Quoted in the Sunday Tribune, Minister Lenihan discusses two part payments:
A levy on bank profits is still planned if NAMA leaves the taxpayer with a shortfall, and there is the idea of paying for the banks’ loans in a two-stage process—possibly 80% up front and the remainder later on, depending on how the loans perform.
But Lenihan has a warning about all these ideas. “There comes a point where you leave so much contingency and risk in the banks that there is no confidence in them. There is a balance you are trying to strike,”
It is becoming increasingly clear that the government is engaging in its own two-stage process in relation to Patrick Honohan’s risk sharing plan. Stage One involves re-interpreting the original plan, which makes a lot of sense, as something completely different which is very flawed—giving the contingent second payment to the banks instead of the bank shareholders as Patrick proposed. Stage Two is to then point out that this reinterpreted plan is flawed and can only be implemeted in a very limited form.
This statement is also the best indication yet that the government’s commitment to its levy idea is, at best, half-hearted.