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Posts tagged ‘http://namawinelake.wordpress.com’

The ECB extortion letters to Brian Lenihan in October/November 2010

By Namawinelake

Today, the Irish Times publishes two feature articles on letters it claims “to have seen” – here and here. It has been established that there are definitely three letters from Jean-Claude to Brian on 15th October 2010, on 4th November 2010 and 19th November 2010. There remains a mystery over the existence of a letter on 11th or 12th November 2010 – Minister Lenihan alluded to it

The letters are threatening in that they tied the continuation of the ECB continuing to provide liquidity funding, to Ireland seeking a bailout programme. In other words “apply for a bailout with close scrutiny of your finances and actions, or we will withhold cash and your banking system and economy will collapse” This is outrageous.

Full article at source :http://namawinelake.wordpress.com/2012/09/01/leaked-at-last-the-ecb-extortion-letters-to-brian-lenihan-in-octobernovember-2010/

Has there been a change of tone at the IMF?

by namawinelake 

There have been a number of statements from the IMF this week which suggest an apparent change in tone towards Ireland’s financial difficulties, now that former managing director and, by the bye, French presidential candidate, Dominique Strauss-Kahn (DSK) has departed the IMF to reconcile himself with the consequences of what took place in his New York hotel room only a week ago. DSK has been replaced on an interim basis by John Lipsky, the American economist with an earlier career with global investment banks. The IMF yesterday announced a recruitment process for DSK’s permanent replacement and say they hope the new appointee will be in place by the end of June 2011; according to the media, frontrunners include the current French finance minister, Christine Lagarde but other names in the frame include former UK prime minister, Gordon Brown as well as non-Europeans like India’s Montek Singh Ahluwalia. Tradition has been for a European to hold the top job at the IMF whilst an American holds top post at the World Bank but that seems as appropriate today as the ban on theUK monarch marrying a Catholic.
This week saw a raft of statements from the IMF that directly dealt with Irelandor which certainly pertain to our difficulties. On Tuesday, the IMF announced that it had agreed to release the next tranche of bailout funding which we had requested to be brought forward. That Tuesday statement by the IMF was quite upbeat about the efforts already made by our country to confront our difficulties. I was impressed by what appeared to me to be the IMF sticking its head above the parapets and suggesting that a medium-term ECB facility for our banks was necessary in order that our banks could return to the market for funding. This seems new and potentially creates a rift between the IMF and EU approach to Ireland. We still don’t know exactly what happened the week of the stress test and bank restructuring announcements at the end of March 2011 but it seems that we were desperately seeking a commitment from the ECB for a medium term facility then; remember the ECB is presently providing some €80bn of short-term liquidity funding to our domestic banks and is additionally authorising our national Central Bank of Ireland to provide €70bn of emergency liquidity assistance to our domestic banks. This short term financing is undermining our banking system and as Greece is finding out in quite graphic detail, being in hock to a lender that can pull the plug in seven days is reckless for a nation. But back in March 2011, the ECB unceremoniously dashed any hopes of a medium term facility with its statements in response to the 31st March restructuring announcements. Well, thank God at last that the IMF is making it plain that a medium-term facility is necessary.
But there’s more. Yesterday, the IMF released its first and second review staff report for Ireland and held a telephone press conference to respond to questions. And what a difference in tone! Back in March 2011 when the press asked the IMF about burning bondholders, the questioner was accused by the IMF of asking a “have you stopped beating your wife” loaded question and the question went unanswered. Yesterday the following exchange took place
Press: And you seem to be implying that you also understand or believe this and that without burden sharing from bondholders, be they bank bondholders or people involved in the bank bailout or whatever, without thatIreland’s prospects are very grim.
Ajai Chopra: Second, European partners need to make clear that for countries currently with programs there will be the right amount of financing on the right terms and for the right duration to foster success. In other words, the countries cannot do it alone and putting a disproportionate burden of the cost of adjustment on the country may not be economically or politically feasible. The resulting uncertainty affects not only these countries but through the high spreads and lack of market access it increases the threat of spillovers and creates downside risks to the broader euro area. Hence, these costs need to be shared including through additional financing if necessary.
I thought this was ground-breaking and signaled as clearly as possible that the IMF was now taking a position, regardless of whether or not it was at odds with the EU. And for good measure, the IMF was clear that “an increase in the corporate income tax is not a part of the EU/IMF supported program because we did not see such a tax increase as consistent with the overall goals of the program in restoring growth.”
The interim IMF boss was also speaking this week and his speech to the IMF Annual Meeting of the Bretton Woods Committee is also relevant to our circumstances when John Lipsky said “Turning toEurope, several peripheral euro area countries today remain in critical situations. And there is no easy solution. Without any doubt, the primary responsibility for restoring their economic health lies with the peripheral countries themselves. Difficult and demanding measures will be required in order to avoid an even more serious crisis and to restore economic health. At the same time, there are compelling reasons for their European neighbors and the global community—operating through the IMF—to support these countries’ reform efforts. The only viable option forEurope today is a solution that is comprehensive and consistent—and that is also cooperative and shared. Such a solution inevitably will include: (i) strengthening area-wide crisis management frameworks; (ii) accelerating financial sector repair; (iii) improving fiscal and macroeconomic coordination; and (iv) promoting high-quality growth.”
Sadly the IMF is the junior creditor in our bailout having a maximum commitment of €22.5bn compared to the maximum of €45bn being advanced by the EU. But securing IMF support for a degree of burden-sharing, for a medium term ECB facility and the maintenance of our corporation tax rate (and by implication its base) should bolster our efforts to emerge from the financial crisis and repay our sovereign debts and share in the repayment of our bank debts. It always struck me that our negotiating team last November didn’t recognize differences in the stances of the various parties and consequently didn’t even begin to exploit those differences. It was also striking that the IMF was hitherto at pains to avoid the perception of any rift or difference of opinion with the EU; the last week has reversed this perception and it is to be hoped that our current negotiators are capable of recognising the changes and developing a strategy which might exploit those differences and deliver a bailout which is sustainable.

source: http://wp.me/pNlCf-1qt

Comment:

New mortgage arrears data shows intensification of problems

New mortgage arrears data shows intensification of problems

May 19, 2011 by namawinelake

This morning, the Financial Regulator Matthew Elderfield released the mortgage arrears data for quarter one of 2011 together with enhanced information on restructured mortgages. The headline is that mortgage arrears are still rising and the pace is increasing slightly. Here’s the data together with as much historical data as is available:

(Click to enlarge)

In short arrears are up more than 10% relative to the previous quarter and up 55% compared with quarter one of 2010. Some 6.34% of all mortgages are over 90 days in arrears and the pace of increase is increasing slightly (the total in arrears increased by 0.68% in Q1, 2011, 0.53% in Q4,2010, 0.513% in Q3,2010). Repossessions in the quarter were at their highest level since these current records began but at 140 are still minute compared to other jurisdictions eg US and UK – forbearance measures by banks and our lack of a modern bankruptcy mechanism might the reasons for this low statistic. The restructured mortgage data is new and I extract here the table from the report published today:

Of interest is that not one mortgage that has been restructured, has been a tracker where the borrower has been forced to take a standard or other mortgage product as a condition of a restructuring agreement. Or if that isn’t the case, the Financial Regulator hasn’t deemed it noteworthy to include such a heading. The under-reported scandal of banks being able to strong-arm vulnerable mortgage holders into surrendering valuable tracker mortgages for standard variable mortgages as a condition of agreement to any restructure has long been a bug-bear on here.

Also it is not quite clear how many restructured mortgages are included in the arrears figures. The report indicates that there are presently 62,936 restructured mortgages and of these 36,662 are not in arrears indicating that 26,274 are in arrears, though some of these may be less than 90 days in arrears.

So if you were to ask the question “how many mortgages are in some difficulty today?”, you’d have to add the arrears of 90 days+ (49,609) to some restructured mortgages (at least 36,662) to give you at least 86,271 or 11% of the total mortgage book. There are reportedly some 16,000 mortgages in receipt of some form of State mortgage assistance, some of these may be included in the arrears/restructurings but some may not.

Source:http://namawinelake.wordpress.com/2011/05/19/new-mortgage-arrears-data-shows-intensification-of-problems/

Comment:

On the 8th of November last Morgan Kelly warned of the upcoming mortgage default tsunami and I for one agree with him we ante seen nothing yet !

read his article here http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865400.html

Irish mortgage market is flat-lining

By Namawinelake

This morning the Irish Banking Federation (IBF), which represents more than 95% of mortgage lending in the State, released mortgage lending date for quarter one of 2011 – the data is here and the press release is here. The figures paint a picture of a property market that is seizing up. Superlatives come in abundance : €577m was advanced during the quarter which is 96.91% down from the peak in Q3, 2006; the average investment mortgage is now €144,000 which is 56% down from peak and indeed 24% down from the previous quarter which is indicative of fire sales or tightening in lending criteria; just 15 mortgages a day were advanced to First Time Buyers (FTBs) during the quarter. The numbers are pretty bad. Of course the stress test and bank restructuring announcements were made at the end of March 2011 so any positive effects of these announcements will not be captured in the figures released today.
As for the outlook, there is a commitment by the incoming government to ensure there is €10bn of new lending per annum in the economy over the next three years and NAMA has flown a kite that it may part-fund purchases of property from its portfolio. The economy remains decidedly weak though the ESRI broke ranks last week and suggested GDP might grow by 2% in 2011. The Allsop/Space auction on 15th April, 2011 laid bare the extent of the decline in Irish property prices with achieved results suggesting we were (unscientifically) 60% off peak actual prices. Generally falling wages, stagnant population due to emigration and the market-distorting effects of NAMA, restraint on repossessions and bank foreclosure sales are all making for a dysfunctional market at present and it is hard to see any significant recovery in lending figures in quarter two.
The IBF numbers are significant though in their implication on the rental market. If potential buyers are sitting on their funds or are unable to get loans, then renting is really the only alternative which might strengthen demand and stabilise prices. Recent data from DAFT.ie and the CSO suggests that rent levels are stabilising.
And here are the numbers. First up, loan volumes (that is, number of new mortgages advanced) – RIL means Residential Investment Loan.

Next up, the value of new lending

And lastly the average of each loan advanced. You CAN’T equate this with average house price because we don’t know the proportion of the purchase price accounted for by the mortgage (was 100% and more during the peak, is typically 70-92% now).

Commenting on the data this morning, IBF Chief Executive, Pat Farrell, stated: “The economic situation remains challenging and prudence remains the order of the day.  For customers that means manageable borrowing and for financial institutions it means prudent lending.”

Source:http://wp.me/pNlCf-1pz

Comment:

There is no reason for anybody to take out loans and commit themselves to years of misery especially when we don’t know what new taxes the government are going to invent .baring in mind we expect to have a new property tax and new water charges imposed on all of the hapless homeowners in the country .Perhaps they will introduce a new window tax and what about a shower tax ,maybe even a new tea tax !

NAMA developer, the Fleming Group puts 112 homes up for sale in Cork

May 11, 2011

by namawinelake

Interesting today to see a deluge of new properties for sale by Cork-based developer, the Fleming Group which is reportedly one of NAMA’s Top 30 developers. The properties all appear to be on estates developed by Fleming Homes and they are:

(1) 15 properties at Cooline, Ballyvoloon, Cobh, CoCork

(2) Six properties at Ardfield, Douglas, Cork City Suburbs

(3) 30 properties at College Wood, Mallow, CoCork

(4) 16 properties at Tir Cluain, Midleton, CoCork

(5) Seven properties at The Glenties, Macroom,West Cork

(6) 15 properties at The Orchard, Macroom,West Cork

(7) Seven properties at Ard Sionnach, Shanakiel, Cork City Suburbs

(8) Three properties Cois Cuain, Courtmacsherry, CoCork

(9) Three properties at The Pines, Cobh, CoCork

(10) Four properties at Buttery Court, Mallow, CoCork

(11) Six properties at Inis Alainn, Inch,Cork

Having had a quick look at the property details and with prices pitched close to the €300 psf, it doesn’t seem as these are bargain basement. It should also be remembered that these may not be NAMA-backed properties, but I would have said the betting would be that they are. Interestingly it is the Fleming Group that is handling the sales rather than an estate agent.

Various companies within the Fleming group have had receivers and administrators appointed. Last month, the Irish Examiner reported that a substantial Fleming development in Wembley, north London had apparently been sold by administrators, Baker Tilly. John Fleming, the founder of the Fleming Group applied for bankruptcy in the British courts in December 2010.

source: http://namawinelake.wordpress.com/2011/05/11/nama-developer-the-fleming-group-puts-112-homes-up-for-sale-in-cork/#comment-5412

Comment:

Your right about the prices these are not bargains in fact I am willing to bet anyone buying these properties will be facing negative equity in a few months let alone in a year. Even at half the asking price you are been robbed .The Fleming Group will have to face reality and step down from cloud cuckoo land.  

New Central Bank of Ireland figures show no slow-down in deposit flight

April 29, 2011

 by namawinelake

Figures released by the Central Bank of Ireland (CBI) this morning for the month of March 2011 show that the flight of deposits from Irish banks shows no sign of slowing down. From an Irish perspective, possibly the most significant figure to watch is the total of private sector deposits in the six State-guaranteed financial institutions (AIB, Anglo, Bank of Ireland, EBS, Irish Life and Permanent and INBS). The total which represents businesses and households fell to €106.3bn in March 2011 from €108.6bn in February 2011 and is now down €23bn from a year ago, €11bn since the IMF/EU bailout in November 2010 and €2.3bn down over the course of just one month. The CBI and ECB continue to provide substitute funding for Irish banks which replaces this flight of deposits and Irish banks continue to provide extensive State-backed guarantees on deposits. It remains to be seen if the pace of decline in deposits slowed after the bank restructuring announcements made after close of business on 31st March, 2011 – Minister Noonan indicated the early signs were encouraging but since then our sovereign bond yields have sky-rocketed again.

So, looking at the deposit figures produced by the CBI. First up is the consolidated picture for all banks operating in Ireland including those based in the IFSC which do not service the domestic economy.

Next up are the 20 banks which do service the domestic economy and include local subsidiaries of foreign banks like Danske, KBC and Rabobank. There is a list of all banks operating in Ireland here together with a note of the 20 that service the domestic economy.

And lastly the six State-guaranteed financial institutions (AIB, Anglo, Bank of Ireland, EBS, Irish Life and Permanent and INBS)

(1) Monetary Financial Institutions (MFIs) refers to credit institutions, as defined in Community Law, money market funds, and other resident financial institutions whose business is to receive deposits and/or close substitutes for deposits from entities other than MFIs, and, for their own account (at least in economic terms), to grant credits and/or to make investments in securities. Since January 2009, credit institutions include Credit Unions as regulated by the Registrar of Credit Unions. Under ESA 95, the Eurosystem (including the Central Bank ofIreland) and other non-euro area national central banks are included in the MFI institutional sector. In the tables presented here, however, central banks are not included in the loans and deposits series with respect to MFI counterparties.

(2) NR Euro are Non-Resident European depositors

(3) NR Row are Non-Resident Rest of World depositors (ie outsideEurope)

source:http://namawinelake.wordpress.com/2011/04/29/new-central-bank-of-ireland-figures-show-no-slow-down-in-deposit-flight/

comment:

Just a few weeks ago Mr. Noonan reassured the public that “The total amount of deposits withdrawn from the pillar banks has been very significantly reduced”. And “the net deposit position of the Pillar Banks has improved significantly” So what’s new he was lying and I expect he will continue to lie to us over the next few years. This is what you get when you try to build so called Pillar Bank on the rotten foundations of corrupt and toxic banks in the first place!

Shut these toxic black holes down now!

Why has ECB raised its main interest rate from 1% to 1.25% today?

April 7, 2011

As expected it has just been confirmed that the ECB is raising its main refinancing operations rate from an historic low of 1%, where it has rested for the past 23 months since May 2009, to 1.25%. The general betting is that further rate rises will be implemented in the coming months. Why? Although it mightn’t feel like it in Ireland, or indeed Greece or Portugal, Europe on an aggregate basis is recovering from the 2007-8 financial crisis. This is what the February 2011 European Commission forecast was for the main EU economies.

Whilst our GDP in Ireland fell by 1% last year – making it three successive years of drops totalling 12% off peak GDP in 2007 – Germany’s economy roared ahead with GDP growth of 3.6% in 2010. Our government might officially say the outlook is for 1.75% GDP growth in 2011, but the EU thinks it will be 0.9% and even the upbeat Morgan Stanley-produced “Ireland – a Time to Buy” analyst note on Monday this week anticipates GDP growth in 2011 of just 0.8%. Mind you, our inflation has been picking up in recent months but is still just 0.9% in February 2011, the lowest in Europe (that is, using the inflation measure which excludes mortgage interest – factor that in and even we were at 2.2%).

So the reason the ECB is raising rates now is to cater to the bigger economies in Europe, and that’s how the euro works. Arguably we are in the present state of distress because of the application of the same principle in the early 2000s when Germany was experiencing sluggish growth and Ireland was continuing to experience Celtic Tiger growth in GDP and inflation. If we had our own currency, there might have been a better chance of increasing interest rates to cool demand but because we were out of sync with Germany, that didn’t happen. Of course we have benefited from membership of a common currency in the sense that our old currency, the punt, was hardly seen as a significant currency and we have cut down exchange rate risks and cost. And political controls might have been exerted in the 2000s to curb the growth in credit. Still, on days like this, you would wonder if the bargain to join the euro was worth it.

Ireland has 785,000-odd mortgages of which an estimated 400,000 are tracker mortgages so today’s announcement will have an almost immediate and widespread effect. If your tracker is ECB + 1.5%, then on a €250,000 mortgage, your repayments, simply calculated, are likely to increase by €50 per month (€250,000/12 * [2.75%-2.5%]). Minister for Finance, Michael Noonan will no longer be able to comfort us with the mantra about the ECB providing €100bn liquidity to our banks at 1%. The prospect of even higher interest rates in the EuroZone will also tend to strengthen the euro with sterling (at 0.874 this morning), and the UK is our main trading partner.

full article at :http://namawinelake.wordpress.com/2011/04/07/why-has-ecb-raised-its-main-interest-rate-from-1-to-1-25-today/

Comment:

Well if we needed another example of whom really the ECB is working for .

We in Ireland need this interest rate rise like a hole in the head, what utter nonsense. This rate rise is stupid it is pushing up the euro in value and soon we should see the euro /Dollar at 1.50 and even beyond. Have these guys a death wish? Maybe the Germans want the euro to collapse. It is hard to see what the big picture here is with the events in Portugal now showing the truth about the banking problem all around Europe I wonder if the Germans are creating the justification they will need to walk away from the Euro Experiment. This has dealt a death blow to the recovering property market here in Ireland  and it only confirms that we are about to see the next leg down ,hold on to your hats a storm is about to hit us real hard!

The mystery of the €7bn deposit into Irish banks by Minister Lenihan on the eve of the general election

By namawinelake http://wp.me/pNlCf-1ff

Last Thursday 31st March, 2011 can’t have been a pleasant day for our new Minister for Finance, Michael Noonan. With the weight of the commitments contained in the Programme for Government, it cannot have been easy to tell the Dail late last Thursday afternoon that the State would need inject a further €24bn into the banks, that there would be no burning of senior bondholders and perhaps most disappointingly, he wasn’t even able to offer us the consolation that the ECB was at least committing to the medium-term funding of our beleaguered banks. Perhaps he might have taken some comfort from the fact that the mess that he is confronting is not of his making, but regardless it was a speech no Irish finance minister would have wanted to make. Fast-forward two hours to when the newly-created Economic Management Council gave a news conference, the first five minutes of which are available here. During the news conference, Minister Noonan stated that in February, 2011 former Minister Lenihan put €7bn into the banks and slightly smirked as he observed to the media that “ye didn’t pick that up”.
I would like to bring you the transcript of precisely what Minister Noonan said but the 45-minute press conference which was shown in full on RTE Online doesn’t appear to be available, certainly not from RTE’s website or the government information service merrionstreet.ie but the €7bn was alluded to again today during RTE’s This Week radio programme when Tanaiste and one of the four members of the Economic Management Council, Eamon Gilmore again mentioned it in passing.
You will recall that in February, 2011 we were supposed to have injected €10bn into the banks as part of the EU/IMF bailout but that Minister Lenihan decided on 9th February, 2011 that he didn’t have a mandate, the general election having been called on 1st February2011. He invited the finance spokespeople for Fine Gael and Labour to write to him if they disagreed with his position, which neither did. So you might have thought therefore that no money was put into the banks in February, 2011? Not so, it seems according to Minister Noonan and Tanaiste Gilmore – €7bn was put in.
And where did the Department of Finance magic this €7bn from? In what must make the financial accountability of our government a travesty, we don’t know. If you consult the Exchequer Statement for the month of February, 2011 there is no mention of it there. There was obviously no press release at the time. So how did the banks get €7bn? My guess is that it comes from NTMA reserves or from National Pension Reserve Fund liquidations of position but neither made a statement on the matter in February 2011. But it might also come from the Central Bank of Ireland who doggedly refuse to disclose information on the €70bn Emergency Liquidity Assistance programme.
What significance does this €7bn have? Arguably none because we now seem resigned to injecting €24bn of which this €7bn is part. The significance I draw from it is that there is no presumption of accountability on behalf of government. A Minister can claim on one hand that he doesn’t have the mandate to inject €7bn+ into the banks but on the other can engineer €7bn of deposits. And when Minister Noonan said, “ye didn’t pick up on that”, how was the media supposed to have picked up on that when neither the national accounts, the Exchequer Statement nor other state agencies including the NTMA and Department of Finance didn’t make any statement on the matter.

source:http://wp.me/pNlCf-1ff

comment:

Brian Lenihan said in February, 2011 that he didn’t have a mandate to put another 10 billion into the banks but now we hear that he put 7 billion in to the banks on the eve of the general election???

This is a perfect example of lies and dam lies, Lenihan should be brought before the Dail and asked to resign his seat, in my eyes he is as big a layer as Lowry if the Moriarty report is to be believed. Minsters seem to think that it is acceptable to lie to the public and we the public seem to accept it because we vote these creeps back into Dail every time .What can we do about this corruption now?how much more can we the people of Ireland take?

NAMA, the banks and the Gardai

Badge of An Garda Síochána

Image via Wikipedia

 

from  Namawinelake

With reports of a file about to be sent from the Gardai to the Director of Public Prosecutions on Anglo Irish Banks (and how is it that FG leader Enda Kenny claims to have knowledge of the detail of the file – do Gardai brief politicians on investigations?) and talk of there being five people in the frame for criminal prosecution in respect of activities at the failed bank, it brings home to us the criminal dimension of the financial crisis, though it should be said that the two year investigation may not result in any criminal charges whatsoever.
A month ago, NAMA came before the Committee of Public Accounts and the NAMA CEO, the owlish Brendan McDonagh, faced some intense questioning on aspects of the operation of the secretive agency. The transcript of the hearing is now available and it shows that Fianna Fail deputy Michael McGrath had a bee in his bonnet about the banks and whether they had misled NAMA in 2009 by providing loan details which informed the draft NAMA Business Plan in October 2009 (which showed an average discount or haircut of 30% off the par values of the loans that NAMA would pay the banks). Michael’s point was that the haircut now estimated to apply to the banks is 58% (October 15th, 2010 estimates) and this near-doubling in the discount might mean that the banks set out to misrepresent the value of their loans so as to obtain an advantage. The relevant exchange is here (the emphasis is mine and the Chairman was Fine Gael deputy Bernard Allen):
Deputy Michael McGrath: I will be brief. I welcome the delegation from NAMA. I would like to pick up on the point made by Deputy O’Keeffe on the quality of the information it got from the banks in 2009 and which fed into the draft business plan in October 2009. Some of the information must have come from fantasyland because if one considers the reality NAMA found when it went in and did a loan-by-loan analysis and a detailed probe, some serious questions need to be answered about the intentions behind some of the information it was given.
For example, in the draft business plan it was anticipated at that time that €77 billion worth of loans would be acquired and that €62 billion of that would be repaid by borrowers over the lifetime of NAMA, 40% of the loans were performing and the loan-to-value ratio was 77%. We know the reality is entirely different. The level of performing loans is 25% and the loan-to-value ratio, as Mr. McDonagh mentioned, is closer to 100%, something which is a matter of fact and which did not change because of the deterioration in the economic environment. How could they have gotten it so wrong?
In his response to Deputy O’Keeffe, Mr. McDonagh referred to a lack of systems but I would take a far more cynical view, namely, that the banks were concerned with trying to extract the maximum possible price from the taxpayer for the loans which we were acquiring.
Mr. Brendan McDonagh: In terms of that, I do not disagree with the Deputy. The reality of our detailed loan-by-loan analysis showed up what it was. People sitting on the boards and senior management in those companies had responsibilities. I recall that when the Minister went into the Dáil on 16 September 2009 and introduced the NAMA Bill there were Stock Exchange statements by the two major banks into the market telling it that they expected their discount to be even less than 30%. The reality has turned out to be different. The Deputy is completely right. There are questions to be asked and answered.
We went in, found what the situation was and reported on it. The discounts are much higher than what could have been anticipated. Based on the information provided at the time, and given what we have been dealing with in terms of the banks over the past ten months and the due diligence which is coming through, they are finding out things about borrowers and loans that they should have had at their fingertips before. They did not have this and there are huge systems failures on the back of that.
Deputy Michael McGrath: I think it is much more than that. If NAMA had not taken such a rigorous approach in going in and analysing every single loan individually and had taken the information it was given at face value, it would have dramatically overpaid for the loans it was acquiring.
Mr. Brendan McDonagh:  Absolutely.
Deputy Michael McGrath: That would have been at the net expense of the taxpayer. It seems to me that there was a clear pattern of false and misleading information being fed into NAMA by the main banks in Ireland during 2009. That has to be investigated. I do not know who has the function to refer that information to the Garda, the National Bureau of Fraud Investigation or the Office of the Director of Corporate Enforcement, but it needs to be done. Some of the data would have changed with the deteriorating economic environment. I can understand the percentage of performing loans changing, for example, and Mr. McDonagh referred to that in his opening remarks. However, getting the loan-to-value ratio so wrong across the board should have rung alarm bells that there was something more going on. It needs to be investigated by the Garda and the Director of Corporate Enforcement. I do not know whether NAMA can make information available to them but there is a clear, systematic pattern of false and misleading information being fed into NAMA and that cannot go unaccounted for.
Mr. Brendan McDonagh: I do not disagree with anything the Deputy said. The first port of call in terms of looking at that must be the Financial Regulator, who has responsibility for supervising and knowing what goes on within the banks. We will provide whatever assistance we can to anybody. I can assure the Deputy that we have established the facts and will make that information available to any regulatory authority, if appropriate. This is where we are now. Other people have questions to answer on what was done in the past.
Deputy Michael McGrath: Is that process under way? Has the regulator looked for information on all of the details that were provided to NAMA?
Mr. Brendan McDonagh:  Absolutely. The European Commission is working hand in hand with the Financial Regulator on the auditing of every single loan evaluation that is happening. The regulator has access to all that information and what it does with that is a matter for it.
Chairman: In view of Mr. McDonagh’s comments, the committee should write to the regulator now, make it aware of the comments and ask it to inform the committee of the appropriate action it proposes to take.
Deputy Michael McGrath: Absolutely. I recognise that it is a very serious charge to make but the evidence is overwhelming that the information being provided to NAMA was fundamentally false and misleading.
Chairman: We will do that.
Deputy Michael McGrath: The regulatory authority needs to investigate and involve, as appropriate, the Garda and the Director of Corporate Enforcement. I welcome the Chairman’s suggestion.
[exchange ends]
Now it seems that the Committee is unhappy with NAMA for a number of reasons. At the hearing itself NAMA was asked to identify developers being transferred to the agency and it refused – it wouldn’t even name the Top 10 stating that it was NAMA policy to generally accord developers the same level of confidentiality they would have enjoyed at the original financial institutions. I think NAMA would have been on more solid ground if it had put a stop to leaks that characterized its existence in the earlier part of this year. The Committee also wanted details of NAMA’s payscales and NAMA declined to provide the information on the day and subsequently wrote to the Committee to say that, in common with the established practice of the NTMA, it would not be revealing salaries, even to the Committee. The Committee chairman, Deputy Bernard Allen, characterized the letter it received last week as telling it to “get stuffed” but the actual text of the letter is in fact pretty neutrally worded.
But what the Committee is most unhappy about is their impression that they were “misled” by the response of the NAMA CEO to questions about the banks. The Committee is now reported as saying that after Mr McGrath asked Gardaí to investigate the matter, that Mr McGrath was “set up” (Deputy Ned O’Keeffe) and the Irish Times says “the committee is to recall Brendan McDonagh in January 2011 over media reports that he has “backtracked” on comments made to the committee last month”. The Independent reports “Ned O’Keeffe said it had now been reported that NAMA had no evidence to back up these claims — and that Mr McDonagh’s comments had been misinterpreted”
My own impression is that NAMA’s defence of its draft Business Plan produced in October 2009 has been a sorry episode for the agency. It seems that it sought to blame everyone else except itself for the disparity between the estimates then compared with today. The banks in particular have been demonized – perhaps justifiably, but it was NAMA’s business plan and it seems that there was little validation of the figures incorporated into it. And whilst the discount on the banks’ loans has grown from 30% to a 58% estimate, the estimate of NAMA’s operating costs has dropped 40% from €2.6bn to €1.6bn. Surely the infernal banks weren’t responsible for NAMA getting its operating costs so wrong. And the suggestion that banks sought to defraud the taxpayer by over-valuing loans also looks suspect because NAMA was always going to involve an intensive valuation process overseen independently by the EU. The NAMA CEO’s nodding in agreement at Deputy McGrath’s suggestions at the Committee hearing might have portrayed NAMA in a favourable light to the Committee and the general public, but to others it just shows an abnegation of responsibility for NAMA’s own business plan. And indeed it is noteworthy to see the NAMA CEO try to pass the parcel for any misinformation provided by the banks to the Financial Regulator.
In any event, it will be interesting to see the fireworks in the New Year when the NAMA CEO is recalled (and the NAMA Act does confer that right of demanding attendance on the Committee).

Namawinelake asks

 If we are fully funded to the middle of next year, then why the rush to ensure the €85bn bailout terms are agreed before markets open tomorrow?
namawinelake | November 28, 2010 at 4:47 pm | Categories: Irish population, NAMA | URL: http://wp.me/pNlCf-Px

Remember that we are fully funded into the middle of next year and indeed should we choose to liquidate the National Pension Reserve Fund we will be funded into 2012 and should we sell off a few State assets, like the electricity and gas utility companies, the bus and rail transport companies or the airport or port authorities (y’know the companies that were privatized in the UK in the 1980s) then we could surely get to 2013 by which time our deficit:GDP should be 5% with strong evidence of a commitment to fiscal stability. And wouldn’t that convince the most skeptical investor to buy our bonds and treasury bills?

source :http://namawinelake.wordpress.com/

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