What does Brian Lucey mean by "Selling Anglo's Deposits"?

We're tending to forget the other side of this massive blunder. What was BL going to do with his Miracle 49Bn. He was going to pay off NAMA with 16bn. But NAMA owes Anglo 18bn.
 
Lucey gets another hammering in today's[broken link removed]from Donal O'Mahony of Davy's.

For example, Brian Lucey’s latest condemnation (Country’s future staked on most volatile of markets, Opinion and Analysis, April 1st) of those who “do not know a subordinated bond from a Smartie” needs to be juxtaposed with his own basic misunderstanding of how the process of Nama financing will proceed.


Far from engaging in “funding short to borrow long, the very tactic that brought down Lehman”, Nama will in fact continuously match its assets (loans) and liabilities (bonds) with Euribor-based variable interest rates, the positive spread between which ensuring that performing loans trump non-performing loans in rendering Nama cash-flow positive on an operational basis.


Lucey’s other suggestion elsewhere last week that Anglo’s €28 billion deposit book should be trade-sold for circa €21 billion was equally misplaced, such proposition appearing to confuse the bank’s assets with its liabilities.
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Amazing how silent he has gone isn't it. This isn't a game we are playing here. If people are going to allow themselves to be used by the media to offer opinions and criticism on NAMA and the banking crisis, the least they can do is make sure they have their facts straight. And if they get it wrong, they should be man enough to write a retraction.

No wonder public sector workers and the ordinary man on the street get annoyed when they read from a Professor of Finance at Ireland's top university that Anglo can be wound down very simply and the Government can save billions if they just follow a few simple steps. Let's not let the truth get in the way of getting your name in the paper though.
 
O'Mahony's article gets analysed on [broken link removed]

Here is the relevant bit to our discussion

Donal responds to Brian Lucey’s criticisms of the policy of NAMA’s bonds being linked to Euribor as follows:
Nama will in fact continuously match its assets (loans) and liabilities (bonds) with Euribor-based variable interest rates, the positive spread between which ensuring that performing loans trump non-performing loans in rendering Nama cash-flow positive on an operational basis.
​
However, to generate ongoing cash flows from loans, people have to be paying them back. Loans going into NAMA from AIB that are past due or impaired account for fifty five percent of the original face value of the transferred loans. The corresponding figures for Bank of Ireland and Anglo are fifty six percent and eighty three percent respectively. It’ll be some class of loaves and fishes act to turn that stuff into a cash-flow positive operation. NAMA, I suspect, may not have quite as clean a face as we were lead to believe.
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A reminder of the collected wisdom of Professor Lucey:

1) 28Bn of deposit liabilities can be exchanged for 21Bn of assets (doesn't know his asset from his liability - DKHAFHL)
2) Anglo should pay 16Bn to NAMA so as to have the NAMA bonds removed from its books (DKHAFHL)
3) NAMA bonds will result in a six monthly 50Bn roll-over requirement (doesn't understand the difference between maturity term and interest setting period)
4) NAMA is exposed to rising interest rates (doesn't understand that interest applies to both sides of a balance sheet and it is standard practice to manage any mismatches by swaps)
5) "Funding short to borrow long" DKHAFHL
6) AIB should be forced to hold on to its foreign subs at the taxpayers' expense (contrarian for its own sake, you can bet that if AIB were resisting these sales the professor would be breathing fire about AIB execs using taxpayers money to cling to empire)
7) House prices would continue to be buoyant until 2010 (written for an estate agency concerned at the growing rumble about soft and hard landings back in 2007)

Donal O'Mahony's article was excellent. It is really perplexing that Professor Karl Whelan posts a churlish critique on the Irish Economy. Yet he doesn't raise a whimper about his fellow professor's howlers.
 
Brian Lucey raises his pretty head again.

m.independent.ie

Publisher retracts 12 papers co-authored by Trinity College Dublin finance professor

A finance professor at Trinity College Dublin is disputing a decision by a global academic publishing company to retract 12 papers he co-authored.
m.independent.ie m.independent.ie

Over Christmas, Elsevier retracted papers jointly written by Brian Lucey which had appeared in journals such as the International Review of Financial Analysis between 2017 and 2024. Its explanation was that Prof Lucey, as editor of the journals, had made the final decision to publish the manuscripts despite also being a co-author.
...
It is understood he has submitted a formal complaint about the retractions to the Committee on Publication Ethics (Cope) and asked it to assess whether the process followed by Elsevier align with accepted norms for editorial investigations.

In a statement to the Irish Independent, he said: “All the authors dispute the grounds for retraction, as stated by both Elsevier and Cope, the industry oversight body.

“Retractions should only take place where there are concerns in relation to the scientific validity of work. No such concerns have been expressed here.”
...
It is understood that Elsevier regards its decision as final. It told one of the co-authors it had reviewed objections to its decisions and concluded they did not satisfactorily address the issues identified.

“It is a fundamental principle of scholarly publishing that manuscripts submitted to a journal are evaluated and reviewed independently of the author ,” the Elsevier representative said.

“This principle explicitly applies to manuscripts authored by the journal’s editor, as outlined in our publishing ethics policy.”
 
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Ah, that brings me back. This "sell the deposits" brainwave was not his most dangerous intervention; even his students would have sniggered at his mistaking liabilities for assets. Far more dangerous was the letter orchestrated by him and signed by 46 academics damning the NAMA initiative. We were throwing good taxpayers' money at dud assets they claimed.
As it turned out NAMA, with of course a few missteps along the way, played a key role in transforming Ireland from basket case to star performer. Of course the professor and his associates have not admitted the huge misjudgement they made at a very crucial time for this country.
 
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NAMA and the 46 academics' letter

It now seems that NAMA will pay off its debts 3 years ahead of schedule and will ultimately return a profit of €3bn to taxpayers. Contrast that with this letter signed by 46 academics at the time the NAMA Bill was published. Led by Professors Brian Lucey and Karl Whelan it predicted that NAMA...
www.askaboutmoney.com
 
It’s amazing reading that IT article with hindsight. How right the Government were and how wrong the opposition. I shudder to think of SF being in the Government then.
 
The follow up was good. Some of them signed an open letter to write off all negative equity. (It's hard to stay within the no bad language posting guideline)

www.irishtimes.com

Mortgage debt forgiveness is essential to recovery

Economists Constantin Gurdgiev, Brian Lucey, Stephen Kinsella, Ronan Lyons, Karl Deeter, Shane Whelan, David Madden, Brendan …
www.irishtimes.com www.irishtimes.com

He managed to persuade good guys like Ronan Lyons and Karl Deeter to sign it.

In the case of Ireland, such a formula would most likely lead to an implicit writedown of at least 30 per cent of the more recent mortgage amounts on average, yielding an expected total cost to the entire system of circa €37 billion to €49 billion.

Morgan Kelly was in agreement and, I think, David McWilliams.

So people would now be sitting in very good jobs with their mortgages paid off all at the expense of the taxpayer.
 
Six months earlier he had written this opinion piece.

I am not sure if he is proposing mortgage debt write-down or arguing against it.

www.irishtimes.com

State must not bank on bailout of bad mortgages

OPINION: GROWING UP beside the seaside, one becomes familiar with the sea and its actions
www.irishtimes.com www.irishtimes.com

But this suggests that he at least saw some of the problems it would cause:

Any bailout, no matter how socially desirable and no matter how structured, will involve transfers from persons who did not borrow excessively to those that did.
 
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