This modest blog doesn’t often get a mention in the mainstream media – not an objective of the blog, I might huffily add – so when Professor Morgan Kelly did refer to this blog as “by far the best source on the Irish economy” in his article in the Irish Times in May 2011, it was (a) noteworthy and (b) very flattering indeed. Morgan Kelly is an economics professor at UCD and had a bearish view of Irish property when it was not fashionable and incurred the wrath of Bertie for his trouble. His occasional speeches and presentations are followed with interest by many. And not that there is any feeling of obligation here, but a newspaper article today which implied the academic professor based his pronouncements on “anecdotes” did rankle, particularly when you delve into the criticism in some detail.
In today’s Sunday Independent, Ronald Quinlan denounces a claim made by Morgan in his recent Hubert Butler Lecture at the Kilkenny Arts Festival on Saturday last 6th August (speech available here). Having discussed developer loans Morgan goes on (from 31:36 onwards)
“What worries me increasingly are mortgages, and in particular there is a group of mortgages, given out, interest only mortgages, that were given out to professionals, to lawyers, solicitors, estate agents at the peak of the bubble. And about 10,000 of these were given out, and this seems trivial, there are three quarters of a million mortgages out there, why should we care about 10,000 of them? However it turns out that these mortgages were for properties of €1-2m each. So these guys would put up like 20% of the price, 10,000 of these loans at €1.1m each which means that there’s like €11bn in loans to these high-rollers from the boom, most of whom couldn’t buy you a cup of coffee now”
(UPDATE: 15th August, 2011. Thanks to commenter “What goes Up” at thepropertypin.com for bringing to attention the youtube video of the speech here)
Not true says Ronald who seemingly forced an admission from Morgan during the week that the “10,000 of €1-2m mortgages at peak” had come from an Irish Times article in May 2010 by “the commercial property editor”. Presumably it is this report by Jack Fagan on 6th May, 2010 (you’ll need a subscription for the full article – UPDATE: 14th August, 2011 Thanks to commenter “What goes Up” at thepropertyp.com for locating a subscription-free copy of the article here ). That report in turn, claims Ronald today, was based on an Irish Brokers Association press release (not available online) which was in turn based on – to quote Ronald – “its own estimates, as well as “anecdotal evidence” and “internal conversations” with brokers”. The Irish Brokers Association represents insurance brokers (500 firms employing 5,500 people) but as insurance is part-and-parcel of mortgages and members also provide mortgage advice, the association probably has as good a handle on mortgages as anyone.
Ronald takes issue with the 10,000 figure and he claims that stamp duty returns “do not bear out” Morgan’s numbers. In 2006 there were only 4,496 stamp duty residential transactions above €635,000 (the highest threshold at the time attracting stamp duty of 9%). 2006 was the peak of the market says Ronald and because 4,496 is less than 10,000 Morgan is wrong.
QED.
Well, whilst it is true that in 2006 there were 4,496 stamp duty residential transactions – and further, those transactions generated €543.1m of stamp duty which given the stamp duty rate above €635,000 was 9% would equate to total value of these transactions of €6.033bn or an average of €1,342,000 – those are the stamp duty transactions. They exclude transactions not subject to stamp duty which would include first time buyers and also buyers of property in new developments where the floor area was less than 125m2. How many professionals finally took the plunge for the first time at the peak of the market? How many rich parents indulged their children with guaranteeing substantial mortgages perhaps on the back of their own property-derived wealth? Difficult to know but Ronald implicitly figures it was zero.
And how many non first time buyers bought property of less than 125m2 in new developments at €900 psf? Again Ronald reckons zero but there were quite a few developments of upmarket apartments and townhouses that would have had floor areas of less than 125m2 in the boom and which commanded prices north of €900 psf or €1,000 psm.
What we do know is that the Irish Banking Federation which represents organizations which handle more than 95% of mortgages in the Irish market say that in 2006 the total number of mortgages handed out totaled 203,953. That compares with the total number of stamp duty transactions in 2006 of 52,901. Of the 203,953 mortgages, 37,064 were for first-time buyers, 45,585 for movers, 28,141 for Buy to Let investors, 26,565 were for re-mortgages and 66,598 were top-ups. Stamp duty returns will exclude remortgages and top-ups. Again Ronald assumes these were zero.
I don’t know if 10,000 mortgages of an average value of €1-2m were given out to professionals at the peak. What is the peak anyway? Property reached its peak in September 2007 nationally according to the CSO thoughDublin apartments peaked earliest in February 2007. Is the peak a 12-month period or shorter or longer But what we do know is that 4,496 will be the absolute minimum number of €635,000+ cash/mortgage residential property transactions in 2006 which will exclude first time buyers, buyers of upmarket sub-125m2 property in developments, remortgages and top-ups. Ronald implies these exclusions amount to zero which seems implausible but wouldn’t the Irish Brokers Association be in a better position to provide a more accurate estimate? Gotcha there Ronald!
As an epilogue to the above, I must personally say I found the speech given by Professor Kelly in Kilkenny to have been a little disappointing. The history of the crisis and the description of the present predicament and some of the future projections, were all engrossing and the audience overall appeared very pleased to have attended. What was disappointing was the absence of any real view on the forthcoming fiscal adjustment – the €3.6bn or €4bn to come out of the budget in December 2011, the additional €3.1bn in 2012 and the likely additional still €3bn to come out in 2013 and 2014. These adjustments are likely to be truly awful for the nation. But to counter these required adjustments, there is scope for major price adjustments in the State so that we begin to pay what is more a European average for goods and services. And there is a necessity for the reform of our bankruptcy laws and perhaps even extraordinary measures to cope with the exceptional levels of legacy debt in Irish society. Emigration as a short-term means of easing the strain but a long term obstacle to economic growth is also an issue of concern on here. Perhaps Professor Kelly might have some insights on these topics in his next public appearance later in August.
[…] […]
@NWL
Would purchases of foreign ‘villas’ in 2006 have been financed by an Irish mortgage and included in the stamp duty figure or financed by means of a smaller top-up of an exising mortgage, or by means of a mortgage from a subsidiary (or off shore unit ) of an Irish bank.
Allow me to wonder whether all such gimmicky ‘foreign’ mortgage arrangements found their way back to the Irish parent bank as soon as the Bank Guarantee was announced.
It really is a question of who you believe on this one.
Banks that have lied repeatedly, stress tests that would to a certain extent have had to rely on such lying, the Dept of Finance whose currentl Secretary-General was responsible for the banking sector within the DOF prior to its implosion, the Central Bank whose previous stress tests results have been catagorised as the ‘costliest mistake ever made by an Irish institution’, the Sunday Independent who cheerled the boom from start to inglorious finish and tired to prolong it with an economically insane call for the reduction of stamp duty.
Or do you believe Morgan Kelly if for no other reason than he got it right before and that to rely on the opinions of any of the above parties mentioned would require a dose of dementia not compatible independent living.
@Joseph, I’m sure there was lending by Irish-based banks for purchases of property abroad. But no these would not be included in Irish stamp duty figures from the Irish Revenue Commissioners, the statistics for which are linked to in the blogpost above.
Every time Morgan Kelly so much as opens his mouth, there is an apparatus in place to systematically rubbish and/or ignore him. This goes all the way back to his original 2006 letter to the Independent which the newspaper’s editor described as “offensive”, and which was only later published in the Irish Times. The above post shows that Kelly’s sources are sound.
These attacks on Kelly are designed to sound plausible–and make Kelly sound implausible–but a closer and more careful analysis always shows that Dr. Morgan Kelly is never far off the mark, and indeed is often not pessimistic enough. There are very few people in the country who have the knowledge, expertise, and importantly willingness to really check the figures in detail and present their analysis. Morgan Kelly is one. And NamaWineLake is another.
I really shudder to think where the state of discourse on NAMA and the banks in this country would be without this blog. We’d likely have to do with the kind of shallow and agenda laden opinion pieces like the Sunday Independent piece above, often written by wine and film reviewers, or else the dry, textbook orthodoxies of Irish Times journalists, who are always on average four months behind the curve in their opinions. The only other source of information would be the Pravda-like press releases of the banks, NAMA, and the Central Bank, which have long since lost any calming effect.
So, on behalf of the country, thanks to NWL for another careful analysis of the facts.
(By the way, NWL. Having potentially vexed the Sindo, you might want to steel yourself for a Norrissian retaliatory expose of this blog in the coming weeks. If you see people searching though your bins, you’ll know what it’s all about.)
Indeed. One can only second that.
Hasn’t all the scandals that have broken in recent years started with “anecdotes”. Morgan Kelly with nothing to gain by sticking his neck out versus the Indo with their agenda – think I’ll stick with the Professor.
“there is scope for major price adjustments in the State so that we begin to pay what is more a European average for goods and services”
Not likely to happenwhile the elite have to maintain those mortgage payments.
Namawinelake performs a vital democratic function – shining a light on a major public body in a way the media has singularly failed to do either due to laziness or because the topic is not amenable to simplistic analysis. I am sure there is a valuable PhD for some politics student somewhere who shows how the influence of ’traditional media’ is being continually undermined by informed and intelligent blogs such as this one. The last place I would look for informed comment and analysis of the actions of NAMA is in The Irish Times, RTE, or indeed Dail Eireann.
On a slightly separate topic but related to a recent NWL thread ‘Is there a future for Ireland?’, let us today salute a continuing source of excellence from Ireland on a global stage – that of Coolmore Stud and Aidan O’Brien. Last night in Arlington in Chicago O’Brien sent out two Grade 1 winners from his base in Ballydoyle, Co. Tipperary. Echoing the point made by Roy Keane, it is amazing how much we indulge mediocrity in Ireland but fail to acknowledge a true superstar such as O’Brien who is a major figure on the world stage in his chosen profession. The Irish rugby public is expected to cheer if Ireland makes the RWC semi-finals or even a final but Aidan O’Brien sends out his horses (and Irish jockeys) to WIN every international race they contest. Coolmore Stud is the finest equine breeding establishment in the world and has achieved this in the face of competition from Sheikh Mohammed (among others) and his billions of petrodollars. Aidan O’Brien is well on his way to be considered one of the greatest racehorse trainers in the history of the sport and all of this comes from rural Tipperary.
If anything the good professor did not cast his net wide enough, or the comment about loans to the professions may have been taken too narrowly from its context. The real problem is mortgages in general that were taken out since 2005. They are all underwater.
Until we have debt “forgiveness” from the banks or a debt for equity swap, the banks will carry this loss in their bellies, pregnant in denial, but obvious to all but the most gullible and naive.
Having gone through migration models in university I’m suprised to hear you say that emmigration is a long run impediment to growth. How so? As far as I understood, migration primarily affects the distribution of wealth in different countries not the absolute level of prosperity. Is there an article or book you could point me to?
@Patrick
“Emigration as a short-term means of easing the strain but a long term obstacle to economic growth is also an issue of concern on here”
I am merely pointing out the fact that Ireland with 10m citizens by 2030 generating hopefully an average EU income is economically stronger than an Ireland with 7m.
Small population countries are sometimes famously able to generate above average per capita income, but I was referring to the overall income of the nation, which as we can see in our present circumstances is not significant enough to produce significant leverage in Europe, for example.
‘Twas a little more than bringing it to the attention of all and sundry :-)
I ripped the audio from the “sharing-unfriendly” flash version and put a few stills to it.Uploaded to YouTube and also put the MP3 version on Archive.org:
[audio src="http://www.archive.org/download/ProfessorMorganKelly-TheHubertButlerAnnualLecture/MorganKellyKilkenny.MP3" /]
There seems to be a curious lack of interest in videoing the man – so I’ll offer my digital media services for free for his next foray into the open!
To me there is very little evidence on either side about the existence of these mortgages. The IBA press release suggests that it is pretty much a guess on their part. There is no harm in that. The press release was highlighting the dangers of interest-only mortgages and was not an attempt to accurately quantify the prevalance of these mortgages.
The Sunday Independent were doing ok when they pointed out the source of the figure used by Morgan Kelly. Their attempts to undermine the figure were as weak as the IBA’s method to come up with them.
We are no nearer to knowing whether these 10,000 €million+ mortgages exist or not. They might exist or they might not. We just don’t know. If they did they would make up about 10% of the total amount of mortgages outstanding (c. €116 billion at end March).
The stress tests allowed for €9.5 billion of residential mortgage losses over the next three years. That would probably require something around €16 billion of mortgage defaults. The covered banks had €97 billion of residential mortgages at end-2010 (€74 billion owner occupied and €23 billion buy-to-let). A default rate of 17% over the next three years is allowed for in the stress tests.
Even if 25% of these jumbo mortgages default the loss to the banks would be around €1.25 billion or so. It is also important to realise that there is no certainty that all of these loans, such that they exist, were issued by the covered banks.
If the losses to the covered banks were €1 billion these would be easily absorbed into the €9.5 billion allowed for in the stress tests and there would still be nearly 90% of the loss provision available for the other 90% of mortgages.
Based on these anecdotes there is no reason to believe that the banks will need additional capital. It would be nice to have actual data to confirm this.
@Seamus, thanks for that. And looking at the bigger picture of overall bank losses and consequent recapitalisation requirements, it is indeed unclear how the 10,000 €1-2m mortgages referred to by Morgan would impact the existing stress tests.
And why separate out mega mortgages anyway? Presumably because if you’re facing negative equity of €500,000 and you’re being called on to now make capital repayments, it probably makes sense to default unless you have substantial unencumbered wealth. Presumably those with such a large quantum of negative equity will treat their predicament in a more commercial fashion than those who took out €300,000 mortgages on property now worth €150,000.
But agreed though. Morgan might make life easier for his audience if he were to provide some more information.
During the property spree, it was common to use existing property, including the family home as collateral or as a source of cash to fund additional borrowing.
In many cases the source of deposits put down on investment properties was re-mortgage of an existing property or the so called “top up”. Mortgage top ups for 2005 – 2010 were as follows,
Year Amount of Loans No. of Loans
2010 € 493,000,000 6,631
2009 €1,123,000,000 14,947
2008 €3,253,000,000 35,315
2007 €4,684,000,000 47,967
2006 €6,039,000,000 66,598
2005 €4,717,000,000 64,821
Re-mortgages for the same years were as follows,
Year Amount of Loans No. of Loans
2010 €461,000,000 2,722
2009 €1,129,000,000 5,774
2008 €5,295.000,000 21,374
2007 €6,675.000,000 25,937
2006 €6.067.000,000 26,565
2005 €5,038,000,000 25,944
Unfortunately we do not have figures for earlier years. The above figures are taken from IBF reports. The Central Bank never bothered to look at this area, despite its UK counterpart regarding equity extraction from the existing housing stock as a key statistic in following consumer spending.
As can be seen from the number of re-mortgages and top ups, there are very few “pure” mortgages in Ireland. It is likely that there are many residences in Ireland where the owners went back to the well on more than one occasion to fund either the purchase of a buy to let or holiday property, new cars and other life style trinkets.
Prof. Kelly’s assertion of €1M plus mortgages is I am sure close to the mark when one looks at the level of cash extraction set out above. Multiples of seven times household income were available and by tying in the re mortgage of the family home, a) the bank spread the risk over a number of properties, b) it looked better because loan to value looked less risky, c) the bank person got a bonus for selling more loans.
The complete circle of debt!
@Niall, thanks for that. There is a link to the quarterly IBF spreadsheet in the above blog post but you can see here directly the volume and value of categorised IBF mortgages here.
https://namawinelake.wordpress.com/2011/05/17/irish-mortgage-market-is-flat-lining-new-lending-figures-for-q1-2011-show/
In truth the IBF figures even with top-ups and remortgages don’t tell us a lot about €1m+ mortgages.
Nor do the stamp duty figures which include cash and mortgage transactions.
Just wait till you see my latest prediction of Gross Q2 Mortgage Lending on the Pin !
@ NWL Noted. I have been looking at the level of cash extraction from housing and its relation to consumer spending for some time. It is impossible to get any hard figures on the amount of times people have extracted cash from the same house, but a contact in one financial institution said he had seen quite a few people who had re-mortgaged three times post 2000.
He blamed two Irish institutions, First National BS later First Active & Bank of Ireland for starting the trend.Historically FNBS were always willing to go that little bit extra for young doctors and other recently qualified professionals and Bank of Ireland were also in that market. Once BofSI followed them into it, everyone else got sucked in.
Whilst Kelly has been a cut above other Irish economists in some of the things he has said, unfortunately it’s not been that hard to look better in what is an utterly dismal field. Near all of them had nothing to say prior to the bust by way of warning, & their silence on why that happened, in the 4 years since, has been deafening. (They aren’t alone of course – mainstream economics thinking globally had little to offer & continues in this vein with non solutions.)
The most ludicrous thing that Kelly has said is that if Ireland were to leave the euro, reverting to our own sovereign, free floating (fiat) currency, we would be obliged to immediately run a zero government deficit.
This is utter nonsense. With our own currency, government spending, in an accountancy sense, would not be credit constrained at all.
Nor would such spending be inflationary starting from a position of large under utilsation of resources – ie high unemployment. It would obviously be sensible to target spending carefully to minimise leakage & maximise benefit to the home economy. Once unemployment rises, spending should be moderated (and/or extra taxes raised) to avoid demand exceeding supply & causing inflation. A modelling study by Prof Yamaguchi of Japan shows that there is considerable latitude in spending overshoot before excessive inflation arises.
Note that any net ‘negative’ balance resulting from stimulus spending has no ‘repayment’ requirement – ever. The money was created by government, not borrowed. (Don’t be shocked at ‘money from nothing’ – banks do this all the time.)
This is known as Modern Monetary Theory. As explained in the videos on this website, for a (reasonably) lay audience by its two leading academic proponents:
http://e1.newcastle.edu.au/coffee/education/index.cfm
If political issues could be resolved, such a system could also operate & solve the economic mess in the eurzone too, no ‘austerity’ economic warfare on ordinary citizens required
MK’s 10k number seems high in terms of 1+ million loans for residential units. Though highlighting the ‘professionals’ is a valid concern. There are probably 10k+ individuals that have a portfolio of investment properties with debt in excess of 1+ million. In additional many of these piled into leveraged property funds (it’s quite plausible that some may have ‘released equity’ to the tune of hundreds of thousands to get into geared funds).
Even if we assume that MK has overestimated by 50%, it’s hard to see why this should make the front page of the Sunday Indo. Their editorial line seems to go from ‘house prices set to soar again’ to ‘debt forgiveness for mortgagees’. You’d be forgiven for thinking they have some sort of agenda.
@Ahura, in fairness to the Sunday Independent – which is a bit of a laugh given that it used stamp duty returns which exclude stamp duty exempt transactions and include mortgage AND cash, but at the same time the paper ignored mortgage statistics – Morgan did discuss development and commercial loans previously in the speech, so I took him to mean the 10,000 related to traditional residential mortgages.
I have asked the IBF if it has figures on the number of €1m mortgages (including remortgages) advanced in 2005 and 2006 and 2007. That would seem to be the logical source for statistics. MK used a statement from the Irish Brokers Association.If you seriously wanted to refute the figures in the IBA statement, you’d consult the banks. Don’t know if the Sunday Independent did that, but if it did it certainly didn’t allude to the banks in its report.
MK was right to say at the end of 2006 that the bust was coming – but it was a bit late to announce what McWilliams had been predicting for 7 years after the house price index had already turned.
MK was also right to say that the banks faced huge losses post blanket guarantee.
He’s been wrong on virtually everything else and his prescriptions are ludicrous. His attacks on Honohan are vicious and his analysis is tinged with paranoia. His invective is warmly received by that section of the populace yearning to transfer blame for their own choice of governments and their blind greed in leveraged property acquisition onto any possible third party.
Where is ‘20% unemployment’? Where is the ‘fascist anti-traveller government’? Should we really leave the euro, renounce the bailout, run an immediate surplus? Is a 200,000 household mortgage strike going to happen?
Using an ancient press release from the Irish Brokers Association as a source is beyond parody. His debt figures are based on namawinelake estimates. Come on.
He puts forward the idea that because Anglo lost 30bn therefore AIB and BoI lost 30bn. If the BlackRock analysis was wrong, then where was it too optimistic?
His comments about staffing levels in Irish banks are just nonsensical and alarmist and doesn’t stand up to even 2 minutes research:
“banking institutions needed to fire two-thirds of workers”
http://www.independent.ie/business/irish/state-bank-control-gives-politicians-say-over-home-debt-2842225.html
@Kirsten,
“Using an ancient press release from the Irish Brokers Association as a source is beyond parody. His debt figures are based on namawinelake estimates. Come on.”
Lucky that there’s no vanity or ego to wound on here! But I would say a feature of this blog is that it has extensive linking to sources, so if you have an issue with a claim, you can generally see the source.
I would recommend Seamus Coffey’s blogpost on the subject of the 10,000 mortgages and I would support his conclusion that there is not sufficient information in the public domain to prove or disprove the numbers.
http://economic-incentives.blogspot.com/2011/08/10000-mortgages.html
As I said in a comment yesterday, the IBF has been asked by this blog if it has statistics on mortgages/remortgages in the peak years which would show the quantum of €1m+ mortgages. And if there is any positive response, rest assured it will be added on here. And as for MK using a press release from an organisation which represents 500 firms and 5,500 employees at the heart of the mortgage business in Ireland, it seems harsh to be very critical.
NamaWineLake certainly has no ego/insecurity problems. The IBA is a trade club for insurance salesmen. Nomadic gentlemen of the insurance business are well known but hardly for their intellectual curiosity, their profound analyses or their devotion to the truth.
I contacted the 5 covered lenders directly and the total number of mortgages in excess of €1m is an absolute maximum of 2,500. The losses in the covered banks using Professor Kelly’s 25% default rate would be in the order of €300 million not €5 billion.
I have set out the calculations in full here:
http://www.askaboutmoney.com/showthread.php?p=1194782&posted=1#post1194782
@Brendan, thanks for that. Did each of the covered lenders you contacted (Bank of Ireland, ICS, AIB, PTSB and the EBS) provide you with a response, and if so do you have the breakdown by lender? Did you ask them for interest only mortgages? Will the figures you obtained include remortgages (which appear to make up about one half of all mortgages at the peak)? Do you think Anglo’s mortgage book (€2.5bn with a €0.3bn provision for losses last time I looked) might have a significant number of “high-rollers”? Did the banks indicate the number of mortgages transferred to NAMA – NAMA is primarily there to manage land and development lending but the agency’s method of operation involves mopping up “associated lending” which the 850 NAMA debtors might also have?
(The last question is to an extent academic because if the loans are in NAMA then it is NAMA, not the banks, that will face the loss – but in April 2010, the IBA might have included these loans in its now famous 10,000 estimate)
Here is my process and why it took two weeks to get the data.
1) I was astonished by the 10,000 figure so I contacted the CSO, the Central Bank and the Irish Banking Federation, none of which had the figures.
2) I contacted Morgan Kelly who sent me the Irish Times article which he quoted
3) I contacted people in the 4 institutions ( counting Bank of Ireland and ICS as one)
4) I contacted two of the non covered institutions just to get an additional sense of perspective on the figures and the market.
5) I spoke to three mortgage brokers to get their views on how frequent these were.
When I added the total for the 4 covered institutions they came to less than 2500. The figures for one of the institutions felt too low compared to the information I had got from the other 3 covered and 2 non covered, so I upped the figure to 2500 to be on the safe side.
I have suggested to the Irish Bankers Federation that they encourage the lenders to publish the data officially and by institution. There doesn’t seem to be any enthusiasm for this.
So to answer your questions.
Yes, I got a response from each of the institutions. But these are not official responses and I am not allowed to quote them individually.
“Did you ask them for interest only mortgages? ”
Yes. The figure of 2500 includes all. The covered institutions did not do full term interest only mortgages. At the outset, perhaps 1250 of them were interest only for a period. Most would be out of that period now, although some which are in difficulty are still paying interest only.
“Will the figures you obtained include remortgages ”
Yes, I asked for all mortgages on their books at present in excess of €1m. So it includes first time buyers (!), switches, refinances (aka remortgages).
NAMA
Whatever about the IBA figures, the 2,500 now does not include them. I don’t think that Morgan Kelly was referring to NAMA in any way.
Brendan
@Brendan, thanks for that, you’ve obviously spent some time on this so as to get to the truth of the matter. I must say that I wasn’t myself too surprised by the claim. With 1.5m+ homes in the country in the mid2000s, just under half subject to mortgages, with 200,000 mortgages a year (including remortgages) totalling €30bn, with the mad dash to release equity to reinvest in more property domestically or abroad, or shares it wouldn’t have surprised me if there had been 10,000 €1m+ mortgages. That said, as noted above in the blogpost I don’t know and I would have said the IBF was the best source as it collects the data along with PwC.I see that it was amongst your first ports of call.
Having said that, a figure of 2,500 €1m+ mortgages isn’t surprising either. The main point of the above blogpost is that stamp duty returns will tell you little because they include mortgage AND cash and they EXCLUDE certain transactions that might or might not have been significant in the 2000s.