Anglo Irish Bank Director Alan Dukes supports NAMA- surprise surprise

Dukes fails to answer the hard questions on NAMA

Alan Dukes was appointed as director of Anglo Irish Bank by the government and is certainly not an independent commentator on the NAMA proposals. He has long had a reputation as an independent thinker. This reputation is undeserved. He has never come up with creative economic policies. He always has a tendency to talk down to people. Unfortunately on NAMA he is devoid of creativity. He comes across as an elitist who lectures others. The fact that he was a former leader of FG is immaterial. He no longer represents party policy on the issue. In short he has moved away from FG. He should now do the decent thing and join FF- a party whose policy he appears to support. In addition he has always been close to Garret Fitzgerald who has also come out in favour of the NAMA approach.

In the Irish Times article Fitzgerald stated that "I have hitherto avoided any comment on the relative merits of NAMA vis-à-vis other possible approaches because I have not felt competent to comment on the finer points of what is a highly technical issue". Fitzgerald has already come off second best in his battle with the 46 economists who have grave misgivings about NAMA. Professor Karl Whelan exposed the flaws in the Fitzgerald thinking in a debate with him on Newstalk radio. In reality Garret Fitzgerald lacks sufficient understanding of the flaws inherent in NAMA. He has failed to satisfactorily address the ten questions posed by Professor Brian Lucey.

Neither for that matter has Alan Dukes. Today Richard Crowley interviewed Dukes on RTE Radios This Week programme.
Not once did Dukes express any concern for the taxpayers. As far as Dukes is concerned the taxpayers can bail out the banks and to hell with the consequences. He failed to convincingly articulate reasons why we should accept NAMA. He failed to answer with conviction on the purchase price of assets. He fudged his answer. He rubbished the FG proposals without spelling out convincing reasons for so doing. Dukes and Fitzgerald have failed to push for RADICAL changes in the NAMA proposals-which are likely to go through. They are doing a disservice to the country. This is not about political point scoring. It is about securing the best deal for the taxpayer and the country.

Just to pose ONE of Professor Lucey’s ten questions

· Why does no independent analyst support the governments view on NAMA? This includes the Swedish finance minister who ran their bad bank system, who said to the Irish Times that he “favours the more severe mark-to-market write-down of assets rather than a ‘through the cycle’ valuation.”, and that “it (NAMA) does not sound like the right solution to buy assets from private banks.” It also includes the IMF who said " Insolvent institutions (with insufficient cash flows) should be closed, merged, or temporarily placed in public ownership until private sector solutions can be developed ... there have been numerous instances (for example, Japan, Sweden and the United States)

Don’t expect answers from Garret Fitzgerald and Alan Dukes. Too much respect has been shown to both of them. Both have been found wanting on NAMA.

Ireland:Brian Lucey Economist poses 10 Questions to the Government on Nama

Economist Brian M Lucey has been a strong critic of NAMA. He poses 10 Questions for TDs and Senators who support Nama.

• What evidence does NAMA have that the current market price of property, land etc is not in fact the correct price to pay?


• What evidence does NAMA have that the current market price of these is not in fact going to decline for a number of years, as would be the case if Ireland were to follow the common experience of previous property crashes?


• Why would a temporary nationalisation of the banks be a bad thing, given that this would provide the taxpayer with a valuable asset which could be sold in future years?


• Why does no independent analyst support the governments view on NAMA? This includes the Swedish finance minister who ran their bad bank system, who said to the Irish Times that he “favours the more severe mark-to-market write-down of assets rather than a ‘through the cycle’ valuation.”, and that “it (NAMA) does not sound like the right solution to buy assets from private banks.” It also includes the IMF who said " Insolvent institutions (with insufficient cash flows) should be closed, merged, or temporarily placed in public ownership until private sector solutions can be developed ... there have been numerous instances (for example, Japan, Sweden and the United States),


• where a period of public ownership has been used to cleanse balance sheets and pave the way to sales back to the private sector", in the context of saying that the likely losses for Irish banks were such as to render them insolvent.


• Why not force the equity and bond holders in Irish banks to take the first place in the queue to absorb the losses that the banks would have to book were current market prices to be paid for the loans made. After all, that’s what risk capital is for?


• If the state overpays for the loans relative to current market prices, what, apart from a functioning banking system, does the taxpayer gain?


• What percentage of book value of the loans should NAMA pay, given that current market prices for land and development properties are somewhere around 30% or less of book value?


• If NAMA were to pay say €60b for loans that are worth only €30b, how can this transfer of a full years tax revenue to private speculators be justified in this economic time?


• If, as is entirely possible, the loans transferred to NAMA do not provide sufficient income to meet the coupon payments of the bonds issues by NAMA, will the taxpayer, at least in the short term, not have to meet these payments?