Fatal flaw in Nama plan exposed - Bruton
POLITICAL REACTION:THE SUPREME Court decision to refuse further protection to Zoe Developments has exposed a fatal flaw in the plan to establish Nama, according to Fine Gael finance spokesman Richard Bruton.
He said the decision showed there was no evidence to suggest that property prices would recover.
The Supreme Court judges had said it was “obvious that some evidence of likely improvement in the property market is absolutely essential” before a court could give the Zoe Group temporary protection from creditors.
“It is equally obvious to me that in the absence of any credible evidence from Government that property prices are only temporarily depressed, the Government cannot justify the use of this elastic concept of ‘long-term economic value’ in paying above market prices for the assets to be bought by the taxpayer,” said Mr Bruton.
“The huge threat from this ill-conceived Nama project is that taxpayers will be forced to overpay the banks for toxic developer loans,” he added. “Rosy and baseless optimism about a recovery in property prices can hobble the public finances for a generation.”
Mr Bruton also said the action by ACCBank also raised huge questions about how the Government and Nama would deal with smaller banks that were part of lending consortiums to troubled developers. Smaller banks may feel that they could gain even greater advantage from a court bankruptcy process than from Nama.
“The nightmare scenario now for the hard-pressed Irish taxpayer would be if small banks like ACC were bought off by the bigger banks and the whole lot passed on to Nama and the taxpayer in a few months’ time,” said Mr Bruton.
Labour TD Ciarán Lynch also said the court decision had put a serious question mark over the Government’s strategy on Nama.
“This decision will provide an opportunity to get an indication as to the state of the property market, before Nama puts us into hock for decades to come. This can only be a good thing,” said Mr Lynch.
He said despite the “bluster” from the Department of Finance it was now clear there was a serious question mark over the entire Fianna Fáil bad bank strategy.
“The Cowen/Lenihan strategy based on the setting up of Nama is one massive gamble with public money, that will only pay off with a return of the property boom. Given that this is the kind of mindset that got us into these difficulties in the first place, one must now seriously question, not only the Government’s direction on this but the basic logic of their whole approach,” said Mr Lynch.