen below the price levels prevailing when these bad loans were made.
The judge in the case stated that projections of a quick recovery to these price levels were bordering the fanciful.
However, by the government’s own assumptions and indications, NAMA will overpay maybe as much as 15 billion euro or even more.
I think that this is an unacceptable squandering of taxpayers money that puts the long term fiscal position of the country in grave danger.
In this current period essential state services are being cut (e.g. cancer treatment service in Sligo, problems at the Crumlin hospital) putting lives in risk.
Charges for universities are being considered, hampering the access of young people to university and reducing the productive potential of the Irish economy.
In the same time the proposed NAMA legislation will transfer billions of resources to banks in a completely unaccountable and secretive way.
I urge you to consider alternative courses of action.
NAMA in its final form should be made to pay the lowest possible price for the assets, safeguarding the interests of the taxpayer first. Additionally, NAMA will give the banks a warrant, allowing the banks and its shareholders to participate in the potential upside income from the management of the bad loans.
If these low current prices paid by the NAMA for these loans cause bank capital to fall below the required levels by the regulator, the governments will inject capital in the banks in the form of common and preferred shares. This approach has been already used in the USA, with great success. Banks, having the government as a shareholder, have been able to quickly raise additional funds in the capital markets. Many of them have already paid back the government with considerable profits.
I therefore ask that you vote against the proposed legislation, and ask you to consider a more fair approach that safeguards the interest of the taxpayer and the Irish economy first before the interests of the banks. Additionally as my representative at the Dáil , I would like to know how you will vote on the current proposal and what are your reasons and justification for your vote.
Sincerely,
E-mail addresses of TDs are usually of the form: firstname.surname@oireachtas.ie
Here are the links of contact details of the majority of our TDs by party:
http://www.fiannafail.ie/people/listing/tds/
http://www.labour.ie/peopleandplaces/
http://www.finegael.org/people/d/
http://www.greenparty.ie/ga/people
Here is a is a full list TD names and email addresses and some suggested questions for the letter courtesy of Brian Lucey
http://brianmlucey.googlepages.com/namapetitionandoireachtasemails
Below we propose a draft letter, but the important thing is to write and express the opposition to NAMA. It is imperitive that you CC NoToNama@gmail.com on the email so we can keep a log of the letters sent to the TDs and thus insure that the TDs respond to our protests.
Draft Letter to Send to All our local TDs.
Dear XXX
As my representative, I am writing you to express my opposition to the proposed NAMA legislation and I urge you to vote against it. I also ask you to demand that the Minister for Finance makes public the detailed regulations of the proposed valuation methodology before the legislation is debated in the Dáil .
NAMA, as it is currently proposed, will overpay for bad loans that Irish banks have made to property developers around the country.
The proposed legislation says that NAMA will pay no more than the “long tern economic value” of these assets and clearly states that this value is greater than the current market value of these assets and loans. (Section 58.4.ii of the Draft NAMA Bill 2009: “a greater [than the current market] value [...] that NAMA considers appropriate in the circumstances”).
A recent case in the high court demonstrated how far current market prices have fallen below the price levels prevailing when these bad loans were made.
The judge in the case stated that projections of a quick recovery to these price levels were bordering the fanciful.
However, by the government’s own assumptions and indications, NAMA will overpay maybe as much as 15 billion euro or even more.
I think that this is an unacceptable squandering of taxpayers money that puts the long term fiscal position of the country in grave danger.
In this current period essential state services are being cut (e.g. cancer treatment service in Sligo, problems at the Crumlin hospital) putting lives in risk.
Charges for universities are being considered, hampering the access of young people to university and reducing the productive potential of the Irish economy.
In the same time the proposed NAMA legislation will transfer billions of resources to banks in a completely unaccountable and secretive way.
I urge you to consider alternative courses of action.
NAMA in its final form should be made to pay the lowest possible price for the assets, safeguarding the interests of the taxpayer first. Additionally, NAMA will give the banks a warrant, allowing the banks and its shareholders to participate in the potential upside income from the management of the bad loans.
If these low current prices paid by the NAMA for these loans cause bank capital to fall below the required levels by the regulator, the governments will inject capital in the banks in the form of common and preferred shares. This approach has been already used in the USA, with great success. Banks, having the government as a shareholder, have been able to quickly raise additional funds in the capital markets. Many of them have already paid back the government with considerable profits.
I therefore ask that you vote against the proposed legislation, and ask you to consider a more fair approach that safeguards the interest of the taxpayer and the Irish economy first before the interests of the banks. Additionally as my representative at the Dáil , I would like to know how you will vote on the current proposal and what are your reasons and justification for your vote.
Sincerely,
NAMA FAQ
The government had the audacity to put a FAQ on the NAMA site.
Here is the link , its a quite an extraordinary document.
http://nama.ie/Publications/2009/NAMAFAQs.pdf
A few of the "diamonds" you can find in there:
(Orignal text in black, comments in blue and red)
2. How can you justify this further bail-out of the banks?
The price NAMA will pay for any loan asset will be determined in accordance with the valuation methodology as set out in the draft Bill.
NOT TRUE: the details of the valuation methodology will be published AFTER the voting of the bill.
It is true that the banks in most instances will not be paid current market value but will be paid a price which is in accordance with the long term economic value of each asset in line with EU guidance. Misleading: The price paid will be HIGHER than the market price!
3. Why is the Government opposed to the nationalisation of financial institutions?
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.
Dogmatic: The government is ideologically opposed to nationalisation , but offers no real arguments , just dogmatic statements.Nationalisation might not be the best solution , but the government makes no clear case about the issue.
7. How will the assets be valued?
Valuations by NAMA will be consistent with EU Commission guidelines and will be based on the current market value of the underlying collateral, adjusted to reflect a longer term economic value which the underlying asset could reasonably be expected to attain.
Misleading again : The price paid will be HIGHER than the market price, why don't they say that clearly?
Detailed regulations on how the long term economic value is to be calculated are been drawn up by the Minister and will be published in September. This is AFTER the bill has been voted into law! This is a blank cheque!
8.One of the key issues is the write-down value to be applied to the loans. What is the logic behind the NAMA valuation and how will it differ from the current market value?
Misleading use of language: the talk about a write-down , when the reality is that they are overpaying for the bad loans.This is propaganda!Nobody in their right minds will think that the bubble prices of years past have anything to do with the current situation and with the future value of land in Ireland!
The principles of the valuation methodology are set out in the draft legislation and the Minister will be making detailed regulations based on these principles when the legislation is passed.
WHY AFTER THE VOTE?
It is important to note that it is at NAMA’s absolute discretion to value the loans on the long term economic value. It can pay the current market value for some loans – it will pay whichever it determines as the appropriate transfer value for that loan depending on the particular circumstance.
So not only they will tell how they will value the assets AFTER the bill is voted , we will them not be able even to question the values they come up with! Is Ireland a BANANA REPUBLIC?
In the USA when the government tried to pass a similar plan with the same provision of no accountability and no control there was a riot at the Congress, why not in Ireland!
9. Will details of the write-downs to be applied to the loans being transferred be made available?
Each loan will be valued separately and the actual amount of the haircut or discount applied will depend on the quality of the underlying property and other collateral. This means there will not be a uniform haircut across all the loans of the institutions but the effective haircut will become apparent once NAMA begins its valuation process. So the answer is yes or no?
19. What will be the interest rate paid on the NAMA bonds?
NAMA will pay a floating rate of interest on any securities it pays to buy the loans. It is expected that the stream of income from the loan assets transferred to NAMA will be sufficient to meet the interest payments on the NAMA bonds as based on information provided by the financial institutions, the cashflow generating loans pay an average margin of 2% above the floating rate of interest. But most of the loans that NAMA will be buying they don't even pay interst any more! So NAMA will not only overpay the banks to buy these loans, but then will have to pay them interest on their bonds while receiving no income from the DEFAULTED developers!
The whole FAQ on the NAMA site is full of misinformation and misleading wording.
This is wrong that on such a critical issue the Goverment tries to lie to such an extend.
Here is the link , its a quite an extraordinary document.
http://nama.ie/Publications/2009/NAMAFAQs.pdf
A few of the "diamonds" you can find in there:
(Orignal text in black, comments in blue and red)
2. How can you justify this further bail-out of the banks?
The price NAMA will pay for any loan asset will be determined in accordance with the valuation methodology as set out in the draft Bill.
NOT TRUE: the details of the valuation methodology will be published AFTER the voting of the bill.
It is true that the banks in most instances will not be paid current market value but will be paid a price which is in accordance with the long term economic value of each asset in line with EU guidance. Misleading: The price paid will be HIGHER than the market price!
3. Why is the Government opposed to the nationalisation of financial institutions?
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.
Dogmatic: The government is ideologically opposed to nationalisation , but offers no real arguments , just dogmatic statements.Nationalisation might not be the best solution , but the government makes no clear case about the issue.
7. How will the assets be valued?
Valuations by NAMA will be consistent with EU Commission guidelines and will be based on the current market value of the underlying collateral, adjusted to reflect a longer term economic value which the underlying asset could reasonably be expected to attain.
Misleading again : The price paid will be HIGHER than the market price, why don't they say that clearly?
Detailed regulations on how the long term economic value is to be calculated are been drawn up by the Minister and will be published in September. This is AFTER the bill has been voted into law! This is a blank cheque!
8.One of the key issues is the write-down value to be applied to the loans. What is the logic behind the NAMA valuation and how will it differ from the current market value?
Misleading use of language: the talk about a write-down , when the reality is that they are overpaying for the bad loans.This is propaganda!Nobody in their right minds will think that the bubble prices of years past have anything to do with the current situation and with the future value of land in Ireland!
The principles of the valuation methodology are set out in the draft legislation and the Minister will be making detailed regulations based on these principles when the legislation is passed.
WHY AFTER THE VOTE?
It is important to note that it is at NAMA’s absolute discretion to value the loans on the long term economic value. It can pay the current market value for some loans – it will pay whichever it determines as the appropriate transfer value for that loan depending on the particular circumstance.
So not only they will tell how they will value the assets AFTER the bill is voted , we will them not be able even to question the values they come up with! Is Ireland a BANANA REPUBLIC?
In the USA when the government tried to pass a similar plan with the same provision of no accountability and no control there was a riot at the Congress, why not in Ireland!
9. Will details of the write-downs to be applied to the loans being transferred be made available?
Each loan will be valued separately and the actual amount of the haircut or discount applied will depend on the quality of the underlying property and other collateral. This means there will not be a uniform haircut across all the loans of the institutions but the effective haircut will become apparent once NAMA begins its valuation process. So the answer is yes or no?
19. What will be the interest rate paid on the NAMA bonds?
NAMA will pay a floating rate of interest on any securities it pays to buy the loans. It is expected that the stream of income from the loan assets transferred to NAMA will be sufficient to meet the interest payments on the NAMA bonds as based on information provided by the financial institutions, the cashflow generating loans pay an average margin of 2% above the floating rate of interest. But most of the loans that NAMA will be buying they don't even pay interst any more! So NAMA will not only overpay the banks to buy these loans, but then will have to pay them interest on their bonds while receiving no income from the DEFAULTED developers!
The whole FAQ on the NAMA site is full of misinformation and misleading wording.
This is wrong that on such a critical issue the Goverment tries to lie to such an extend.
Proposed NAMA bill
Here is the link for the proposed NAMA bill.
http://nama.ie/Publications/2009/DraftNamaBill2009.pdf
Its 136 pages long but the critical point is the valuation methodology for the bad assets at section
58 at the bottom of page 49.
The whole essence of NAMA is in here , the proposed overpayment by NAMA for bad real estate assets and loans.
The Minister for Finance has refused to publish the exact details of how the "long term economic value" will be calculated till after the vote at the Dail.
This is essentially a blank cheque that the Irish taxpayer is writing to NAMA
There is absolutely no control of how much they will pay for these bad assets.
This is total madness.
http://nama.ie/Publications/2009/DraftNamaBill2009.pdf
Its 136 pages long but the critical point is the valuation methodology for the bad assets at section
58 at the bottom of page 49.
The whole essence of NAMA is in here , the proposed overpayment by NAMA for bad real estate assets and loans.
The Minister for Finance has refused to publish the exact details of how the "long term economic value" will be calculated till after the vote at the Dail.
This is essentially a blank cheque that the Irish taxpayer is writing to NAMA
There is absolutely no control of how much they will pay for these bad assets.
This is total madness.
Say No to NAMA Intro
This is a site to organise people in Ireland against the proposed National Asset Management Agency (NAMA).
We believe that NAMA is a dangerous development that will cost the Irish taxpayer.
We want the NAMA legislation voted down in its current form, and a fair alternative to the financial crisis be implemented.
The interest of the group is to be positive about the situation and try to be a part of a solution.
We want to highlight the risks of NAMA as in its current proposed form, but also suggest alternatives that spread the risks more fairly.
We want to get people to write to their TDs and ask them to reject NAMA in its current form.Most importantly we demand the the Minister for Finance makes public the detailed regulations of the pricing methodology before the debate at the Dail.
We want the process of purchasing bad assets from the banks to reduce the risk to the Irish taxpayer to the lowest possible level, while in the same time helping the banking system to recover.
We want the proposed agency to pay the lowest possible price for the bad loans.
We want the pricing process for the purchase of the bad loans to be public and transparent.
We explicitly reject the proposal to "overpay" for the bad loans, and we view such action as a transfer of the taxes of the Irish people to the benefit of bank stakeholders ( bond holders and equity holders) and property developers.
We explicit reject the assertion by the government and the promoters of the NAMA solution that one way or another the Irish taxpayer will pay the cost.
There is still enough capital in the banks( equity , retained earnings , and bond holders capital) that can assume some of the eventual losses , and we believe that this capital should be the first in line to take losses before change the proposed legislation.
In this current period essential state services, are being cut (e.g. cancer treatment service in Sligo, problems at the Crumlin hospital) putting lives in risk.
Charges for universities are being considered, hampering the access of young people to university and reducing the productive potential of the Irish economy.
In the same time the proposed NAMA legislation will transfer billions of resources to banks in a completely unaccountable and secretive way.
We want the Irish people to resist the proposed legislation and to ask for a more transparent and fair plan.
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