The Committee will benefit from the expertise of Patrick Honohan and Karl Whelan on Wednesday afternoon: read the announcement here.
Update: Patrick’s introductory presentation is here; text of his introductory remarks here.
Update: Karl’s presentation is here.
6 replies on “Oireachtas Joint Committee on Finance and the Public Service to discuss NAMA”
How was the presentation received by the Committee?
I think it is fair to say that Committee members were concerned that it’s all a lot of money and worried about moving too quickly.
There is a distinction to be made, of course, between the need to move relatively quickly to stabilize the banks and the need for caution in splashing out large sums in NAMA purchases.
Recapitalization and asset purchase are two separate things, we both (Karl and myself) argued. Asset purchase presupposes recapitalization (and should not be used to achieve it covertly), but the converse does not apply.
Committee members seemed somewhat attracted by my proposal to reduce the taxpayer’s exposure to potential inadvertent overpayment by NAMA though a two-part payment scheme — a small downpayment in bonds plus an equity-type stake for the bank shareholders in NAMA recoveries.
There was discussion of whether the State should end-up with a 90% or 100% stake. I stressed this was a secondary issue, but suggested there might be some merit in leaving shareholders with 10% equity rather than likely having to pay out the same amount (say €1.5 bn) in cash compensation based on recent market values.
Asset purchase? What is the point of buying blocks of empty apartments, towers, brown field sites, half finished housing estates in Roscommon? None of these assets are productive not one extra job will be created by NAMA. It will recapitalize toxic banks be acquiring all these unproductive, toxic assets. Of course some well paid jobs for the boys will be created by NAMA itself. That is just more quango jobs and they will have little or no effect on the economy. Did any of this dawn on the committee?
When are the government going to understand, that sticking 64 billion Euro into buildings, that just stand there, doing nothing, while the tax payer picks up the interest tab is suicide.
Anyone who think that the banks after being relieved of their toxic sludge will start lending to businesses is living in the land of the Oireachtas a land of smoke, mirrors, committees and politicians.
The FDIC chairperson in the US recently came out with a statement that, “The Dogma of Too Big to Faill, Should be Dumped Into The Dustbin of History”. Agreed! Mr Lenihan needs to be informed of this. What we need is healthy banks not ones that are so sick, that they require 64 billion of taxpayer debt to turn them from zombie banks to just slightly sick banks. Pay less for the toxic assets and we will need to recapitalize them by direct injections of cash. The whole thing is a massive con!
NAMA is a logistical and legal quagmire it could only be dreamed up by someone who has little or no appreciation of unemployment, corruption and crony capitalism. Irelands big problem is still cronyism and this has dictated the proposed solution to the problem.
NAMA is a gigantic scam. The financials are private companies with senior executives and boards of directors. Their duty is to whom … …? Each of these financials would have had AGMs and would have published details about the operation of the business. They did disclose ALL the details – like the probable risk they were taking with their shareholders and bondholders investments – yes? or, no? Should be easy to find out. Now these companies crashed, and are insolvent, and should be in bankruptcy. This indicates that there must have been a serious flaw in their business plans. Yes? Hence, these executives and their directors were either inept or untruthful. So which is it? And now some Gobshite politician reckons the Irish taxpayer has to foot the bill for this debacle. Throw these financials to the market wolves! The State can establish three new banks, ones without any debts. So why is this not being done? Please remember that the first duty of an elected representative is to the citizens of the state, not to Interest Groups nor Commercial sectors nor their political party. The citizens!!
The media are still telling us, May 13th, that they are still in the dark, and don’t know much about NAMA. However, the logic runs, that it must be great if Sean Dunne and a few other property developers are getting hot under the collar about it. Let’s put this typical Irish I’am loving it, if THEY are in pain attitude aside and take a look at what is going on.
Developers have been helpless to do anything about the market forces that cut them to shreds. They paid too much for sites, built what was not required and mistimed the market completely. In reality, there were never buyers for these assets on this island. Too much supply, a glut of property assets of every hue and description with not enough buyers or tenants. Simply. Not a big enough population in Ireland. Did that ever dawn on any of these gods of wisdom? The government, developers, planners, bankers and the regulator, these are your “gods of wisdom”.
They developers cannot do anything about the market that has made them dead men walking, but they can do what Freud said, they can “transfer” their anger and frustration to some government, cobbled together, Quango called NAMA and maybe, just maybe, the logic runs, if they tie them up in legal knots (think tribunals) for the next few years they might be able to postpone painful reality.
It is only when, they see the assets being seized and sold by the bank, that they would finally have to admit defeat and take off the canary yellow or pink ties for a decade or two. Developers could not postpone their day of reckoning with the banks but they can postpone it indefinitely with NAMA by getting stuck into the legal, constitutional and European law aspects of the quango. just like I predicted they would on this blog!
Why should the taxpayer through the incestuous entity that is NAMA (Bacon was a player in the property market) have to play a guessing game about what any developers assets are worth. The loans to business will never materialise, NAMA or no NAMA. These banks when you look at the figures are also dead entities walking! It is not our headache and certainly not a headache worth paying 63bn and failure of the state for.
Somers has just blown the lid on NAMA at the Dail Public Accounts Committee. The prospect of all these people feeding at the trough while unemployment exploded seemed to be to much for Irelands highest ranking civil servant. It proves that his legacy is important to him. He more or less told Lenihan to push off!