Securitisation

 

If a an Irish financial institution has say 10.000 mortgages on its books, it can package all these mortgages into one product and sell for say €2billion to an EU Pension Fund. The International Financial Buccaneers pocket huge commission, say 3% i.e. €60 million. All the mortgage companies, banks and building societies were doing this. The bottom limit on the amount of Retail Mortgages securitised is €60billion. This is being paid back at roughly €4billion a year. These were very attractive to bankers, from liquidity, competitive interest, able to achieve higher ratings from the rating agencies! etc.

 

The drawback for Ireland of Securitisation is disastrous:

1,       The money from securitisation mainly comes from outside the country. Ireland has a wide open economy. When people make money from these deals e.g. builders, labourers, bankers, solicitors, accountants etc the first thing they buy is a SUV, foreign holidays, helicopters etc with their first purchase. Often products are manufactured in the country that lends the money for securitisation i.e. EU. The point is : the money quickly  goes out of circulation in Ireland.

2        We get one swipe at it for taxation; estimated to have been €100,000 for each house. But the tax take rapidly stops as imports and travel luxuries are bought.

3        The Securitisation money was pouring into the country faster than houses could be built. This shoved up the price of housing. But once this borrowing stopped, tax take fell, houses prices collapsed by 50%.

4        Our well educated youth are now in massive net equity. What bigger insult could we impose on our youth in a system that reveres money and wealth?

5        The annual repayments on worthless securitised loans are the equivalent of a levy of €7,300 on every house in Ireland. This mortgage repayment money immediately leaves the country.

6        Ironically, this would be what the rates would be on a house of c. €350,000 if they were applied at the same amount as during the 70s. But rate money comes back into the community; Securitisation for Irish assets does not.

7        The absence of rates shoved up the value of houses. The International Financial Buccaneers via Securitisation were able to apply larger than normal mortgages, thereby queering the pitch on any attempt that the Irish government might take in applying rates for the next 20 years.

8        If the government applies rates. Young people will not be able to pay the mortgages. The government will have to further bail out the banks.

9        €60billion of Securitisation deals is what I counted. There is more, but time dictates my application to this subject. The negative Equity in connection with Commercial Securitisation has not been calculated by me either; the madness in this area was also apparent e.g. out of town shopping areas etc

10      This is killing local trade. I calculated the following annual less spend per population in each of the counties in the Euro North West Constituency to be:



Clare                                                          106m

Galway                                                           220m

Leitrim                                                         27m

Mayo                                                         117m

Roscommon                                                     55m

Sligo                                                            57m

Cavan                                                          60m

Donegal                                                         140m

Monaghan                                                   53m

Longford                                                      33m

Westmeath                                                      76m

 

The lure of continued borrowing from abroad caused our property developers and bankers to go ape! If we have to pay the bailout currently underway by the National Asset Management Agency (NAMA); you can at least double the above figures!