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Liam Carroll Judgement Changes the Game
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Whatever the Department of Finance believe, this is a big deal. Banks now get to put a receiver in place to get a hold of assets and return as much value to the creditor as possible. NAMA’s function with regard to these 6 companies and potentially all of Carroll’s other companies/liabilities is now moot. I am still trying to make sense of it but others are a little ahead of me.
Here is the full Supreme Court judgement as well as good background from the Irish Times. On Irisheconomy a good discussion has kicked off trying to get to the heart of the main points. On The Property Pin there are over 30 pages picking over the ruling.
Everyone appears to have a couple of questions from this:
What now for Carroll? Is this all he owes and in the likely even there is more debt, what happens to that?
What now for NAMA? The bad bank has been undermined by ACC’s action and the other banks have been made look negligent for their willingness to go as far as the old lady with the two bad legs.
Where to for our government on holidays? Saving NAMA is paramount for them, whether it should be or not.
One passage from the Indo caught my eye in that regard:
Last night’s judgment will have several repercussions for the Government’s plan to pass the NAMA legislation next month. It raises the prospect of destabilising the property market, but it also challenges the assumptions underlying the legislation.
NAMA is predicated on the notion that property prices will rise over the next decade or two and that the public should accept that presumption. But yesterday’s dramatic judgment challenges that assumption.
The outcome of the Carroll case will raise further questions about the State’s setting up of NAMA to buy toxic property loans.
But the Department of Finance insisted the Supreme Court ruling would not have any implications in the setting up of NAMA or its operation.
For anyone who needs it, a reminder of just how damning Peter Kelly’s judgement was for the NAMA/property market solution. Im still working through the coverage, post any good links / info / thoughts below. Especially if you find foreign stuff – that is always interesting.
Scenario: ACC shutting up the shop and taking its assets scuppers the other banks, so they go to ACC and buy its debt in the companies. Then, when NAMA is legally established, we tax payers pick up the ACC tab in the Carrol suite of companies too.
I don’t see it as such a big deal.
ACC and NAMA both have the same problem i.e. a dead market. ACC is attempting to be pro-active rather than a passive spectator while the other lenders are sorted out by NAMA.
Much commentary seems to be inspired by wishful thinking about that market and panic is caused by every event which threatens to expose it as wishful.
It may not be a big deal structurally for NAMA – though that’s arguable – but politically it’ll be awful.
People will be asking why we’re paying BOI €45m for a lump of shit in Kerry when ACC is selling a very similar lump of shit five miles away in Cork for €20m.
The Liam Carroll judgement shows that NAMA was never anything more than a scam to get the texpayer to buy unsaleable assets from developers for as much as the government, the banks and the developers could get away with.
With this judgement the jigsaw now is beginning to fit together, the refusal to disclose these assets, the percentage to be paid by the taxpayer and the refusal to nationalise the banks and instead give the saleable asset to foreign multinationals at knock-down prices etc. Isn’t it amazing that we the people are willing to sit back and allow all this to happen?
Mark, really now “People will be asking why we’re paying BOI €45m for a lump of shit in Kerry when ACC is selling a very similar lump of shit five miles away in Cork for €20m.” The answer is that the €45 million lump of shit is in Kerry and that in itself has to be worth at least double an equally sized lump in Cork.
This changes everything and I can’t help but wonder if the state was stalling with NAMA and waiting for someone to hit the hoardings (or whatever it is that people hit) to cause a real shake up in the discounting. It is even possible that FF will adopt, by stealth, the FG policy of letting the bond holders take the hit first.