Peter Mathews (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

I am sure he will, to counterbalance his previous form.

Let us go back to fundamentals. NAMA, at the beginning, was to be the way of harbouring the solvency dangers to six Irish-owned banks in order that liquidity could begin to flow by other methods. That means loans with a par value of €76 billion were parked in NAMA under this model, although Hank Paulson, Ben Bernanke and Tim Geithner said it would not and could not work - that all the pragmatics would make it unworkable in the United States. One does not buy toxic assets, for the very reasons we have discussed - the difficulties of valuation, the difficulties of what happens in subsequent years, the retrospective look to see what was fair or unfair, and so on. Deputy O'Donnell asked why we do not have a benchmark investment return model against which to judge NAMA's performance.

Let us go back to the beginning. The Irish-owned banks, which had loan books of €400 billion, parked €76 billion of those loans, at a price of €32 billion, with NAMA. So it is a financial problem. But now we are discussing it with the political and social wrappings that are very distant from the core need to address solvency in the banking system. If one adds in Danske Bank, ACC, or Rabobank, Bank of Scotland Ireland, KBC and Ulster Bank - all the other domestic banking system banks - one did not just have losses of €76 billion less €32 billion, which is €40 billion, but €85 billion of losses, which is half the GDP of Ireland in 2008. The equivalent level of banking system losses in America, which has a GDP of $10 trillion, would have been $5 trillion. What America did with its Troubled Asset Relief Program, which involved an investment of $700 billion, was to inject capital, to bring in the Federal Deposit Insurance Corporation, to give tailor-made guarantees for deposits and other types of obligation as a banking system. It certainly did not involve bonds which were two- and three-year funding by professional investors. They would have to take their bath and their medicine. That unravelled like an inferno. It was the financial equivalent of the Australian forest fires.

The same Tim Geithner that did all that was pragmatic and correct for the American system - and the world systems - decided that Ireland could be sacrificed to the extent of €32-ish billion in Anglo Irish Bank losses. That is what happened. The witnesses from NAMA are the best people to understand all of this financial engineering for Ireland, the fallout from it and the pragmatic issues in addressing the detritus. It has 800 client cases. A hundred of these have been redeemed, or solved, and are out of NAMA. There are 700 left, but NAMA is down to 50% of its initial peak staff count. There must be an awful lot of tension and high blood pressure in trying to cope with 700 cases, which equals 87.5% of its original client count, with only 50% of its original expert staff. The question arises, then: who is running the ledgers of all these loan accounts? It is back at the banks, maybe. Is that right? I am talking about the accounting ledgers and systems.