Borrowers likely to resist Nama's powers, warns CIF

THE WIDE-RANGING powers that the Government proposes giving to Nama are likely to prompt resistance from borrowers, the Construction Industry Federation (CIF) says.

CIF director Hubert Fitzpatrick believes that the agency’s “extreme powers” will draw resistance from borrowers, particularly those who are meeting their commitments to the banks.

He also argues in a draft submission on the plan that there is no need to give Nama these extensive powers, as it will take over existing loan contracts from the banks, which should give it enough power over borrowers.

The Government is proposing that Nama will take over €90 billion worth of loans from the banks which have been secured against properties whose value has fallen dramatically over the last two years. The agency is designed to aid the banks in cleaning up their balance sheets to allow them to raise cash and begin lending to the real economy.

The draft legislation gives the agency extensive powers to do this. It limits both the right of appeal against its decisions and the scope for getting court orders that will prevent Nama from taking over loans and interests in property.

The CIF broadly supports the proposal, but warns that the solution to the current crisis must ensure that the Republic has a viable construction industry.

“The construction industry is a vital part of the real economy and has the sustainable capacity to contribute 12 per cent to 15 per cent to Ireland’s GDP and sustain a strong level of construction-related employment,” Mr Fitzpatrick argues in a briefing document.

“Without a working construction and property industry, economic progress will be slower than it should be.”