There are three lies being told by the pro-NAMA camp and repeated by journalists who can’t be bothered to check some facts.
Firstly, it is said that ‘NAMA is not a bailout for developers’.
If, by some miracle, NAMA comes good after 10 or 15 years, who will be the owners of these now profitable properties. The same people who own them now. The developers. Yes, the loans are being transferred into an incubator where they can be coddled endlessly. Yes, we are promised that the developers will be pursued for every last penny.
Guess what? You can only go after people who own things that you can claim on. So the ownership is to remain with the developers, ‘ad infinitum’. So, of course, it’ s a bailout.
All this taxpayer effort is being expended to help the tax-avoiding developers hold onto their assets, while, daily, taxpayers are being thrown out of their homes. These homeowners are not benefitting from interest roll-ups and they are often in less negative equity than the developers.
And, if your concern is to get the economy moving again, may I ask you; NAMA might take care of 20% of the banks balance sheets. But it does nothing for the 80% where there are serious problems of indebtedness and negative equity.
Secondly, it is said that ‘the money is coming from the EU and/or the ECB’.
That is the same as saying that the money for your mortgage came from AIB. The State is borrowing this money and you are going to pay the interest and your kids are going to have to pay it back.
There is no special deal and there is no approval of the scheme and there is no allowance for our circumstances. The EU Commission was involved in making sure that the overpayment was not too large and did not amount to an anti-competitive subsidy. The ECB is applying exactly the same rules to us as it does to Germany and to Greece.
Anyone who says different to this, is either a liar or an incompetent. I am happy to see anyone in court on this. I challenge anyone to produce a document from either organisation outlining special treatment for Ireland with respect to the EU Commission or the ECB.
We are in exactly the same situation as someone who had paid off their mortgage and comes back to borrow the same amount and more to bail out a child that is in trouble. At this point, let me remind you of the first rule of lifesaving (in swimming) – you don’t go in the water if you are not entirely sure that you can carry it off without endangering yourself. We were in terrible trouble in the 80’s and, thanks to hard work and the Celtic Tiger, we paid all that debt off in the 90’s. There will not be a second Tiger.
Thirdly, it is said that NAMA will pay for itself over its lifetime.
For about the next 12 months, it might, if the world stays in recession and interest rates stay at their historic lows that allow for the initial rate of 1.5%.
If we come out of recession, interest rates will go back to where they usually are in the EU, ie 4 to 5% (with a premium of at least 1% on top), and then NAMA will be operating at a substantial operating loss. So, it is not a case of waiting for 10 years to see if we get lucky or unlucky at the property roulette wheel. We will be facing operating losses within a year and that means that we will be closing more operating theatres as we pay interest to foreign bondholders.