Madam, – At a time of falling prices no one would willingly pay more than the market price for property. It is therefore shocking that we are collectively compelled to do so by our Government through Nama. To confound this absurdity, the assumed market price for those properties is far more than they are actually worth.
An excellent report by Mary Carolan (Finance, October 20th) quotes Mr Justice Peter Kelly, who manages the list of the Commercial Court, as saying that he is dealing on a daily basis with cases illustrating falls in property values of between 70 and 80 per cent (not 30 per cent). This reality is being ignored by the Government in paying €54 billion to the banks for property worth half that amount.
To transfer by way of overpayment such a huge amount of public money into private hands is morally wrong and in no way can be justified by the Government’s reluctance to partially or temporarily nationalise banks. An overpayment of €27 billion represents 10 severe budgets which would cause major discontent.
Of course Nama will provide more money for the banks, but at an enormous cost to taxpayers, who will ultimately have to foot the bill. Like not seeing the wood for the trees, the Government cannot see the people for the banks.
The people need a national bank with branches countrywide and then private banks can sink or swim according to their behaviour. Otherwise, banks will just dictate, and surely we have seen enough of that? It should be self-evident that borrowing to pay too much for property is exactly what caused the collapse. Let’s not repeat it. – Yours, etc,
Madam, – Have I got this right? The taxpayer, having given €11 billion to organisations dedicated to private profit, is going to give them a further €54 billion, and this will be overseen by a structure where the taxpayer will have 49 per cent control. People whose primary responsibility is to increase private profit will have 51 per cent control, but somehow this (magically) is not a majority.
There is a future for the Government in comedy – and they will not even need to hire script writers. Now that is a saving. – Yours, etc,
Madam, – I note, “Minister for Finance Brian Lenihan said today he is considering introducing an appeals procedure for companies rejected for loans by lenders as part of the law creating the National Asset Management Agency”, (Breaking News, November 9th).
Could this possibly be in response to my letter (September 30th) suggesting just such a procedure? In any event, why not apply the same concept and logic to Irish home owners under threat of losing their homes due to difficulties in meeting mortgage repayments? Nama could then display a social conscience, become a business champion and a saviour for our banking system. Sainthood is only around the corner! – Yours, etc,
Madam, – If we do not take the non-performing loans from the banks and put them in Nama then the banks will sell the attached assets on the open market.
If that happens then the property market will be flooded with cheap properties and many more people will be faced with negative equity in their home or apartment mortgage. That is unfortunate but not the end of the story.
We have a huge unemployment problem which cannot be solved this time by Government investment/spending, since the Civil Service is already too expensive for taxpayers to afford. Therefore unemployment will only be solved in two ways: 1. emigration or 2. private sector investment/spending.
Those of us over 40 will remember those days of mass emigration and the sadness it brought and will not want to return there. However, if emigration returns then there will be less demand for the housing stock which means that prices for houses will fall even lower putting even more people into negative equity.
Which leaves us with only one remaining solution – private sector investment/spending.
Private sector investment comes from bank borrowing by SMEs on the basis of the assets the owners have. The assets normally used by SME owners as collateral for bank borrowing are family homes. If these homes are worth less than the mortgages already placed on them then the banks will not lend any money using these assets as collateral. Therefore there will be no private investment. So what do we want? Nama – where Government soaks up all the distressed loans and their associated properties, underpinning the values of collateral assets, allowing private sector investment and increasing employment? Or no Nama – and mass emigration and even more unemployment? In my view Nama is the wise choice. – Yours, etc,