Here’s a couple of issues relating to the property loanbooks of the banks that will have some bearing on interpreting the average discount paid by NAMA, but which I don’t have good handle on yet.
Author: Karl Whelan
There’s been a flood of recent commentary on NAMA from opinion columnists, editorial writers and broadcast journalists. Unfortunately, much of this discussion has been premised on an incorrect but apparently appealing idea.
This is the idea that it doesn’t really matter which approach we take to resolving the banking crisis because the costs to the taxpayer are going to be about the same no matter what happens. We’ve guaranteed the liabilities, these people will argue, so basically we’re on the hook no matter what. And since all the plans are going to expose us to lots of risk, let’s just get on with the plan the government has.
Advocates of this position often explain the pricing decision facing NAMA as follows: Over-pay and the taxpayer loses, under-pay and the state has to recapitalise the banks, so the price tag is the same come what may. I first remarked on the prevalence of this line of thinking in the media back in March. However, I started to get really worried about it when Peter Bacon regularly made this point during his post-NAMA-proposal media blitz, at which point I named the proposition after its most noted advocate.
Two days into the public debate about the implications of the proposed NAMA legislation, I have been extremely disappointed at the approach taken by the government to debating the key questions raised by this policy.
Today’s Irish Times features a very clear and well-argued op-ed by Brian Lucey on the NAMA legislation. Link here.
The Minister for Finance appeared on Morning Ireland today. A strict interpretation of his comments would suggest that NAMA is going to apply a very large haircut.