The outgoing AIB chief executive, said NAMA’s inauguration would not result in more lending to the cash-strapped business sector.
How cash-strapped is a moot point given the lack of demand in so many areas of the economy right now.
TDs at the hearing maintained firms they knew of are being left bereft of funding for no good reason.
The chiefs of Bank of Ireland and AIB denied this was so. Their views reflect the claims made in the Mazars report that was hotly contested by IBEC’s small firms division at the time.
They insisted there was enough money to meet the needs of Irish businesses.
Without having companies putting their names out there saying have been denied cash, it makes Dáil deputies quizzing the two top bankers in the country on the issue was a bit futile.
That lack of data is frustrating those anxious to get some clear signals as to what shape the country and the banks are actually in at this stage in the economic cycle.
The banks have to say the bulk of demand is being met but in reality the situation is so bad it is hard to imagine that too many companies are facing too much hardship at this time.
This is not a defence of the banks.
The harsh reality is that the more vulnerable are getting it in the neck for paltry amounts while the billion-euro property barons are having their bad debts transferred to NAMA.
The Dubai debacle has put fresh focus on sovereign debt and Dermot O’Leary of Goodbody Stockbrokers noted yesterday that since the Dubai debt default shock, the cost of borrowing to the Irish state went up relative to the amounts being charged to higher rated economies such as Germany.
Dubai could not have come at a worse time, just before the Government is expected to slash €4 billion off next year’s budget.
Dubai is about to, or has defaulted, on $60bn of debt which is almost the bulk of that state’s $80bn foreign debt exposure.
It’s true to say that Dubai is the Ireland of the Middle east as far as property is concerned and the €40bn in debt isn’t too far behind the €54bn the state here is planning to hand over to the banks for their dodgy property and land loans.
The fear is that if international bankers become unnerved about the global property market, it may force rating agencies to further downgrade Irish debt which would have serious implications for our rising debt levels.
Hopefully Dubai will not result in this global shift in attitude to foreign debt, but fears we could be headed for another period of uncertainty cannot be dismissed.
That said it looks as if Finance Minister Brian Lenihan and the National Treasury Management Agency have done a lot to reassure global investors that this government will not shirk from tackling the current funding crisis.
To date it is reasonable to assert that the markets have accepted our bona fides on our borrowing difficulties.
But the 0.4% between Irish and German 10-year bond yields on Thursday to 206bps is a sign that the markets are getting jittery on Ireland. Some months back the gap was 134bps.
Luckily the state has done all its borrowing for this year and has covered about a third of what needs to be borrowed next year.
On Thursday also Mr Lenihan made it clear that the Government was forging ahead with the €4bn cuts with the backing of the main opposition parties.
If the Government had any doubt about what to do, the events in Dubai should help stiffen its resolve.
We have to be seen to be doing the right thing. Dubai looks to have banished any notion we can take longer to sort out our problems.