FG's Solution to the Banking Crisis

[Drico]

Here is an interesting proposal from the FG press office:

Fine Gael Deputy Leader & Finance Spokesman Richard Bruton TD has set out a radical new approach to solving the banking crisis.

“There may be no easy routes out of this crisis, but until we are ready to draw a clear line between the impaired banks that will indefinitely feed off the taxpayer, and ways to support resumed lending to enterprises and households, there will not be a sustainable recovery in the Irish economy.

“The Government’s plan for a National Asset Management Agency is a dangerous bailout for bank investors and poses huge risks to Irish taxpayers. The NAMA proposal has too many weaknesses to inspire confidence. Although immediate nationalisation would avoid some of the problems of NAMA, it still represents a high-risk strategy for taxpayers and a dangerous bailout for banks.

“Fine Gael has set out an alternative twin track approach centred on:

1. Setting up a new National Recovery Bank to finance new investment and stimulate job creation;
2. Giving the retail banks a 16 month period to clean up their balance sheets.

“The National Recovery Bank would be a wholesale bank, funded by the ECB, which could be up and running within four to six weeks. This approach has many advantages: it would get credit flowing immediately, inject new lending into the economy without delay, and help to stimulate job creation.

“Existing relationships between businesses and their banks would be able to continue, but under a more prudent arrangement. Cash-starved businesses would be able to avail of credit facilities once again. And the retail banks would have an onus to clean up their balance sheets within the 16 month timeframe, or face administration.

“This process would underpin the banking system now and into the future. It would leave the toxic property debts in the hands of the banks which made them, and which are better placed to recover them. Crucially, it would facilitate the recovery that the economy, businesses and families so urgently need.

“There are serious concerns about the Government’s plans to set up NAMA, and nationalisation has too many drawbacks. I am urging Finance Minister Brian Lenihan to immediately engage with Fine Gael on these proposals.”

Personally I would agree with the arguments put forward by Bruton here.

How do you lot feel this compares with FF or Lab. policies on the crisis?

[Mr.De-Regulation]

Pretty cool banking plan from Fine Gael IrishLibertarian

Download it here.

I think the other thread on this should be closed, as this OP explains it better.

[Watcher1]

Sounds good on the face of it. I prefer it over NAMA, which I didn't like at all. Wonder how they would actually roll it out - devil in the detail and all that.

This is the concept of creating a good bank and leaving all the bad banks behind, no?

[AMCW177]

HHow do you lot feel this compares with FF or Lab. policies on the crisis?

It's exactly what I've been saying to anyone who would listen (my poor family ) since last September!

After a few years of wavering between the ABFF options, this policy puts me firmly in the FG camp. Which in fairness I've been leaning towards for the last year, but this clinches it.

[atlantic]

It's a good idea and alot of people on this site and general public have been saying the same thing over the last few months but no one was listening.Who would be running this Bank? Who would be in control?Would it be government controlled or private?

[Mr.De-Regulation]

As far as I have read, the government will appoint people to run it. Me probably.

[Drico]

It's a good idea and alot of people on this site and general public have been saying the same thing over the last few months but no one was listening.Who would be running this Bank? Who would be in control?Would it be government controlled or private?

If it is a government bill I would be almost certain that it would be publicly owned. Privately owned is hardly a government solution but one of a private entrepaneur.

[MsAnneThrope]

Comment's by the NTMA's Chief Executive Michael Somers today should also add pressure to reconsidering the whole NAMA route:

NTMA chief executive Michael Somers today told the Public Accounts Committee that putting valuations of the bad loans will present “an enormous dilemma”.

He added: “There will be arguments down the courts if we don’t get it right."

He said he believed up to 5,000 officials in the main banks were currently examining bad loans.

“At the moment, we really have no feel for how Nama will operate. But my preference would be a core group of between 30-40 people.”

But Mr Somers insisted the NTMA would be on a steep learning curve as it has had no past experience of bank reconstruction.

Full story: NTMA warn over bail-out of banks' bad assets

[The Emperor of Absurdia]

I am on the record suggesting we only nationalise BoI purely for its branch network and transactions systems and let the rest go hang. As an idea it was a lot cheaper than keeping all the banks. But I like the cut of Brutons idea even better. Imagine you are a customer of Halifax or Ulster or NIB. Would the collapse of AIB etc. impact you at all ? If not why should you pay for them to recover. How much would guaranteeing all of the personal deposits up to 100K per individual cost ? These might have to be transferred to the new institution for a period of say 2 years before complete withdrawal allowed thus recapitalising on the cheap. NAMA is too expensive and a sh1tstorm of legal. This means credit will not restart and we desperately need that to happen now so that employment is not destroyed