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WITH regard to NAMA there is a bottom line – a principle that must not be breached.
It is that limited liability of the private sector (banks) must never be converted into unlimited liability for the public sector (taxpayer).
This must be sacrosanct.
We must remember that Ireland’s reckless financial and fiscal management was well known in London, Frankfurt and New York markets long before the crash happened.
Yet these bond markets continued to extend credit to Irish institutions in the same way as disreputable subprime lenders continued lending regardless of clients’ creditworthiness. The central point now is that, while NAMA would be like a limited liability company, it would not have limited liability as the banks currently have.
Effectively it would become the means for converting limited liability of banks into unlimited liability for taxpayers – a limited cancer of the financial sector would become an unlimited cancer in the fiscal sector.
The golden rule of keeping business limited liability watertight from unlimited personal liability resulted in the developers’ rumoured personal wipeout. Banks pressured them into this fatal compromise. Now banks and developers together want the Government to repeat this reckless, self-inflicted jeopardy by converting the banks’ limited liability debts into unlimited liability for taxpayers. While the taxpayer must of necessity support banks in their self-inflicted crisis, it must be at arm’s length – as with any potentially-fatal infectious disease.
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