EU Green Light Not a Ringing Endorsement of NAMA

The conditions applied to NAMA, as called for by Fine Gael, are welcome. The European Commission must now ensure these conditions are rigorously adhered to.

The EU Commission’s approval of NAMA, which is qualified by a series of conditions relating to pricing, competition and restructuring, as set out by Fine Gael, will provide much needed safeguards for the Irish taxpayer.

The Commission must now ensure that these conditions are rigorously adhered to especially where Anglo Irish Bank and Irish Nationwide Building Society are concerned.

The conditions attached to the EU Commission’s approval of NAMA clearly underline the inherent flaws in the scheme and are critical to ensuring damage limitation for the taxpayer.

 While Fine Gael would have wished that the scale and scope of NAMA were reduced by excluding Anglo Irish Bank and performing loans, we nevertheless welcome the fact that the Commission has taken into account many of the points raised by me in my submissions to the European Commission of 15th December 2009 and 12th February 2010.

By taking on board suggestions, with regard to pricing and the valuation process, the Commission has limited the ability of NAMA and the Government to deliberately force taxpayers to overpay the banks for their toxic developer loans and to distort competition in the property market to the benefit of NAMA. 

This in turn makes it almost certain that the transfer of loans to NAMA from Anglo Irish Bank and Irish Nationwide Building Society will leave both institutions insolvent. The Commission’s guidelines make it clear that in such a scenario, insolvent banks should ideally be broken up and / or wound down in an orderly manner, as Fine Gael has been arguing, with losses being absorbed first and foremost by private investors, including certain classes of bondholders.

The Commission’s guidelines provide that ‘once assets have been properly evaluated and losses are correctly identified, and if this would lead to a situation of technical insolvency without State intervention, the bank should be put either into administration or be orderly wound up, according to Community and national law’.

I am now calling on the Commission to ensure that its own guidelines are followed after the NAMA write-downs render Anglo and Irish Nationwide Building Society insolvent by forcing the Irish Government to either wind them down or break them up as per Fine Gael policy.

 Anglo Irish Bank will report record losses of up to €12bn- Irish Times Mon 1st March

http://www.irishtimes.com/newspaper/frontpage/2010/0301/1224265372916.html

 Anglo Staff Frustrated at  Terms of Redundancy- Irish Times Mon 1st March

http://www.irishtimes.com/newspaper/finance/2010/0301/1224265371978.html