We are now approaching endgame for fianna fail’s disastrous NAMA bailout. With tacit EU approval now secured, the first loans are likely to be transferred next week.
These loan transfers are irrevocable, permanently transferring super-sized risks onto irish taxpayers.
Without having nationalised the banks before transferring the loans, as labour proposed, generations of irish taxpayers could be left to pick up the tab for the botched NAMA bailout.
“Today’s approval of NAMA by the EU Commission hardly comes as a surprise as it was the only proposal put on the table by the Irish government. Commissioner Almunia, who as competition Commissioner is charged with scrutinising NAMA, is known to be personally supportive of the NAMA approach. He said last year on a visit to Ireland as Commissioner for Economic and Monetary Affairs that NAMA should proceed ‘as soon as possible’.
“NAMA is only part of the bigger picture in terms of EU approval for Fianna Fail’s bank bailout efforts. Approval is now awaited for the bank restructuring plans submitted to the Commission by AIB, Bank of Ireland and Anglo, the three biggest NAMA participants. Given the Commission’s track record in dealing with other European banks, the conditions attached to any approval could be quite onerous and could have a significant impact on the future structure of the Irish banking sector.
“It is now up to the public servants involved in the NAMA process to ensure a robust valuation process that doesn’t leave taxpayers exposed to billions in losses. With the cost of resolving the banking crisis expected to escalate, it is essential that everything is done to keep this cost to an absolute minimum. There have been worrying reports of late that loans being transferred from Anglo to NAMA could be up to €4bn more than expected, potentially pushing the NAMA total closer to €60bn.
“It is clear that many commercial landlords are living in a NAMA fantasy world. By insisting on maintaining upward-only rent reviews and driving rents ever higher, they are pushing many retail outlets and small businesses to the brink of collapse. Many have had to close up shop already.
“By insisting on keeping rents high, even at the price of leaving a property vacant, landlords are trying to artificially support commercial property yields and the boom-time fairytale of astronomical property prices. If the effect of NAMA is to provide an artificial floor for commercial rents, the burden of restoring competitiveness will be pushed onto ordinary workers through wage cuts and tax hikes. The government must act immediately to end upwards-only rent reviews to give the market a dose of reality, keep more businesses open and stem the rising tide of job losses.”