NAMA ‘necessary for economic recovery and a return to healthy lending’

“Necessary for economic recovery and a return to healthy lending”


Yes to Nama
Dara Calleary

EIGHTEEN months ago our banks were on the brink of financial collapse and our economy had gone into reverse. We have come a long way since then but a lot of tough decisions have had to be taken. None of us wants to be in the position we are with the banks but it is vital for every thread of the economy that we have a functioning banking system, and that is why the Government introduced the Banking Recapitalisation Plan last week.
The Plan includes NAMA, the National Assets Management Agency. Through NAMA the Government is buying the land and development and related loans, from banks. This will take the riskier loan classes away from the balance sheets of the banks and make the banks stronger and more secure for depositors and investors.
NAMA has the support of the leading economic and financial experts in the world; the Governor of the Central Bank Patrick Honohan; Secretary General of the Organisation of Economic and Cooperation Development (OECD)Angel Gurria; the European Central Bank and the EU Commission.
It is a tried and tested method which has been used successfully in other countries in the past as part of the work-out process of problem loans.
The steps taken in NAMA will provide certainty to the people from whom we must borrow money on the international markets. If they do not have confidence in our banking system, our lending rates will be more expensive and this will greatly limit our spending power into the future.
I understand that people hear the figures and feel it is unfair that this amount of money has to be directed towards rescuing our banks because of their reckless behaviour. But we will not have recovery without a functioning banking system. The banking system is broken and we have no choice but to help repair it.
A lot of focus has rested on Anglo Irish Bank in particular. People are angry at the excesses at the bank and there is an understandable impulse to obliterate it. Failing to recapitalise Anglo would cost us more than to save it, however, and there would also be very grave consequences for the State.
It is important to say that the banks will not be allowed to make the same mistakes again. Strict regulation has now been enforced and will be maintained.
The banks must also now repay the debt they own to the State by facilitating the economic recovery through better lending. The Minister for Finance Brian Lenihan TD has imposed strict lending conditions on Bank of Ireland and Allied Irish Bank as a condition of their recapitalisation.
Both banks will also have to make €20 million each for Seed Capital to Enterprise Ireland supported ventures and will each set up a fund of up to €100 million for Environmental, Clean Energy and Innovation projects.
The newly-established Credit Review Group will give an independent review of decisions by participating institutions to withhold credit to SMEs, farm businesses, and sole traders.
The Government’s determination to deal with the problems in our public finances through firm and decisive action has engendered real confidence in our economy on the international stage.
Now that we have put the mechanisms in place to fix the banking system our economy will grow faster as a result.

Dara Calleary is Minister of State for Labour Affairs.