Dail debate on NAMA: May 12 and 13

The Labour Party is sponsoring a debate in the Dail on Tuesday and Wednesday evenings this week on NAMA. The motion will call for the temporary nationalisation of the banks covered by the State guarantee.

You may follow the debate live on the web at www.oireachtas.ie. The times are 7pm to 8.30 pm on both Tuesday and Wednedays evenings this week May 12 and 13th May.

21 replies on “Dail debate on NAMA: May 12 and 13”

This will be interesting, to see the debate, and depressing, to see the debate.
It is also pointless, in that the government will win the vote with whipped lobby fodder plodding through the gates regardless of their views or level of understanding. As a senator noted to me last week on another issue : I will always vote my part line regardless of my conscience.

Expect a debate full of halftruths, mistruths, deliberate misunderstandings, mis-charactrisations of the alternative positions, confusion of basic economic positions and a liberal dose of unvouched assertion. With some luck we may even have unvouched aspersions being cast on posters here!

The most important debate in Irish economic history is a foregone conclusion and democracy is all the poorer for that. Now for the economy to be made all the poorer. Just dont say we didnt tell you….

Prof Lucy, Your right – sorry about that! Some Words-of-Wisdom (WOWs) over on Cynicuseconomicus.blogspot.com. Your comments are mild by comparison.

Brian P

[…] Originally Posted by Digout I thought all jobs over a certain value are supposed to be tendered? yes they are. Unless they arent. These werent. But we will never know. Meanwhile theres a debate in the Dail on NAMA this week The Irish Economy Blog Archive Dail debate on NAMA: May 12 and 13 […]

This I posted as a comment on another post but it bears directly to the issues here

I spoke today to the man who invented the term Zombie Bank, Ed Kane, of Boston College. He has been following the debate here a little, and considers the government position to be “regulatory gambling”. But sure, what would he know

“Edward J. Kane is the James F. Cleary Professor of Finance at Boston College. From 1972 to 1992 he held the Everett D. Reese Chair of Banking and Monetary Economics at Ohio State University. A founding member of the Shadow Financial Regulatory Committee, Kane rejoined the organization in 2005. He served for twelve years as a trustee and member of the finance committee of Teachers Insurance. Currently, he consults for the World Bank and is a senior fellow in the Federal Deposit Insurance Corporation’s Center for Financial Research. Kane has served as a consultant for numerous agencies, including the Federal Home Loan Bank Board, the IMF, various components of the Federal Reserve System, and three foreign central banks as well as the Congressional Budget Office, the Joint Economic Committee, and the Office of Technology Assessment of the U.S. Congress. He is a past president and fellow of the American Finance Association and a former Guggenheim fellow. He also served as president of the International Atlantic Economic Society and the North American Economics and Finance Association. Kane is a longtime research associate of the National Bureau of Economic Research. Besides authoring three books, he has published widely in professional journals and currently serves on eight editorial boards. He received a BS from Georgetown University and a PhD from the Massachusetts Institute of Technology. ”

Ed is coming here for a conference in June and will be keynote at the conference next year. By then we can see the full effects of the zombification of Irish banks. Dead men walking….


they (FF/GP) wont listen to good advice. I truly hope Finance give them good advice and they are simply ignoring it. I have no evidence that that is so but either they are getting and acting on bad advice or getting good and ignoring it. Both are observationally equivalent.

What would the State do with these bad banks, after they were nationalized? In my view, the only workable thing would be to merge them into one or two entities, strip the debt and then somehow float them or otherwise sell them at a relatively low price. (Personally I think that is an acceptable plan, but am I missing some other possibility?)

@Antoin : indeed, Karl Whelan has noted this a few times : nationalise, recapitalize, reorganize and refloat (or whatever).
Its not just bogus, its downright lying to say that there is no way back from nationalisation….

Usually when everyone agrees on some economic issue i get worried! Now maybe I am wrong but it appears that everyone agrees that properly capitalised banks will solve a lot of our problems and the debate is around a way to achieve this.
But will it? Yes we hear things about businesses needing access to cash for working capital and this lack of working capital is no doubt causing some unemployment. However if all the businesses who needed working capital had it would things be that much better? I don’t actually believe so as I do not think that there is that much additional demand for credit out there.
That said it is of course important that the banks are properly capitalised and how this implemented is of critical importance to the state and therefore debate should occur. However it is also important that debate should occur around what happens if the bank are recapitalised and the economy is still in trouble.

Properly recapped banks are a necessary but not sufficient condition to have credit flowing.
As things stand, they arent and the pref share recap (the warrant element in particular) has exacerbated the problem.
If the banks are not healthy then the economy is in trouble. The economy will be in less trouble in a healthy banking system but still in trouble. So its not a magic bullet.
Finally – just because a business wants capital doesnt mean it shoud get it. There is a credit squeeze (reduced supply) and a credit quality decline (effective demand reduced for a given quality level) so …

you need an invite. Why bother tho….it will be on the interwoogie . Plus as I mention we could script it….

@Brian Lucey: “The most important debate in Irish economic history is a foregone conclusion and democracy is all the poorer for that. Now for the economy to be made all the poorer. Just dont say we didnt tell you….”

The outcome of the Dail debate might be a foregone conclusion, but that doesn’t mean that the battle for a better decision is lost. Decisions aren’t made by the Dail anyway. The thing to do at the moment is to encourage those property-developers and friends of Tom Parlon who are trying to screw as much money as possible out of NAMA. If there’s much more of the sort of stuff discussed in today’s papers, either the Dept of Fin may get cold feet about the risks of NAMA or the populace may rise up and hang politicians, bankers and property developers from the nearest lampposts (I have a ladder they can borrow).

BJG has a point. As P J FitzPatrick says, we are united without any dissenting entries, that this is going to be a poor option for our banking system. So maybe this will help influence those who wish to be heard in that debate?

@the cost of bad advice
Yes, selection of the right people is crucial. Personality testing for independent thought, a history of debt realization etc We can only guess at the types actually inserted into NAMA. I find I have nothing further to say bearing in mind that I do not wish to engage this site in vulgar abuse nor in libel about these unknowns.

If anyone would like to attend this debate in the Dáil, from 7pm on Tuesday and Wednesday evenings, please email me (joan.burton@oir.ie) to indicate your interest and I would be delighted to facilitate you.

Is it streamed by audio or video on the oireachtas website? Or is it just a text update?

These are some items I’d hope to see discussed.

A marker laid down is that any NAMA legislation/bill does not delegate responsibility to NAMA to agree the price paid for toxic debt. In other words – no blank cheque. Ideally, the initial legislation would enable the setting up of a body to negotiate the purchase price for the target loans and report back to the Dail.

Transparency. At some point, there must be transparency. Are TDs happy to vote for something they don’t have detail on? I don’t mind if they do this in the normal course of events, but this is not a normal event.

Focusing on TDs (sorry), but how many are qualified to make decisions on this issue? Personally, I’d like to see a level of ownership for those TDs who vote for this legislation. It would be difficult to formulate, but I’m thinking there should be some form of profit share if NAMA makes a profit. Or share of losses in the form of liens on TD/ministerial pensions.

The idea of NAMA recovering its losses from the banks needs to be precise. The government has highlighted this as a failsafe, but I see a real risk that it will be dumped at a future point. When the guarantee was introduced, the banks were supposed to reinsure each other. This was (rightly) removed, but the price of the guarantee didn’t increase. NAMA recouping such losses from banks will be messy to implement. Each loan could be a legal nightmare as banks dispute the work-out processes/maximizing recoveries. Also, at what point in time would NAMA seek such recoveries from banks. I’d suggest that this should happen as soon as a loan is worked out.

Although it might make things a little too complex, we need to see a credit strategy for banks post-NAMA. Are we hitting the reset button just to get a property credit bubble going again? Looking at the HomeChoiceLoan scheme or the €1bn for First Time Buyers requirement in the BOI&AIB recapitalization, I think a certain leopard still has its spots. In all likelihood, credit will remain tight. We need to target it correctly. This could be done through adjusting risk weights. Another area to be addressed is Systemic importance (& moral hazard). Although I would like to see no bank with systemic importance, I’ll settle for two. Any systemic bank should be required to have very high levels of capital.

Is it just me or are Labour paraphrasing Brian Lucey?! Not that there’s anything wrong with that…

Brian, are you charging royalties?

@Marcus : my IP lawyers are watching this CAREFULLY!
Note : I am not a member of, in the pay of, or giving solo advice to any party. I have talked to Labour, and to GP and to FG. I work for coffee (and blueberry muffins).


Why would developers want to screw more money out of NAMA? The less NAMA pays for the assets the better chance the developers will have of buying their way out of NAMA in the future. The developers and the tax payers will be on the same side in that fight. The banks are the ones who will want to overvalue the assets to reduce dilution of shareholdings and to reduce state control of the banks through ordinary share capital.

The Government amendment, which reverses the sense of the Labour Party motion, has been accepted 73 to 59 (Fine Gael voting against the Government but with a number of abstentions).

Last night’s debate is here:http://debates.oireachtas.ie/DDebate.aspx?F=DAL20090512.xml&Node=H12#H12

These debates tend to be ritualised with little real dialogue but I think the Minister was nuanced in his initial comments. I think the crucial point in his opening speech is the following:

“The Government’s objective is to ensure that the lending needs of the real economy are met. A commercially focused banking system, which includes banks having a market presence, operating within market disciplines and constraints, is best equipped to achieve this aim. This is not a position held no matter what the cost, but is rather a balanced approach to the existing circumstances….It is not a simple matter of suggesting that there is a stark contrast between the total nationalisation of the institutions concerned and the continued private ownership of them….I made it clear in my recent Supplementary Budget Statement that any further State capital introduced into these institutions would require the issuance of ordinary shares, which would, inevitably mean a greater degree of public participation in these financial institutions.”

In regard to Anglo-Irish, I note that there staff are rushing to join the IBOA whose Secretary General described Anglo as a “commercial semi-state”. I very much doubt if this is the case but If the staff want the security of being State employees they had better realise where their duty lies i.e. stop protecting their former bosses.

Neither NAMA not Narnia nor Nationalisation will magically tirn on a tap of credit to the SME sector.
WTF are they at, I wonder at times? Its like a banking version of Zeno’s paradox. Gimme 70%….no, 74%….no, 80%, my final offer, ok 87%, and that it, ah ok 92% and thats my final offer.

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