Category: Banking Crisis

IT Article on NAMA

With the Lisbon debate now over bar the voting and counting, I’m hoping that despite widespread exhaustion with the topic of NAMA, we can now have a debate about this issue that doesn’t involve misleading spin about IOUs, free money from the ECB, support from international organisations and the like. It’s with that in mind that I have written this article for today’s Irish Times.

Reading it now, the tone seems a bit more strident than my usual approach but I think it’s important that misleading spin be seen for what it is so that we can return the focus to the basic questions of correctly diagnosing the problems with our banking sector and designing fair and efficient ways to deal with them.

For that reason, I don’t plan to engage in a comment-fest here on the various distractions that have been been central elements of the government’s PR campaign on NAMA. If you don’t agree with me about free money, IOUs, ECB, international organisations, or frogs and locusts, fine, but I’ve said my piece on these and don’t see much benefit from repeating myself any more.

Happy Birthday to the Guarantee!

I think we’d be remiss if the blog failed to mark the one-year anniversary of our Bank Guarantee Scheme or, as I like to call it, the initiative formerly known as “the cheapest bailout in the world so far.”

Useful points for discussion might include whether the guarantee was a brilliant move that saved the country from ruin (as our small but dedicated band of Lenihan fans will most likely view it), whether it should have included Anglo Irish Bank, whether it should have included subordinated bonds, and whether it should have applied to all existing liabilities or been limited to deposits plus new bond issues.

Special Purpose Entities

SPEs have been much discussed in the context of the global financial crisis: the BIS has just released a comprehensive new report on this topic.

Bloomberg Article on NAMA

Thanks to commenter Blake for flagging this article from Bloomberg about the NAMA plan.

The reference in the article to the original US Trouble Asset Relief Plan (TARP) is a useful one in light of our current public debate and one that I’ve thought about blogging about a few times lately. It is indeed the case that US Treasury Secretary Hank Paulson wanted to use large amounts of US taxpayers money to purchase distressed assets from US banks, an idea that sounds a lot like NAMA. However, the US Treasury ended up deciding that a better approach was to use the funds to purchase equity stakes in banks for the taxpayer. There were various criticisms at the time that the terms of these equity purchases were too generous to exisiting shareholders but it seems now as though many of these deals will provide a decent return to the US government.

There are, of course, numerous difficulties in comparing bank rescue schemes across time and place but I think the TARP story is still instructive.

G20 and Reforming Banking Regulation

The communiqué for the latest G20 summit is available here. It contains lots of the usual waffle about co-operation on this that and the other, but I think the most important element of the discussions relates to the reform of banking regulation.

Continue reading “G20 and Reforming Banking Regulation”