NAMA: The big lie

The 26 County Minister for Finance Brian Lenihan has confirmed a bailout measuring in tens of billions of Euro for Irish developers, property speculators and their bankers.

Over ten thousand Euro for every man, woman and child in the 26 Counties is to be transferred from the public purse into the hands of Ireland’s private banks.

The unprecedented bailout -- benefiting individuals known to be linked to the current and previous Fianna Fail governments -- is being described by some as the largest white-collar crime in financial history.

Minister Lenihan said that the state would exchange 54 billion Euro in cash for the “distressed” property loans on the hands of the banks, effectively buying green fields, abandoned construction sites and empty developments at a massive, and still unknown, premium.

As the Minister’s statement was being examined today, it appeared the cost to the taxpayer may be even greater than claimed. It has now emerged that there will be large distortion sin the subventions being paid to the various banks. In particular, a large amount of debt will remain on the balance sheet of Anglo-Irish Bank -- previously forced into nationalisation after it collapsed in a fraud scandal last year.

The banks which will gain the most from the transactions are the private banks -- Bank of Ireland, Allied Irish Banks, the EBS and Irish Nationwide.

A “risk sharing” element touted by the government -- and particularly by the junior coalition partners, the Green Party -- all but vanished in Minister Lenihan’s speech to the Dail, involving only 5% of the money to be paid to the banks.

One beneficiary, the Bank of Ireland, now expects to secure over 90% of the value of the bad debts on its books, despite the crash in Irish property prices in recent years.

Bank shares soared again today on the Dublin stock exchange, and have now risen more than tenfold since the National Assets Management Plan (NAMA) was first mooted.

The widely held belief that the bailout amounts to a corrupt “dig-out” for government cronies -- long known to include developers and senior bankers -- has now been augmented by concerns over potential “insider” trading in bank shares in recent months.

A debate in the Dublin parliament yesterday was the scene of tense exchanges and desperate attempts to block the passage of the legislation through its second stage.

Sinn Fein described the NAMA bill as “legalising corruption”. The party’s finance spokesman Arthur Morgan repeatedly interrupted proceedings with the warning that Taoiseach Brian Cowen had consistently told lies, as Minister for Finance and as Taoiseach, in relation to the property bubble.

Despite a suspension of the Dail, Mr Morgan remained seated and said he would not leave until the Taoiseach had at least made an apology to the Irish people.

“People’s backs are to the wall. They are losing their jobs and their homes.”

After a second 10-minute suspension, and with other opposition parties demanding time to speak, Mr Morgan agreed to leave the chamber.

Sinn Fein leader Gerry Adams, who watched the debate from the Dail’s distinguished visitors’ gallery, said he supported the intervention by his colleague despite criticism over the delay.

He said Sinn Fein would do everything in its power to oppose the legislation.

Fine Gael’s finance spokesman, Richard Bruton, said very different figures had emerged during the Minister’s speech than had been bandied around by the Government in the past few weeks.

He accused the Government of spinning and expectation management, and said that the loan-to-value ratio was much higher than that suggested by Government spokesmen in recent weeks.

He said the figures supplied by the Department of Finance yesterday suggested it was as high as 88 per cent.

Mr Bruton said that when rolled-up interest of O9 billion was included in the equation, the loan-to-value was 12 per cent higher than the 77 per cent figure produced by the Department of Finance yesterday.

Fine Gael said that its first, cursory examination of the documentation had unpicked some other major assumptions. It questioned the assumption that there was a realistic prospect of high yields on commercial property.

“Anglo Irish, with O28 billion of loans, and Irish Nationwide, with O8 billion, account for almost half of all the toxic loans,” Ms Burton said.

“The tragedy for the country is that a bank like Anglo Irish Bank, which is a developers’ bank and not of systemic importance, is allowed to grow to extraordinary levels and allowed to imperil [the economy],” she said.

Socialist Party MEP Joe Higgins said: “The self-same banks being bailed out for their reckless lending to greedy speculators and developers will show precious little consideration to ordinary householders who fall behind on mortgage payments,” he said.

After an otherwise predictable debate, Fianna Fail, backed by the evidently cowed Green Party, succeeded in advancing the second stage of the legislation without a single defection from the government benches. But desperate appeals continue in the effort to yet convince the Greens, and possibly Fianna Fail back benchers, to acknowledge the overwhelming opposition of the Irish people to NAMA.

Tonight, in the face of mounting pressure from party members, the Green Party leadership again appeared to bluster and hedge. Environment Minister and party leader John Gormley claimed concessions sought by his rank and file were “fundamental” to their continued participation in the Cabinet.

Mr Gormley said if grassroots members vote against the proposals at their gathering next month, they will have no other option but to leave.

“If the programme for government is rejected, if Nama is rejected, there’s no question that we could not continue our participation in government,” he declared.

But after the Environment minister all but ignored the outcome of a similar meeting last weekend, and in the absence of a tangible change of tack, hopes among progressives that the Green Party leadership might move against NAMA remains low.

Urgent Appeal