TARP and Lending

I have noted before that even if one sets aside issues relating to fairness and cost to the Irish taxpayer, I don’t believe that NAMA will achieve what the government states is its purpose, namely “getting credit flowing again.”

In this context, it is interesting to see that there is a debate this week in the US, prompted by this government report, which focuses on, among other things, whether TARP increased lending at assisted institutions. Chicago’s Casey Mulligan writes about it here.

The report’s conclusions, on page 30, noted that there were US government officials who had concerns about the health of some of the banks being assisted and that statements that TARP was going to get lending going again created “unrealistic expectations.”

James Kwak of Baseline Scenario responds here that the politicians knew full well that TARP probably wouldn’t increase lending—that it was more an emergency measure to keep the banking system afloat—and that these claims were made simply to obtain the necessary political support for an unpopular measure. Sound familiar?

Stiglitz on Primetime

Joseph Stiglitz appeared on PrimeTime last night and RTE have also made the extended interview available. He made extremely strong statements arguing against the NAMA approach, as well as advocating mortgage mitigation, and better measurement of societal well-being.

link here

Special Government Bonds and the ECB

The ECB recently issued this opinion on the proposal by Cyprus to issue ‘special’ government bonds that may be used as collateral to obtain liquidity from the ECB.

A New Twist in Latvian Banking Policy

This FT article reports an interesting development in Latvian policy, where the interplay with foreign-owned banks and currency policy are important features.

Donogh O’Malley’s 1966 Announcement of Free Education: The Hidden History

Donogh O’Malley caused consternation in government when he announced his free education scheme in September 1966 without having brought the matter to Cabinet.  The enthusiasm of the public response forced the government’s hand.  Whether or not Lemass had prior knowledge has been the subject of heated debate among historians.  Lemass denied it, but five members of the cabinet told Brian Farrell, while writing Chairman or Chief?, of their belief that not only had he seen the text in advance but he had actually amended it.

The journalist John Healy was a great friend of O’Malley’s.  Later in life he told Michael O’Regan, who is now the Irish Times parliamentary correspondent, that the paper trail had been designed as a smokescreen  and could not be relied upon.  Healy published his recollections in Magill magazine in March 1988, on the 20th anniversary of O’Malley’s death. At  the behest of Michael O’Regan, I’ve dug it out.  The hidden history is here.