How much will developers pay NAMA?

[paddy26]

A quick question. If we nationalise the banks can those banks still swap the govt debt they are issued with (in payment for the bad loans) for cash at the ECB?

 

[Purple]

I know quite well what NAMA is doing, it's going to put me, you, my kids & your kids in hock to the markets for the next 30 years, until the next boom comes along (The last one being the early 70's). T

There is no basis in fact for the 10 years before these loans become solvent again.

The only winners out of this are the bond holders.

The banks loaned the Developers the money, the bondholders loaned the banks the money, the insurance industry provided the CDs to cover the bonds, at no point do I see the government (Taxpayer) in this equation & frankly I dont see it as our mess to clean up.

I agree with all of that but we are where we are. I'd like to see lots of people in prison for the next 40 or so years but that won't sort out the mess they created.
The international investors are the winners but the bottom line is that we need them more than they need us.

 

[paddy26]

Yes, but that's the point. This "different person" will be a government agency, essentially a bank, founded by Fianna Fail and whose valuation committee will be chosen solely at the discretion of a Fianna Fail minister.

Sorry, but anyone who thinks that such a body will have a completely objective stance on getting money out of those who have largely funded the Fianna Fail party over the years... well, the best I can say is that I would like to live life that naively; it must be rather blissful and I imagine good for one's blood pressure.

If they operate it separately like for example the Revenue Commissioners this may work

 

[canicemcavoy]

I dont understand how the annual interest cost would have anything to do with the capital value.

By the way the cost of borrowing would be nearer 5%. The point Alan Aherne was making was that the interest paid on these loans by the developers would pay the interest NAMA would be paying on the Govt bonds issued

But none of the developers are even paying interest anymore, never mind the capital:

http://www.independent.ie/national-...n-interest-payment-by-developers-1622498.html

A HIGH-PROFILE developer has accused Finance Minister Brian Lenihan of "not telling the truth" over claims that the majority of developers were making interest payments to Anglo Irish Bank.
Mick Wallace of Wallace Construction said yesterday that he, along with a number of other developers, could not afford to pay their loan interest.

Why would NAMA be better at, er, persuading them to pay interest than a private bank?

 

[paddy26]

But none of the developers are even paying interest anymore, never mind the capital:

http://www.independent.ie/national-...n-interest-payment-by-developers-1622498.html




Why would NAMA be better at, er, persuading them to pay interest than a private bank?

Then they would default on the loan and NAMA would cease the property and either sell it (unlikely due to current values) or rent it and use the proceeds to pay the interest. Development land may be more difficult but due to the level of cross security on a lot of this stuff there may be income producing assets in the pot. It is difficult to speculate without know the terms and security of each individual loan

 

[canicemcavoy]

Then they would default on the loan

That still negates Ahearn's rebuttal that "interest paid on these loans by the developers would pay the interest NAMA would be paying".

So, NAMA would end up seizing land it can't sell. And we already know that developers were using the same assets for multiple loans, the assets seized will cover only a small fraction of the loan value.