Stitching Up The Tax Payer!

August 20, 2009

Be sure to hit the archive link top right for more posts on NAMA by this writer:

Couple of interesting urls for you:

http://www.rte.ie/news/2009/0731/banks.html

From the above url:

“The Construction Industry Federation has begun consulting its members on the draft legislation.

The Federation, which represents developers,  said it will respond once the deliberations have ended.

The CIF said it is imperative that NAMA is up and running quickly to clear the logjam in the banking system.

The Irish Bankers’ Federation has welcomed the new legislation.

It said the model used for NAMA had been rolled-out successfully in other countries.”

NAMA has only been rolled-out successfully where it has been used in conjunction with temporary nationalization of the banks. Its led to protracted and deep rooted problems in countries that have ignored nationalization eg Japan.

One should read carefully Moody’s assessment of the German experience of cleaning up its banks:

http://www.tribune.ie/article/2009/aug/02/nama-awaits-international-jury/

The German tax-payer is not being loaded with the cost,  the banks themselves will meet the cost of their own restructuring.

The German government would not find it politically possible to do what the Irish  government is attempting,  given the fact that elections in Germany are this September!!

There will be a  political cost for this open- cheque approach provided by the government on behalf of the tax payers of Ireland.

Also:

http://www.irishtimes.com/newspaper/breaking/2009/0730/breaking81.htm

Both CIF (Construction Industry Federation) and IPC ( Irish Property Council ) are gearing up to defend their interests regarding NAMA.

No doubt they will be arming themselves with a large fund for the legal costs involved in challenging any NAMA write down of their loans.

That should cost us all plenty of billions of tax payers money, no money for any government jobs, teachers, doctors, etc, etc. Ah well, should only effect the younger generation!!

The irony is these guys, the developers, are not in jail for defaulting on their loans already. It is also ironic that they still wield the power with our government both through the CIF and now the new IPC.

Its time to let them go.

A bottom line in clearing up the mess is that these guys have no say in clearing up the mess. If they avoid jail through loan defaults,  then, at the very least,  they ought not to be given a property loan ever again by an Irish bank. Cleaning up the banks should mean cleaning out the old guard who created the mess along with the developers/speculators who rode the tiger and lost.

This cleansing should begin with The Public Accounts Committee of the  Oireachtas calling  bankers/developers in for questioning,  in a deep probe
inquiry on the decisions and actions that led to the mess.

The Banking Regulator could attend. We might set up a useful committee
to recommend tighter regulations for the financial industry which has become  a gamblers paradise and a parasite feeding off our future.

Ideally this should be followed by a Referendum on NAMA to allow the Irish people have their say on NAMA.

We could also badly do with an election on the matter of how the financial fall- out of our crash/crunch is being managed by the government.

Let me predict here and now, given the mess of the NAMA legislation proposed by the government,  its daft attempt to appease CIF and IPC and the interest groups that have created the mess, this government will fall,  sooner rather than later.

What we have is a government trying to bank-roll those who have lost at the tables in the hopes they will win back what they have lost. …. That’s not smart. They can’t be that dumb? Yes they Can!

Nationalization should be a bottom line for any negotiations between the opposition parties and the independents.

While Labour are clearly in favour of nationalization,  its of concern Fine Gael are somewhat unclear on the same issue.

http://www.finegael.org/news/a/843/article

We need to examine closely what a ‘National Recovery Bank’ means. Does this mean nationalization and winding down of the other Irish Banks?

Next time we will look at this more!

SeeU

Colm

“From http://www.irishtimes.com/newspaper/breaking/2009/0730/breaking81.htm :

“NAMA, the Government’s ‘bad bank’ solution to the property loan woes, looks to be facing its biggest challenge yet, with the powerful Construction Industry Federation (CIF) putting together a €2m fighting fund to protect developers’ interests.

In a letter to 1,000 developers sent last Monday, CIF director general Tom Parlon called for a special levy of €2,000 to be paid into what he termed a ‘development fund’ as soon as possible, to allow the lobby group to meet the “substantial costs which will be incurred” in defending the federation’s
members.

Asked if those costs would include the funding of a test case legal action against Nama by the CIF, Mr Parlon pointedly refused to rule it out, saying simply that nobody within the organisation was contemplating taking such a case at present.

Asked what such a substantial fund would be used for, Mr Parlon said a consultancy report on Nama, which the CIF had now commissioned from UK-based Lombard Street Research, would alone “cost the bones of €100,000”, while the CIF would also be taking “independent legal advice” on the proposed agency.

Mr Parlon went on, however, to issue what could be construed as a thinly veiled warning to the Government on behalf of CIF members, saying Nama “will only work if everybody [from Nama, the banks and developers] takes an equal hit”.

In his letter to the CIF’s developer members, Mr Parlon makes it clear just how seriously the organisation is taking the Government’s plans to remove both performing and non-performing property loans off the balance sheets of the banks.

According to the letter, CIF officials have, in the six weeks since Nama was announced, “held meetings with members of the Cabinet, Government and opposition to source up-to-date information in relation to the preparation of legislation, the proposed structure of Nama and how Nama or whatever
structure or mechanism is put in place might operate in the future”.

The CIF, Mr Parlon says, has also met various banks, the Central Bank, the Department of Finance and the National Treasury Management Agency.

Other meetings have been held with the interim chief executive of Nama, Brendan McDonagh, and the assistant secretary of the Department of Finance, Kevin Cardiff, the man responsible for drawing up the legislation dealing with Nama.

In the letter, Mr Parlon further informs members that a special subcommittee representative of “major developers with extensive banking experience” has been established to deal with Nama.

According to the letter, the membership of the committee includes: Matt Gallagher of Ravenshall Developments; Joe Cosgrave and Pat Keogh of Cosgrave Developments; John Bruder of Treasury Holdings; Nobby O’Reilly of Pierse Contracting; Alex Brett of Maplewood Developments; Paul Sheeran
of Park Developments; and Dominic Donegan of the Tullamore-based John Flanagan & Sons.

Commenting on the reaction of CIF members to the proposed agency, Mr Parlon writes: “Feedback from members all over the country has been one of concern with regard to the proposed operation of Nama, how it will operate and how it will impact upon members.”

Referring to the CIF’s appointment of UK-based consultants Lombard Street Research to examine the proposals for Nama, Mr Parlon says they have been asked to review the Bacon Report that proposed its establishment.

On this, he says particular attention will be paid to “the proposed rationale for Nama and commentary on other parts of the Bacon Report which are deemed to be relevant”.

Adding to the Government’s concerns will be the proposed formation of a new Irish Property Council (IPC) by developers who aren’t currently members of the CIF or the Irish Home Builders’ Association

(IHBA).

A number of these developers — who include several prominent professionals from law and medicine — are due to meet next Thursday at the Ballsbridge Court Hotel to hold discussions on the formation of the IPC to represent them in negotiations with Nama, banks and the planning authorities into the
future.

In a statement last night, those behind the proposed body said it intends to co-operate with the CIF and the IHBA in areas of mutual interest. And while recognising the CIF had established a subcommittee to deal with Nama, the proposed group said it was not understood “if or how a sub-committee of the CIF has a mandate which allows it represent property developers in all of the
current areas of concern as against the interests of the construction industry as a whole”.

Asked last night about the proposals for the IPC,  CIF chief Tom Parlon dismissed the need for its establishment, saying: “I feel very strongly that there should be just one group. We have invited them
to join with us. There is no point in having more than one group.

“There are big developers who aren’t part of the CIF but we believe we have a very representative sub-committee. – RONALD QUINLAN”

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