NAMA and the banks - Greens are right, have the debate

THERE is a refreshing whiff of democracy in action about the call from sections of the Green Party to hold a special party convention on the form that the National Asset Management Agency (NAMA) might take and how it might do its business.

The consequences of getting it wrong on NAMA are so terrible that it is entirely right that anyone with a stake in this country’s future should try to work their way through the maze that the banks, the developers and our Government propose to lead us through.

The Green Party suggestion can only be considered novel if viewed against the reluctance of other parties to engage in any formal assessment of NAMA.

Undoubtedly, they will all say that consultations are on-going and extensive — the “trust us” argument again — but they will inevitably all funnel to a parliamentary party meeting where the a small number of people will make decisions of huge importance.

These discussions are all the more pertinent as the whiff of collusion between the bankers and failed developers grows stronger every day. Of course these discussions would not be necessary if there was even the slightest prospect of bankers or developers putting taxpayers’ concerns before their own interests.

However, we all know that idea is as fanciful as the suggestion made by Liam Carroll that his companies could be in profit within three years. That the banks endorsed this bewildering contention tells us where their loyalties and intentions lie. The objective was plain enough ... do all you can to maintain the imagined value of the assets at the centre of this crisis.

During the court proceedings Carroll’s accountants admitted that his Zoe group could only repay about one-quarter of what it owes to Irish banks. It is anticipated that NAMA will purchase loans for an average discount of one-quarter. If NAMA were to purchase the Zoe loans at that price it suggests taxpayers would pay three times current market value.

These concerns can only deepen when you consider another argument that is hard to dismiss. There is a growing belief that, last September, the banks misled the Government by suggesting that they faced short-run liquidity problems rather than a long-term solvency crisis brought about by property speculation. By doing this banks managed to receive a five-star Government guarantee to cover their obligations.

No one knows how the Carroll saga will pan out. It is possible that the Irish banks owed money by Carroll will pay off ACC and circle the wagons, telling liquidators to put the survival plan, dismissed as fantasy by the Supreme Court, into action. It is possible that NAMA will buy Carroll’s or other developers’ loans at a large premium without taxpayers ever knowing, the usual “commercial sensitivities” dodge being invoked.

The court proceedings led to concerns that the potential sale of Carroll’s assets would be a “problem” for NAMA’s valuation process. It might be a problem for banks and developers to have the real, low value of Irish property assets established. This of course would make it very difficult for NAMA to pay high prices — three times the going rate maybe — citing the prospect of a long-term return. This may be a problem for bank shareholders but it must be good news for taxpayers.

The Greens are right to call for a proper debate on this sorry, stinking mess. If the rest of us don’t we would be fools and can only be expected to be treated as such. Surely we’ve had enough of that.