Architecture and NAMA

Fair cop Brian, you may have seen this in the Irish Times a few weeks ago:

http://www.irishtimes.com/newspaper/features/2009/0630/1224249776560.html

Having read that article I’d have to say be careful what you wish for.
Three of the ideas presented there are fanciful, with the one by the leader of the RIAI full of his ususal pretence and gaelgóir rhetoric, but essentially lacking any substance.

Dominic Stevens emerges with his integrity intact, as ever. He is the kind of architect we should be looking towards to find a creative solution to this quagmire.

He’s a champion.

Good link foremanjoe, although it’s hard to read some of that stuff, it can be truly cringe inducing.

This is slightly better from the said S O’L, but again you do have to tip toe around the ‘Dear reader’ folk tones.

I am not too worried how high quality or otherwise the comments are, as long as they are coming.

I know architects are over-worked, and take on projects without sufficient staff etc. They don’t have the time required to study every possible side to an intricate economic and political web. I have no problem cutting the architect slack where it is deserved.

But they do have a lot of real life experience, on the job dealing with situations. Dealing with real people. Maybe, there are ordinary people out there today, who would like to hear the architect’s view point more. Just a thought.

Brian O’ Hanlon

Everything is linked to transparency/economics/resources…

There is no bad loan book that details the last 30 year history on the properties in question in clear and diagrammatic/table ways. The funding/tax audit relationships. Most importantly there is no fine/personal turmoil if they get it wrong. If the public got rewards for for finding irregularities and the information was available that would be the first step.

But the information is not available. Therefore it is difficult to know where the land is…

Also there are no fixed prices and the relationships between earnings and tax’s property are not linked.

The only thing that might save architecture is a maximum 5 year mortgage and 10% deposit as well as the 5 zones proposed previously and above links that is linked to the entire state.

30 year mortgages = a few crashes/job losses and much pain.

But nothing will change…

An interesting development reported by Neil Callanan in today’s Sunday Tribune newspaper.

Ballymore, the property development company owned by Sean Mulryan, has been approached by troubled landowners and the banks asking for help to develop their assets.

http://www.tribune.ie/business/article/2009/aug/30/troubled-investors-look-to-mulryan-for-advice/

Looks like the only way forward to me.

While Emmet Oliver, always an interesting journalist to read, paints a very possible scenario of Fine Gael taking power by next December.

Trading in the shares of the following guaranteed institutions – Allied Irish Bank, Bank of Ireland and Irish Life & Permanent – has been suspended and none of these companies will now maintain a listing on the Irish stock exchange.

http://www.tribune.ie/business/article/2009/aug/30/so-the-toxic-bank-gets-dumped-what-then/

The question that remains in my head – if those Irish banking institutions, who seemed so sure of themselves for the past decade, had actually employed trained land development professionals such as architects, to lend proper advice and views on the subject of lending – would be in the same mess we are in today?

It gets back to a question I had asked a long time ago on this message board – where does banking end and architecture begin, or visa versa? How do we find the correct balance and implement it – to become leaders in our attitude towards development, instead of the worst kind of laggards?

Maybe it has to do with the designer people un-doing a century’s worth of the ‘silent tradition’ and standing up to be counted. Our architectural schools have only ever been good at producing talent, who say very little for themselves. I was encouraged in reading the newspaper today, to see an American trained engineer lead an opposition party to victory in Japan, the second wealthiest economy in the world.

Is it impossible to conceive that could ever happen in Ireland? Are we destined to be a nation ruled by accountants for everymore? Some of my friends are accountants, and they are honest. They would probably get my vote any day. In general they have more common sense than others. But what is wrong with the other professionals?

Brian O’ Hanlon

I admire your belief in the architectural profession Brian.

Whilst architects study many topics en route to professional practice (Theory of Architecture, History, Technology, Services, Urbanism, Law, professional practice are all covered in sufficient detail) Ethics is not a subject that is very high up on the agenda.

That is essentially the nuts and bolts of where you’re going with this thread: Where does the role of architect as designer/builder/contracted professional end and where do his social responsibilities begin?

There is no doubt that the architectural profession in general has to bear a portion of the blame for the mistakes that have been made in this country in the past two decades. But how do you define exactly how much responsibility they should bear, and how do you begin to define what their role should be in the clean up?

I, for one, would struggle to begin to construct those definitions.

I was thinking a bit about it since. It did occur to me, that many architects may not have the energy or capability to do what they do, and to put effort into compiling a NAMA repsonse too. Perhaps, it is time that they appointed their own task force or similar. Some group, who could devote more time to the subject. Would that me too much to ask?

The task force may not need to comprise all architects. In fact, it would be a lot better if it did not comprise of too many architects. But that it comprised of people from industry, appointed by the architectural members, to provoke them with suggestions and solutions. The architects could then respond to those suggestions or solutions, and inform the task force, why they agree or disagree with a proposal.

Something like that would require a lot less effort or work on the part of architects. But would enable architects to formulate some kind of a draft version of a response. That draft version would be the subject of an all member conference held at several locations around the country, where local architects could further try to refine the draft document, based on their own experiences locally. Experiences of some issues may vary from location to location throughout the country.

What I am suggesting, is perhaps a lengthy procedure, but it would not be an expensive procedure to do I don’t think. It would enable all members of the profession to make some input into NAMA. It would also create a document that would be a useful addition to the NAMA process on a higher government and decision making level. I don’t know if anything like this has been tried before.

But as I see it, the key thing is for initial suggestions to be made in a provocative manner by construction industry members, as opposed to architectural members. Then allow the architects to voice themselves in response to whatever provocations are forth coming. If you leave the process to be administered and massaged by architects themselves, it will result in very polite, meaningless dribble. Because, architects will know only too well how other architects think and only insert things into the proposal that are designed to massage the architectural ego.

Brian O’ Hanlon

@garethace wrote:

. . . . . architects may not have the energy or capability to do what they do, and to put effort into compiling a NAMA repsonse too. Perhaps, it is time that they appointed their own task force or similar.

That is a good point.

It might be a bit spurious to draw parallels between the bursting of the Irish property bubble and the Great Fire of London, but that’s never stopped us before.

Within days of the conflagration, a Commission was established for rebuilding London. The six appointees were: two architects, (Christopher Wren and Robert Pratt); a royal official with architectural responsibilities, (Hugh May); a top academic, (Robert Hook); the City surveyor, (Peter Mills); and a significant land owner, (Edward Jerman).

What they came up, ‘The London Building Act’, passed by parliament less than four months later, was a whole strategy, not just for rebuilding the city, but for completely re-odering it, direct instructions on how this was to be done, provision of measures to address the potential bottleneck of the trade guilds, and solutions to how the public elements of the plan were to be funded.

Interestingly, the more grandiose notions of the architect members didn’t get through, but nonetheless the architectural input was central to the enterprise.

Our property calamity is perhaps less apparent than if we were now looking out over a smouldering wasteland, but the flaws in what we were doing were every bit as deep as if we now were.

The property bubble happened because no one had a overall vision and developers and their banker friends filled this vacuum with their own vacuous vision. Our myriad of so called ‘Development Plans’ were so anodyne and soothing they put all the planners asleep while everywhere ‘development’ was proceeding at break-neck speed.

Now we’re heading into a period where there may be very little development for a very long time, so it is absolutely crucial that whatever development takes place, is the right kind of development and takes place in the right kind of place.

If history tells us anything, this won’t happen by itself, we need a Development Commission, a body that sets out clearly what needs to be achieved (compact towns and cities with functioning public transport systems), how that is to be achieved (through incentives in one hand and CPOs in the other and by de-zoning everything that tends to dilute this) and strategies for focussing the scarce funding at only the crucial elements.

NAMA isn’t a Development Commission, but it could be.

What they came up, ‘The London Building Act’, passed by parliament less than four months later, was a whole strategy, not just for rebuilding the city, but for completely re-odering it, direct instructions on how this was to be done, provision of measures to address the potential bottleneck of the trade guilds, and solutions to how the public elements of the plan were to be funded.

I think what you have suggested makes a lot of sense. Certainly, if one accepts the point, that the avalanche of sub-contractors businesses, design and construction consultant businesses etc are going to come crashing down within the next six months. Their business model is essentially finished unless something is done. Maybe what you have suggested above, is a pre-emptive strike, to prepare a report to find a way to employ a very worthwhile and productive sector of the workforce – instead of waiting for the whole mess to fall upon us.

If history tells us anything, this won’t happen by itself, we need a Development Commission, a body that sets out clearly what needs to be achieved (compact towns and cities with functioning public transport systems), how that is to be achieved (through incentives in one hand and CPOs in the other and by de-zoning everything that tends to dilute this) and strategies for focussing the scarce funding at only the crucial elements.

I think that is a very good plan indeed. It could work very, very well in the medium and long term. In the short term, my only question is, what mechanisms are being set up at the moment, in order to allow this kind of idea to push through? Short of a few well meaning articles in Irish newspapers that is?

Brian O’ Hanlon

Waiting for the whole mess to fall upon us, is something we are expert at in Ireland. I read with interest today, at Constantin Gurdgiev’s blog:

“There is a reluctance to lend money to banks that do not have the transparency that stock market membership brings, and that are viewed as being open to political interference.”

This is false.

1. Irish banks and banking institutions – listed or mutually owned – are not transparent already, as the Anglo saga clearly illustrated, as AIB repeated blunders in public statements have clearly highlighted and as the reluctance of all of these banks to take realistic writedowns on the loans attests.

I have to agree with Constantin Gurdgiev on the above point. No Irish bank before Anglo Irish had ever got as much of its funding on the open markets. Yet, no Irish bank before Anglo Irish bank had been so opaque, in terms of our knowing what went on inside of it. For anyone to submit now, that Nationalisation would add or subtract to ‘transparency’ of an Irish bank is a bit spurious. It is a well known fact also, that a bank manager working at AIB would get a phonecall from a local political representative, if they did not finance a project in any local constituency. That was always in the back of an Irish bankers mind, when they were giving out loans.

I am not sure that Nationalisation will solve any of Ireland’s problems today. But to try and say that Nationalisation will lead to an increase in political interference with decision making in banks, is not true. It is already cronic.

Anyhow, that is a digression from the main purpose of this thread. I only mention it, to demonstrate in the recent past, Ireland has waited until the mess is right upon us, before reacting in any way. I am hoping in this thread to generate a discussion, to ask why can’t Ireland be ahead of the game for a change. Instead of trying take up the rear position and pick up pieces of wreckage all of the time. Picking up the wreckage is exactly what we will be doing come next January when the construction industry finally collapses and the related building professions are carried down with it.

Brian O’ Hanlon

@gunter wrote:

That is a good point.

Now we’re heading into a period where there may be very little development for a very long time, so it is absolutely crucial that whatever development takes place, is the right kind of development and takes place in the right kind of place.

If history tells us anything, this won’t happen by itself, we need a Development Commission, a body that sets out clearly what needs to be achieved (compact towns and cities with functioning public transport systems), how that is to be achieved (through incentives in one hand and CPOs in the other and by de-zoning everything that tends to dilute this) and strategies for focussing the scarce funding at only the crucial elements.

NAMA isn’t a Development Commission, but it could be.

Would very much agree with that. I think (from my blinkered planner’s perspective) that NAMA will have to assume the mantle of, or be the parent body of, a regeneration agency. So much centrally located brownfield land could end up under their remit that this is the obvious first step.

@garethace wrote:

I was encouraged in reading the newspaper today, to see an American trained engineer lead an opposition party to victory in Japan, the second wealthiest economy in the world.
Is it impossible to conceive that could ever happen in Ireland? Are we destined to be a nation ruled by accountants for everymore? Some of my friends are accountants, and they are honest. They would probably get my vote any day. In general they have more common sense than others. But what is wrong with the other professionals?

Many Irish professionals have studied or worked/trained abroad, so statistically there is a good chance of a foreign-trained one entering the Dail. However, most, if not all, would not even dream of it! What businessperson of sanity would put everything on the line to join the petty gombeenism of Irish politics?

About 30 TDs are former teachers of one sort or another. (Easy to understand why – they have guaranteed jobs should they fail to get elected or get kicked out!) Most of the rest are either publicans, lawyers, accountants or farmers. No businessmen/women that I can think of. The few (guys like Ivan Yates) left after a brief interlude. Even the much vaunted Georgy Lee has achieved nothing, bar a few acerbic remarks as a commentator. Even he is guaranteed a job back in semi-state RTE should he lose his seat.

As for accountants, :confused: well, don’t forget that Sean Fitz and his cohorts, and most of the senior lenders in Irish banking are accountants.
Rs
K.

@tommyt wrote:

Would very much agree with that. I think (from my blinkered planner’s perspective) that NAMA will have to assume the mantle of, or be the parent body of, a regeneration agency. So much centrally located brownfield land could end up under their remit that this is the obvious first step.

I too agree with the thrust of Gunter’s post, but we have quite a different situation to post-Fire London. Those guys had a greenfield (blackfield?) site, we now have one that has half-built or built- and-forever-empty houses that are economically unsustainable. Similarly, we have hotels currently being run by banks that never can be viable as businesses. Buried way back in the myriad of posts exchanged with garethace I asked the question “Where are the Planners?”

It would be nice to see something akin to the letter by the 46 economists but focussing on planning/zoning and the future of the semi-rural landscape.

Ireland cannot hope to sustain the employment level we had in construction: in recent years it was out of line with our economic size and population. Two thirds of those people will have to quit/retrain/emigrate. Yes, we will lose some great skills, but it was not in our interest to develop them in the first place.
K.

@KerryBog2 wrote:

Buried way back in the myriad of posts exchanged with garethace I asked the question “Where are the Planners?”

It would be nice to see something akin to the letter by the 46 economists but focussing on planning/zoning and the future of the semi-rural landscape.
K.

Excellent point.

B.

@KerryBog2 wrote:

I too agree with the thrust of Gunter’s post, but we have quite a different situation to post-Fire London. Those guys had a greenfield (blackfield?) site, we now have one that has half-built or built- and-forever-empty houses that are economically unsustainable. Similarly, we have hotels currently being run by banks that never can be viable as businesses. Buried way back in the myriad of posts exchanged with garethace I asked the question “Where are the Planners?”

It would be nice to see something akin to the letter by the 46 economists but focussing on planning/zoning and the future of the semi-rural landscape.

Ireland cannot hope to sustain the employment level we had in construction: in recent years it was out of line with our economic size and population. Two thirds of those people will have to quit/retrain/emigrate. Yes, we will lose some great skills, but it was not in our interest to develop them in the first place.
K.

To be honest I haven’t even asociated NAMA with ghost estates or zombie hotels in my mind when I think of the initial first steps of the organisation. To me it is self evident such locations will blight provincial Ireland for at least a decade. If there is some courageous decision making we may see some alternative tenure ideas take root that will realise at least some innovative uses in the medium term for s&a housing comunity or arts focused uses etc.
Somewhere in the links the mention of the vast squatting movement in Berlin in the late 20th century got mentioned, now something along those lines developing I would personally find very interesting but cannot see the Irish intellect being even remotely capable of coping with an ideological attack on the principle of private property.

I have three hopes for NAMA from a land use perspective;
1: to deliver proper holistic urban regeneration on a european model by knocking heads together and being an urban renewal facilitator in central locations.
2: Stop all the nonsense about haircuts and only pay agricultural oe amenity land values on someof the ridiculous sites that should never have been even remotely considered developable due to their obvious constraints. I would include all emcumbered specualtiveland on Motorway corridors in this category also.
3: Pay a decent price for well located zoned & serviced suburban sites to be developed in a logical manner.

You’re quite right that planners have only offered fairly anodyne input into the debate so far, I would hope this will alter as the whole debacle progresses

@tommyt wrote:

You’re quite right that planners have only offered fairly anodyne input into the debate so far, I would hope this will alter as the whole debacle progresses

NAMA and Better Spatial Planning

http://www.irisheconomy.ie/wp-content/uploads/NAMA%20and%20Better%20Planning.pdf

Decent article- I would take umbrage with citing the Docklands (assuming it’s Dublin) with good planning, but like the idea of NAMA attracting back all the super creative Boho types we lost to NYC, SF and Berlin during the boom!

Somewhere in the links the mention of the vast squatting movement in Berlin in the late 20th century got mentioned, now something along those lines developing I would personally find very interesting but cannot see the Irish intellect being even remotely capable of coping with an ideological attack on the principle of private property.

I have a couple of thoughts on this myself. Wouldn’t it be great though, if something could really get on track, in terms of funding for work on the subject. That way, ideas could move up a grade or two past the level of being notions and become something better, more worked out etc.

Even listening to minister Lenehan today, several times the debate ran into the issue of bankruptcy law, and developers not being able to re-purchase properties which they had previously released into NAMA. There are pretty hefty ministerial powers embedded in the NAMA legislation to prevent that from occuring. But still, there are legal hurdles to surmount down the tracks. You cannot stop a private developer from getting back into business. But you can sure as hell make sure, that the individual does not get possession of their old property again.

At one stage, it was suggested NAMA could sell the loans to the original developer, and then re-possess the loan from the developer a second time. (who was still in hock to NAMA from the original loan) But that was meant to be a joke, as a way to try and extract money from developers who claim they cannot pay.

It reminds me a little of when the United States broke up Ma Bell telephone company into all of the ‘Baby Bells’. Somehow, in the decade that followed all of the little ‘Baby Bells’ started to re-form themselves again, back into bigger chunks of the original Ma Bell company. There is a long road ahead of us, and I don’t know what exactly the future holds in store.

Brian O’ Hanlon

An article worth reading in today’s Irish Times. Eoin McDermott, a chartered surveyor wrote:

Another important factor in this process will be the categorisation of property assets including undeveloped unzoned land, undeveloped zoned land (greenfield, brownfield, prime urban), undeveloped property with planning refusal, undeveloped property with planning permission, partially completed buildings, completed unoccupied buildings, completed partially occupied buildings, etc.

It is imperative that an overall strategy and action plan is put in place for the macro management of these distressed loan assets.

http://www.irishtimes.com/newspaper/opinion/2009/0901/1224253586371.html

It is good to hear from the Chartered Surveyors perspective in the newspaper. We are still waiting from some kind of Yvonne Farrell, Frank McDonald, Merit Bucholz kind of mix, to substitute as an opinion from the Architects of Ireland. Although, in fairness, Sean O’Laoire’s NAMA land visualisations and sketches from a couple of months ago, would qualify somewhat.

Brian O’ Hanlon

I thought this was a good paragraph by professor Barrett in today’s Irish Times newspaper.

The proponents of Nama describe the sale at market prices of impaired assets as a fire sale. The description is, of course, wrong. A fire sale involves assets harmed by the fire and the damage is incorporated in the price. The sale of empty houses, shops, hotels and land bought at inflated prices arises from the economic incompetence of the builders and bankers concerned and not because of any fire damage.

http://www.irishtimes.com/newspaper/opinion/2009/0902/1224253663079.html

I for one, am sick of hearing that ‘media friendly’ phrase of fire sale prices, in relation to everything about the Zoe developments court cases. Well done, professor Barrett.

This is where the limitations of the ‘London Fire’ analogy are exposed also.

Brian O’ Hanlon

@garethace wrote:

I for one, am sick of hearing that ‘media friendly’ phrase of fire sale prices,

This is where the limitations of the ‘London Fire’ analogy are exposed also.

You’re mixing up your analogies there a little bit.

The ‘fire sale’ analogy has to do with flogging property quick and cheap to get some return in and, more improbably, get some kind of hype going to rouse the dead property market.

The ‘London Fire’ analogy has to do with the manner of the response to a property calamity. Faced with the 80% destruction of Europe’s biggest city, the authorities could have said: ‘Our property rights and lack of regulatory burden built this city, our fundamentals were sound, we just need to be sure that in the future every house has a bucket of water nearby’

In deciding not to do this, and instead in attempting to change the fundamentals and re-imagine the city, they laid the foundations for a sustained building programme that put London back on top in jig time and arguably kept it there to this day.

Personally I think the fudamentals of our planning and development system are wrong. I think we need to move to a system where a ‘development authority’ decides what development is in interests of the city/country, goes off and master-plans it and then invites ‘developers’ to come and build the bits they’ve tendered for. At present, the ‘planning authority’ in limited to a negative role, adjudicating on the developer’s plans, which invariable have everything to do with making the developer rich and little or nothing to do with advancing the public interest. How is this not the opposite of planning?

If you combine the concept of NAMA (the taking of a public interest in failed private developments) with the other public interest enterprises like transport21, for example, and put them under the guidance of a ‘Development Commission’ with powers to acquire the property necessary for the execution of a particular strategic plan, and you might have the makings of a mechanism for driving development that would, for once, be integrated, sustainable, and in the public interest.

What’s wrong with that?

@gunter wrote:

Personally I think the fudamentals of our planning and development system are wrong. I think we need to move to a system where a ‘development authority’ decides what development is in interests of the city/country, goes off and master-plans it and then invites ‘developers’ to come and build the bits they’ve tendered for.

I agree completely.

Whats described above is the fundamentals of a proper and progressive planning and development system. The value of lands within these masterplans are then much less speculative.

Thanks gunter,

I’ll read over your post a couple of times again, when I get a chance.

The other crucial thing that professor Barrett’s article exposed in my view, is that phrase ‘development land’.

Barrett is correct, and I would side with him in a lot of issues. The things that seem to piss off professor Barrett, such as this thinking inside of a bubble mentality, are the things that piss me off too.

What is ‘development land’ supposed to be anyhow? Is there a kind of land, upon which development cannot happen? I don’t think so. I remember David Wetzel, when speaking on his ideas about land taxation in Dublin a while ago, recognised the fact that from an economics point of view, even the water and the sea is land. Places such as Dubai, proceed to make themselves more land, if they need it. The fact that land happens to be covered with water, is only a minor technical detail.

When I think of the phrase ‘development land’ I also think of the phrase ‘re-habilitation’.

Does anyone remember that scene from Shawshank Redemption, where Red, played by Morgan Freeman, is up for his parole hearing? He says to fellow at the other side of the desk, yes son, I know what you think ‘re-habilitation’ means. It is a bull s*** word, a politicians word. A word made up, so that young men such as yourself can wear a suit and have a job. Go ahead and fill out your papers, becasue I don’t give a damn.

Brian O’ Hanlon

@gunter wrote:

Personally I think the fudamentals of our planning and development system are wrong. I think we need to move to a system where a ‘development authority’ decides what development is in interests of the city/country, goes off and master-plans it and then invites ‘developers’ to come and build the bits they’ve tendered for. At present, the ‘planning authority’ in limited to a negative role, adjudicating on the developer’s plans, which invariable have everything to do with making the developer rich and little or nothing to do with advancing the public interest. How is this not the opposite of planning?

@henno wrote:

I agree completely.

Whats described above is the fundamentals of a proper and progressive planning and development system. The value of lands within these masterplans are then much less speculative.

Dead right. The housing bubble all stemmed from rampant land price speculation rather than inflated costs for building houses. We need a complete rethink.

One question that professor Barrett did ask, and didn’t exactly venture an awnser himself in today’s Irish Times article is: Did we sow the seeds for the ‘Casino’ banking system twenty years ago, in the last major banking crisis on this island.

This is where I really do get stuck. I don’t remember the last banking crisis we had on this island. Perhaps some one else can fill in those details better than I can.

You see, economics is not my field, whereas property is. Land economics is something that I am interested in, because it informs quite a lot of decisions to do with design and planning. But Land Economics is hardly taught, or at best taught poorly in architecture schools. To the extent where architecture students all fall asleep in the Economics class. (Or was it only myself) We need to animate that subject for students. It is like the problem with higher mathematics in second level schools – nobody will touch it with a barge pole. I would not blame students either, it is made too boring by the manner in which it is taught.

The point everyone here should be interested in, including architects and planners, is what sorts of ‘seeds’ is NAMA going to sow for the next twenty years. I know NAMA is important to improve the image of Ireland abroad etc. But professor Barrett talks repeatedly about is the need for a banking system that serves 99% of the needs of the Irish population.

What we had for the last twenty years in Ireland probably, was a banking system that increasingly only catered for the needs of 1.0% of the population. The problem is, planners and architects spend most of their time, working in close proximity to that same 1.0% of the population. That is why I believe provocation is now required, within the land professions, in order to shake them out of the current paradigm and set ground rules for a new one.

Brian O’ Hanlon

@garethace wrote:

One question that professor Barrett did ask, and didn’t exactly venture an awnser himself in today’s Irish Times article is: Did we sow the seeds for the ‘Casino’ banking system twenty years ago, in the last major banking crisis on this island.

This is where I really do get stuck. I don’t remember the last banking crisis we had on this island. Perhaps some one else can fill in those details better than I can.

We had a bank crisis, not a banking crisis. In March 1985 Insurance Corporation of Ireland, then a subsidiary of AIB was put into administration. It had unquantifiable insurance liabilities, linked to long-tailed risk (primarily asbestos, etc.) and supposedly underwritten by its “man” in London. The extent of the provisions required would have broken AIB and they could not walk from it as bank bonds have a clause stating that if an issuer does not stand over a subsidiary, then all its paper liabilities crystallize – i.e. fall due for immediate payment. AIB had no option but go to Government, cap in hand and request a bail-out. Taoiseach Garret the Good bought it off them for £1. He probably could have got gratis a substantial chunk of equity at the same time but did not ask for it.

If you look at you next insurance bill you will see a 2% Government Levy – that was introduced to raise the cash for the first bailout of an insurer –PMPA and left there ever since!
Rs,
K.

Very intersting history, and not that long ago. Yeah, I was really wondering what professor Barret was refering to. I know the IMF were barking at the door back in Garret’s time also. I wonder, how Alan Dukes was wrapped up in all of that, at the time.

Apologises, back in 1985 I think I was more worried about how many goals Diego Maradona was scoring.

Brian O’ Hanlon

BOI pubic
BOI private

PPP;) don’t try and separate them if the shit hits the fan

What I have written down below is of great relevance to Irish Architects, or any architects who are seeking to find commission for their services in Ireland over the coming two decades at least. Basically, when you read Pat McArdle’s article in today’s Irish Times, the truth of it all hits you between the eyes. Those ‘angel investors’ who kept the boat afloat for Irish architects over the past decade are essentially wiped out. Even if they get the best possible deal on the 16th of September. Architecture has to look for a new business model, or clear the hell out of dodge. The later being the most likely solution.

Angel Investors

I remember a story told about Bob Noyce, one of the founders of Intel who later became an ‘Angel Investor’ to many Silicon Valley high tech start up companies. When Bob Noyce was preparing his legal will not long before he died, he told his accountant there was something he should look into.

Noyce went upstairs to his bedroom wardrobe and fetched an old shoe box which had been there for years. He handed the shoe box to his accountant. The accountant almost dropped dead when he discovered what was contained inside. It was millions and millions worth of ‘first issue’ stock market tokens for young Silicon Valley companies.

It appeared that Bob Noyce had been pumping money into small companies for decades. But he had no idea what was in the shoe box and whether it had any worth. There were some interesting finds in the shoe box, such as Advanced Micro Devices (a competitor to Intel) first round investment papers. But the bulk of what was in the shoe box was of no value at all, when they went through it.

A lot of the companies had not lasted more than a few months and died. They were forgotten bits of history in Silicon Valley. Bob Noyce was philosophical about the whole thing. The way he looked at it was, he was giving back to the garden from which he had derived so much of his own wealth and achievements. That is what ‘Angel investment’ is all about.

Pat McArdle, an economist until recently at Ulster Bank wrote a good article in today’s Irish Times newspaper.

The difference between the initial value of the projects funded, €115 billion, and the current market value of €50 billion is split 45:40:15 with the borrowers losing €30 billion equity, the banks taking a hit for €25 billion and the Government putting up €10 billion.

http://www.irishtimes.com/newspaper/opinion/2009/0904/1224253820646.html

As soon as I read McArdle’s article, I knew he had put time an effort into structuring the writing and the overall points very carefully. He seems to have covered quite a lot of ground in his article. The paragraph above did strike me as significant. It is the first time I have seen NAMA analysed in that manner.

I like to visualise something called a ‘NAMA tree’. On the 16th September, we will all find our presents underneath the NAMA tree. I can visualize it now. First the taxpayer will sneak down stairs and pick up the smallest of the presents. The taxpayer will give it a shake, listen to it closely against their ear and then turn it upside down and around. Satisfied that they cannot ‘guess’ anymore, they will go about their business satisfied and proceed to unwrap it.

Next will come the the banking institutions. They will choose the next largest present and proceed to do the same as the taxpayer with their present. They too will go away satisfied and unwrap their present.

Lastly will come the ‘borrowers’. They will be the least enthuasiastic about the whole affair. They will take one look at the big huge box lying underneath the tree and say: That is much too big, it couldn’t be mine and walk away in denial.

The truth is, the Irish property developers travelled around Ireland in their Mercedes four wheel drives and helicopters for the past ten years. The story is told in Frank McDonald’s excellent book ‘The Builders’. They weren’t even property developers of any note worthy skills or talent. They thought they were ‘Angel Investors’ like Bob Noyce and NAMA land was their Silicon Valley.

The truth is, many of the developers operated very little sole traders, and very bad ones at that. Yet the banks offered them million after million to do their ‘Angel investing’ with. On the 16th of September, the taxpayer has got the department of finance and heaven knows how many other departments to interpret the figure of €10 billion. The banks are also capable of understanding

The only people who have no ability whatsoever to understand their figure of €30 billion is the Irish property developer. They were the only ones who really bought into the ‘spirit of Christmas’ that was the Celtic Tiger madness. On the 16th of September, the builders will begin their process of collective denial of reality. Perhaps they will never come to terms with their own collective actions. To many of them, the Celtic Tiger was only a shoe box full of monopoly money. It was never real at all.

Brian O’ Hanlon

‘Intrusive’ regulation would damage IFSC, warns Went

http://www.irishtimes.com/newspaper/finance/2009/1124/1224259338529.html

grace you been quite I take it your in the safe?
The only way banking will be fair is if the same rules apply to banks i.e you buy shares the people working for the bank have to personally guarantee them and have a sinking fund. You can do a credit check and request any information you want from the banks.

Even a blood test…
Don’t take photos in the IFSC 🙂

Keep working in architecture Missarchi, there is no future for you in finance.

Too many platitudes and clichés in that article. Why did the journalist not ask some hard questions of Went, also Chairman of the I Times?? Hmmmmmm.

David Went was in Ulster Bank, then Coutts before leaving top job ILP in mid-2007. It is more than a bit rich that he now is pontificating from the podium. What was he doing about the ILP’s lending policy when he was in control there? His suggestion that a rules-based regime was “not a panacea” is obtuse if not even specious to say the least – it was the use of a rules-based system (i.e. subjective criteria by humans) that caused the crisis. Behaviour-based (use of stored historic data) would take years to implement because the raw data is corrupt, caused by years of stupid lending.

What does he propose instead? Answer – it is “crucial that the right staff were hired, that they were paid well, empowered and provided with good IT.” Maybe poor David needs to be told that there are about 25k staff in the IFSC, mainly graduates, working in more than 1000 companies, ranging from aircraft finance through fund management (servicing one third of global hedge fund assets) and SPVs for insurance. Now, in a few words, tell me how a bunch of civil servants, the majority of whom without any qualification (and currently on strike) are going to be able to learn about – let alone oversee and police – complex financial transactions?

“It fills me with absolute horror some of the things I have seen that have emerged,” Went said. I’m sure it does. Me too. But that gob$!te was in control at ILP and was in a position to ask questions, like why fund ludicrous prices for a Ballsbridge property, particularly when it did not even have planning permission? Anyone?

“EBS chief executive Fergus Murphy said the chief risk officer should report to the chief executive of a financial institution and be present at board meetings.” Very erudite. Now, if I’m not mistaken, the CRO at Anglo reported to the CEO and look at what happened there. Sshhhhh – don’t mention directors’ loans.

Slowly going further down the tubes, waiting for the IMF.
Kb.

http://www.shadowland.ie/Shadowland/Comments/Entries/2009/12/14_Panel_Discussion.html

chasing shadows…

For those still interested in NAMA and Bank Inquiries, here is some reading on how Uncle Sam conducts a bank Inquiry – the JPMorgan-Chase Statement On Financial Crisis

Testimony of Jamie Dimon Chairman and CEO, JPMorgan Chase & Co. before the Financial Crisis Inquiry Commission January 13, 2010

In it he has some classic stuff. The gobdaws in Finance, IFSRA and the financial institutions here really should start learning it for future use e.g.

To be sure, there are a number of things we could have done better: the underwriting standards in our mortgage business, for example, should have been higher, and we wish we had done an even better job in managing our leveraged lending and mortgage-backed securities exposures, all of which I discuss later in my testimony. But our entire team – including the firm’s credit officers, risk officers, and legal, finance, audit and compliance teams – worked diligently to address these issues and minimize the cost to our company and our customers.

and other guff. Full text is here
http://newsroom-magazine.com/2010/governance/financial-crisis-governance/fcic-jamie-dimond-statement/

K.

who owns the federal reserve? :p