Carroll property collapse would be best for taxpayers, says Labour TD

THE collapse of the Carroll property empire could be the best outcome for taxpayers, Labour’s housing spokesman said last night.

In a dramatic intervention as the Supreme Court considers the fate of reclusive billionaire Liam Carroll’s Zoe group of companies, Cork TD Ciarán Lynch said if they were refused an examiner it would mean the real value of property would be revealed ahead of the National Assets Management Agency’s (NAMA) creation.

In such a scenario a fire sale of Mr Carroll’s assets would set the market price for development assets which would then form the basis for the write-downs banks will have to take when the “toxic bank” takes over their bad land deals with taxpayers’ money.

“It is clear that the domestic banks regard the survival of Zoe as crucial to their capacity to get back to ‘business as usual’ as soon as possible.

“The court case must take its course, and if the end result means that we can set a benchmark for the market value of property assets, before NAMA puts us into hock for decades to come, all the better,” the TD said.

“The Government’s strategy based on the setting up of NAMA is one massive gamble with public money that will only pay off with a return of the property boom. Given that this is the kind of mindset that got us into these difficulties in the first place, one must now seriously question, not only the Government’s direction on this, but the basic logic of their whole approach.

“The last thing we need is the Government exposing the taxpayer by taking on risks, based on assets whose values are bloated and over-inflated, all to shore up the major banks,” he added.

The Supreme Court extended Zoe’s protection from creditors until a full hearing of the appeal next week against a High Court decision to refuse examinership to the group whose debts total €1.1bn.

Fine Gael’s deputy finance spokesman Kieran O’Donnell said Zoe’s case “brings into sharp focus” the issue of valuation as it is not included in the draft NAMA legislation published.

“Here we are discussing the NAMA legislation without knowing the crucial part which is the valuation of assets. It’s like buying a car without the engine,” he said.

He added banks are not being compelled to start lending and free up credit to small businesses or home buyers under the draft NAMA laws.

Finance Minister Brian Lenihan said the whole point of the new agency was to clean up the balance sheets of banks “so they are in a position to be a motor of credit in our economy”.

But there is no mention in the 200 sections and 150 pages of the NAMA bill that banks should start lending again, as was the case in the bank capitalisation laws.