As promised below, there is a story in today’s Irish Times that: “THE INTERNATIONAL Monetary Fund (IMF) told Minister for Finance Brian Lenihan last April that the National Asset Management Agency (Nama) would not lead to a significant increase in lending by the banks.” I dare say that this (NAMA not resulting in increased lending) does not come as a huge surprise to anyone??
22 replies on “IMF on NAMA and lending”
I’m shocked.
Shocked I tell you.
The only people who want “a significant increase in lending by the banks” are property developers on the brink and over-borrowed businsesses that can’t hack it in post-bubble Ireland. Everybody else wants sensible lending by the banks. Can people not face the fact that the credit boom is over? If the banks can be restored so that they can deliver sensible lending to sensible businesses, then good enough.
Truly shocking …….. truly. Mental reservations of the highest order. Whatever next?
I’m shocked Joe – we are all shocked Joe ……… Joe Duffy to run in Dublin South ………….. for the ..er.. green_party!
I will now put my comment in the right place!
So, they told the government last April did they?
It can’t possibly be true because in a post made by Minister Lenihan on…..
http://www.fiannafail.ie/news/entry/second-stage-reply-speech-nama-minister-brian-lenihan/
….put there on 14th October 2009 he said “The establishment of NAMA removes the riskiest assets from the banks balance sheets which frees the banks to restore the flow of credit to the real economy.”
So that’s alright then. These documents are obviously wrong.
LOL ….. well I would be laughing if it wasn’t so serious.
Well done to the Irish Times though on getting the FOI act to actually work for once.
@David O’Donnell
Brian Lenihan promised us a wall of cash. Now zhou will urbanely tell us that of course the government didn’t mean what they were saying. And zhou is right. The government never tell the truth about anything. Of course this has happened.
The government concealed that the economy and the banking system were tottering before the 2007 election. They still refuse to admit that AIB and BOI have BOTH collapsed COMPLETELY. To avoid admitting this they are intent on bailing out bank investors and megadevelopers – hence NAMA. And finally the government have covered up and continue to cover up their key role in the collapse of the banks and in covering up their collapse. It’s cover up after cover up. They’ve donned “The Green Burkha”.
The most shocking thing is that the opposition have actively cooperated in the cover up. FG have cooperated on the banks since at least the bank guarantee and all the opposition have given the government a free ride since the debate on the Anglo 10. This is Ireland – the land of concealment and cover up. As far as I can see the entire Dail, a large majority of the media and most of civic society – by failing to raise their voices – have donned the green burkha. It’s tradition.
@Oliver Vandt
…. always sensed that there was a touch of the Tally-Man about ’em.
I notice since the story broke that it has suddenly been ‘buried’ in the IT website and not given the prominence it deserves – ditto on RTE tonight – wasn’t even mentioned in the headlines (but thankfully at least got a mention later).
That’s part of the job of the PR consultancy – not just to put ‘news’ out but to supress anything unflattering – call those editors up and use the bully boy tactics if all else fails. Alastair Campbell was a master at it.
@Joseph
“That’s part of the job of the PR consultancy – not just to put ‘news’ out but to supress anything unflattering – call those editors up and use the bully boy tactics if all else fails. Alastair Campbell was a master at it.”
On NAMA, the banks and the economy the bulk of Ireland’s media have been totally tamed/are actually part of the establishment themselves. Joe Duffy sounded in terror today when he asked George Lee what impact his return might have on the licence fee. It’s not like Duffy feels personally threatened as he won’t be on the bread line whatever happens. But FF PR people have obviously threatened to slit RTE’s throat. Apparently when George Lee left FF were owed total obedience for an indefinite time. They’ll be on to RTE demanding total obedience until the next election if he comes back.
Minister Lenihan to Emmet Oliver, Sunday Tribune, on 6 SEPT 2009!
“Lenihan…asserts that a “wall of cash” from Nama can help to restore the credit flow, even allowing for fewer banks and retrenchment by UK-owned lenders.”
http://www.tribune.ie/article/2009/sep/06/the-business-interview-brian-lenihan-minister-for-/
Also of interest:
http://www.independent.ie/national-news/financial-crisis/minister-rips-kenny-conspiracy-theory-apart-1657571.html
Belturbet Bypass. Hmmm.
Trying to keep things focused on the economics … the IMF were not the only people to argue that NAMA would not get credit flowing. Here’s a blog post I wrote in September pointing out that this outcome was highly unlikely:
http://www.irisheconomy.ie/index.php/2009/09/12/will-nama-get-credit-flowing/
@Karl Whelan
Just one more political thing! I fear this will get lost on the other thread on the story of the day. It also does relate to the NAMA debate.
I was at this talk on 21st October 2009:
http://www.irisheconomy.ie/index.php/2009/10/21/peter-mathews-talk-tonight/
At the end of the night several people, including myself, approached George Lee. Fittingly enough I believe he was the only Oireachtas representative who bothered to turn up. Naturally – given the nature of the meeting – we all complained that not enough was being done by FG on NAMA and strongly urged (some might say attacked!) him to do more himself. His unhappiness RADIATED from him. He loyally defended his party, saying that the Green convention was the place to stop NAMA and that he had been allowed to do some radio interviews on it. However, his discomfort was projected with unmistakable force.
Anyone in the FG parliamentary party who says they didn’t know of his dissatisfaction is being completely dishonest. And no one can be as completely dishonest as plausibly as a politician.
@Karl Whelan again
The issue now is that the government knew this in April but kept on repeating it until very recently. Increased credit was the major part of the establishment’s sales pitch. And they KNEW there would not be increased credit as they were saying it. This is appalling.
I notice the defence (by Cowen) last night is along the lines of “think how bad it (credit flow) would be without NAMA.”
Does anyone take this guy seriously?
……..and I noticed that the IT didn’t even print a word on the letters page about this IMF story and are really starting to play it down now. Someone must have been got at.
If there are any senior civil servants out there reading this – what we need is not so much the FOI Act but a whistleblower. Get in touch with me and I will run with your story!
I think what gets my goat most about this IMF story is not so much that a Minister was told one thing and then said something else (which, once-off, could possibly be a mistake) but actually went on a sustained and highly visible campaign, along with his cabinet colleagues, of saying completely the opposite thing.
On the subject of ‘getting credit flowing’:
The classical economist in me thinks that, in a eurozone free of capital constraints and solvent thanks to the fact that Germany and the Netherlands did not hoc the family jewels at the races, Irish households and businesses were always going to get the credit they deserved and needed.
This simple supply and demand equation means that all the Irish govt had to do to ‘get credit flowing’ was create the conditions under which foreign capital could come in to Ireland in the form of sensible loans. All ING or Deutsche Bank need to make a profit off Irish punters is a sensible regulatory structure. They will supply the funds and set the commercial interest rates.
Now, the fact that not a lot of that has happened just means that there isn’t a huge demand for loans now (leastways not among those in a position to pay the money back).
But that’s a consequence of the situation in which the Irish economy finds itself – the real economy is in cowpads. No one needs a loan right now.
Now back to the real issue: Transferring taxpayers money to bank stakeholders by the billions…
@ Karl – I should have referred to your thread – one more reason not to be too surprised. I should also have referret to the fact that Brian Lucey was on Morning Ireland yesterday talking about this story.
@ Graham – I am not so sure that there is nobody out there looking to get a loan to invest in whatever. There are always good opportunities during recessions if you have good ideas and finance.
@Edgar,
I agree.
So let’s let the proven bankers at Deutsche have a wire-glassed look at there business plans and shovel some Adler-backed euros their way. Geht in Ordnung.
@ Joseph – Brian Cowan also admits that NAMA “is not just sufficient in itself obviously for credit flow”.
“Nama may have to put money into assets to develop market interest in them,” – IMF
Whilst this seems to make perfect business sense when dealing with assets which have a current market value way below what we are paying for them, I think pumping even more money into these ‘toxics’ is going to be an extremely tough sell.
It will be difficult to convince the public that the €10m plot of land the government has bought for €25m will need another €10m invested in it on order to ensure it sells for some kind of acceptable figure.
@Edgar.Morgenroth – ‘Brian Cowan also admits that NAMA “is not just sufficient in itself obviously for credit flow”.’
Did he only say that last night or has he been saying that as often and as consistenlty and for as long as he’s (only) been saying that the primary objective of NAMA is to get credit flowing i.e. without that qualifying statement?
The statement “is not just sufficient in itself obviously for credit flow” is a very recent addition I would suggest (or at best one that wasn’t trotted out very often at all over 2009).
@Joseph – you may well be right. I stuck the extra quote in since it puts a different perspective on that interview, but not necessarily previous ones (I would have to go back and look over all previous ones which I don’t have time for).
(I would have to go back and look over all previous ones which I don’t have time for).
Sadly, I do and I have.
[…] Minister Brian Lenihan has said NAMA is needed to make credit available again to businesses. But he was told by no less a source than the IMF, before NAMA was even implemented, that it would do no such […]