FG/Bruton anti-NAMA proposal is, sadly, rubbish

[mollox]

There are legitimate arguments to be made on both sides of the NAMA/ Nationalisation debate, even if I detest the Lucey & Co/populist media commentator loose approach to the potential numbers involved.
But, as a life-long ABFFer, I regret to say, the Bruton/FG approach, as espoused in today’s IT, is a clear recipe for disaster, as it displays a complete ignorance of how the real world economic/banking system works.

FG 'good bank' plan offers better alternative than Nama - The Irish Times - Fri, Aug 28, 2009

Firstly: we’re now faced with a banking system where foreign-owned banks e.g Ulster, BoS(I)/Halifax, NIB, ACC etc..are effectively in retrenchment mode, they’re actively trying to reduce their exposure to the Irish market.

When it comes to domestic players, Anglo Irish & Irish Nationwide are dead in the water, while permanent/TSB & EBS are actively trying to deleverage and reduce their loan books – based on the interest rates they are quoting.

The only real players in the credit marketplace are AIB & BOI – and god knows they’re fussy enough about extending new credit.

But, between them AIB & BOI are by far the biggest players in all our key banking markets – deposits, lending (both to SMEs and consumers, mortgages,) money transmission (current accounts, payments) etc etc..

So what is essence of the Bruton/FG proposal, insofar as it affects the real economy?

1. Put the two main banks that drive economic activity in this country (even more so now all the foreign-owned banks want to pull out) on a death-watch for September 2010.
2. Create a new “National Recovery Bank” with no branches/outlets of any kind.

What does Bruton/FG think that (1) above will achieve, other than cause AIB/BOI to pull lines of credit from any even slightly dodgy small business across the country, in order to bolster their balance sheets,never mind not extending credit to new business?
Even if they wanted to lend they couldn’t – because the FG policy proposal would mean that depositors would immediately start to move their funds elsewhere – to banks which aren’t lending to Irish business/consumers.

How does he think that the National Recovery bank (2) will operate for SMEs when it has no distribution outlets? Online/Phone perhaps? This is a serious question.
The only certainty is that it will pick up every bad business in the country as a grateful client, but the logistics of servicing the tens of thousands of SME business customers across the country needs more than a top-of -head sound bite.

There are legitimate questions/challenges for NAMA, mainly around how taxpayers interests can be protected. Nationalisation or majority state ownership of the two main banks may well be an outcome.

But letting the economy/banking system stew for 12 months more than necessary, as espoused by Bruton/FG, is simply a recipe for disaster.

[Dreaded_Estate]

Was the plan not to use the branch networks and staff of the existing banks to do the admin and processing of applicants?
With just the funding coming through the new NRB.

What makes you think anyone would withdraw their money if the deposits were still guaranteed?

p.s. What the hell is ABFFer

[Cael]

Setting up offices around the country wouldnt be a major problem. Where there's a will there's a way.

[toasteroven]

somebody needs to get this man on tv uninterrupted, or on youtube with a series of speeches. With George Lee, David Mcwilliams and others.

It could encourage people to get out on the streets and protest against NAMA.

Thats essentially what needs to happen for this to come down, then the Greens will vote against it.

[mollox]

Was the plan not to use the branch networks and staff of the existing banks to do the admin and processing of applicants?
With just the funding coming through the new NRB.

Why would AIB/BOI co-operate in their own commercial suicide? They'd have nothing to gain and everything to lose. They'd tell the Govt to F.O., or at least do everything they could to act like a public service service i.e. enveloped in red tape.

What makes you think anyone would withdraw their money if the deposits were still guaranteed?

Perhaps not immediately, but once depositors knew they weren't guaranteed beyond Sept 2010 they'd start to move funds and no new depositors would replace those funds.

p.s. What the hell is ABFFer

Anyone but Fianna Fail

[mollox]

somebody needs to get this man on tv uninterrupted, or on youtube with a series of speeches. With George Lee, David Mcwilliams and others.

It could encourage people to get out on the streets and protest against NAMA.

Thats essentially what needs to happen for this to come down, then the Greens will vote against it.

Richard Bruton is frequently on TV & radio.

[Harmonica]

When it comes to domestic players, Anglo Irish & Irish Nationwide are dead in the water, while permanent/TSB & EBS are actively trying to deleverage and reduce their loan books – based on the interest rates they are quoting.

Not true about EBS, Their products have improved a lot in the last few years & they have a separate section pushing top up mortgages at rate competitive to BoI & AIB.

[toasteroven]

Why would AIB/BOI co-operate in their own commercial suicide? They'd have nothing to gain and everything to lose. They'd tell the Govt to F.O., or at least do everything they could to act like a public service service i.e. enveloped in red tape.

Perhaps not immediately, but once depositors knew they weren't guaranteed beyond Sept 2010 they'd start to move funds and no new depositors would replace those funds.

Anyone but Fianna Fail

Richard Bruton is frequently on TV & radio.

When he's not on RTE he gets a fair chance... They are so biased its a bloody joke. Especially on Primetime. Hopefully he will go on Vincent Brown when hes back on. Vinnie is anti-NAMA.

[Hal]

When he's not on RTE he gets a fair chance... They are so biased its a bloody joke. Especially on Primetime. Hopefully he will go on Vincent Brown when hes back on. Vinnie is anti-NAMA.

Just for clarity, what constitutes "a fair chance" in your view.

[Cael]

The idea of setting up a new national bank and letting the private banks go to the wall is certainly a good idea. It could be set up very rapidly by actively headhunting good staff form the collapsing private banks, and office space is readily available at a good price all over Ireland.

But in reality, if the state just tells the privateers that the game is up, we want your offices, there will be no resistance.