- The NAMA transfers are announced
- Quinn Insurance is put into administration
- Some eejits in Switzerland finally make black holes
NAMAI've written various bits about NAMA in the past and have always believed that it is a rotten deal that does nothing in the long term for the tax payer. Sure, it keeps certain financial institutions running and keeps the wolves from the door of certain developers for a while but how is that really in the state's best interest. Yet again Elaine Byrne says it far better than I can in today's Irish Times where she says we have been sleepwalking into NAMA. A letter in today's paper also sums up a lot about what is wrong with the Irish mentality where thousands march about hurling and hunting and only a few hundred (one of whom was me) marched against NAMA last September.
So today we finally get to see some of the toxic loans transferred into NAMA from the banks. According to reports, after this exercise INBS, EBS and AIB will end up effectively in state ownership and the state will hold a substantial minority shareholding in BOI and we will be left needing to recapitalize them giving an overall cost of about €22,000,000,000. As Elaine Byrne puts it, that is about €6,000 per man woman and child in the country.
I still believe the fundamental flaw was the blanket guarantee of all the bank liabilities as opposed to just depositors. Bond and share holders were taking a punt, were drawing down the big returns and so when it all went wrong should not have recourse to get the state to repay them. A short nationalization of BOI and AIB to keep consumer banking functioning while the rest went to the wall would have been cheaper and quicker. Instead we're now up to our gills in debt for absolutely no gain.