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Archive for August 8th, 2011

It’s August, schools are out, politicians have shut up shop and many of us are on our annual holliers. The media often have to hunt around for stories, though with the ongoing financial crisis, that doesn’t seem to be a problem this year. But reporting standards can slip.

Take a look at Ivan Yates contribution to the INM-owned Enniscorthy Guardian. You’d be hard-pressed to find so many inaccuracies in a single article.

(1)  “It was hoped that taking toxic property loans off of bank balance sheets would prevent institutions from being nationalised. NAMA failed to avoid complete government ownership of AIB, Anglo Irish, Trustee Savings Bank, Irish Nationwide and EBS” – Trustee Savings Bank, part of Irish Life and Permanent is not in NAMA

(2) “smaller developers, with loans of €20 million or less, are not now being transferred to NAMA” – that only applies to AIB and Bank of Ireland, all eligible loans, regardless of value, are being transferred from INBS, EBS and Anglo

(3) “NAMA is on its third business plan (first two were binned)” – NAMA is still sticking with its second business plan, and hasn’t indicated that the second business plan has been abandoned or superceded.

(4) “They intend to dispose of mega tranches of assets: 2012 – €6 billion; 2016 – €11.7 billion; cumulatively, between 2011 and 2019, almost €47 billion” – complete rubbish, there are no such targets. There is a 25% disposal target by end 2013. And if NAMA’s assets are worth €30bn, as Ivan says elsewhere in the article, then how will NAMA generate €47bn? Just where is he plucking numbers from?

(5) “The vital context is that in the peak boom period of 2006, our national property sales peaked at €3.3 billion”. The stamp duty alone paid in 2006 on residential property was €1.3bn and on commercial property was €1.6bn. That would equate to a property market worth over €30bn. Over €27bn in mortgage finance alone was handed out in 2006.

(6) “The NAMA board and management have no knowledge, experience or expertise in the hotel sector” – NAMA has employed hotel specialists eg Patrick Ryan

(7) “They know little about retailing, yet they control department stores like Arnotts and large retail sports chains.” – Rubbish. Anglo and Ulster Bank control Arnotts, and it has nothing to do with NAMA. And Anglo and Ulster appointed Palladin Capital to manage Arnotts.

Meanwhile over at the Irish Times, John McManus displays the lack of basic arithmetic that Morgan Kelly was warning us about on Saturday – “first Nama buys the €72 billion worth of loans at something close to market value – an average discount 58 per cent – and then the taxpayer puts capital into the banks to help them absorb the loss” which is true enough but John then goes on to say that “to facilitate a bank rescue, it will be doing very well to get 58 cent in the euro back”. As Professor Kelly might patiently explain, if you buy something at a 58% discount, that means you’re paying 42c in the euro not 58c.

And then we have Matt Cooper in the Irish Examiner who writes “confirmation of just how bad this lending was came with the eventual transfer of loans to NAMA before INBS was closed in April 2011. NAMA purchased commercial loans with an original recorded value of €8.7bn. But it estimated that only €1.4bn, or 16%, was likely to be repaid.” Heaven knows where Matt got his “€1.4bn or 16%” but NAMA says in its Annual Report (Page 17, Table 1) that it acquired €8.5bn of loans from INBS and paid €3bn and that represented 36% of the value of the loans; 36c in the euro is bad, but I don’t see how Matt gets his sexed-up 16c in the euro.

To err is human, and we all make mistakes at times, but just because many of us are demob happy doesn’t mean that basic reporting standards and fact-checking have to suffer.

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