Protecting the taxpayer
Labour analysis the National Asset Management Agency (NAMA) Bill 2009
Issued : Tuesday 8 September, 2009
The bill to establish the National Asset Management Agency (NAMA) is one of the most significant pieces of legislation that the Dáil will ever debate. It involves setting up an agency that will acquire some €80 to €90 billion in property-based loans from Irish banks.
The risks to the Irish exchequer are enormous and irreversible. Overpayment by NAMA for these loans will impose a huge financial burden on the State, yet it is clear that this is the inevitable consequence of the Government's approach
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Summary
Throughout the banking crisis, Labour has been consistent in our determination to protect the interests of the Irish taxpayer, while advancing proposals to restore a functioning banking system, supplying needed credit to the Irish economy at least cost and risk to the taxpayer. Labour's approach, based on temporary nationalisation of the two biggest banks, minimises the risk to the taxpayer, and provides a potential up-side when the banks are re-nationalised.
Labour has also been consistent in our opposition to the underlying culture of greed and recklessness which gave rise to the banking crisis in the first place. During the bubble years, Labour pointed out the dangers and unfairness of soaring house prices, brought forward legislation to control the price of building land, and challenged the tax breaks that were fuelling property prices. Instead of acting to control property prices, Fianna Fáil stoked the property boom, at the same time as they flaunted their relationships with property developers.
As shown in this document, there are serious weaknesses in the proposed governance structures of NAMA. As well as the risks and costs of bad loans being borne by the taxpayer, there is nothing in the NAMA bill to give assurance that a tough commercial approach will be taken with developers.
This document has two parts. The first sets out an analysis of some of the main flaws in the draft NAMA legislation. The second explains the advantages of the alternative approach based on temporary nationalisation.
