WHETHER WE accept the proposals from the Coalition Government, Fine Gael or the Labour Party to resolve the banking crisis, we are put between a rock and a hard place. We shouldn’t be there. For this reason, the changes incorporated into the second draft of the Bill to establish the National Asset Management Agency deserve a cautious welcome. They tackle a number of real concerns about the original proposals put forward by Minister for Finance Brian Lenihan – which have been raised by a number of academic economists, and a former Fine Gael taoiseach and party leader, in a debate in our Opinion pages. They would have over-exposed the taxpayer.
Mr Lenihan let it be known in recent days that he would review the risk-sharing mechanism between Nama and the banks but the Green Party has secured a number of key concessions which could make the whole Nama project more palatable for the taxpayer.
The main issue addressed in the Bill published yesterday is the sharing of risk between the banks and the taxpayer. The proposed solution – based around subordinate bonds – appears logical, but judgment is best reserved until the details are made public.
There is, however, greater clarity around the measures aimed at ensuring that there is no rerun of the property boom, no matter how unlikely that might seem at the present moment. The windfall tax on rezoning appears at this remove to be a common-sense solution to the problem of speculation. The requirement for consultation with the departments of the environment, transport and energy will also give some comfort that profit will not be the sole yardstick by which Nama’s actions will be judged.
Equally, the undertaking to clear out the boards of the banks – albeit at a fairly leisurely pace – represents a belated holding to account of the individuals who carry the ultimate responsibility for the reckless lending that was another key factor in the bubble. The legislation specifically outlawing the lobbying of Nama is an imperative, and an indictment of our political and business culture.
As the Green Party has demonstrated, some of the risks associated with Nama can be managed, and some unintended consequences can be anticipated. There is also an opportunity to make sure mistakes are not repeated. Obviously more can be done and Fine Gael and Labour have correctly focused on transparency and accountability as areas of weakness.
Despite the changes, however, there is no escaping the fundamental fact that the Nama Bill is one of the most significant pieces of legislation to come before the Dáil in the history of this State. Its implications will influence the lives of the next generation of citizens.
But we do not yet see the true picture. The price which Nama pays for the assets which it buys off the banks will not be known until the Minister for Finance unveils the valuation mechanism next week. Then, and only then, can the public interest in the risks involved in the Nama project be assessed.