Monday, 28 June 2010

A NAMA for the people

RTE 1 on the weekend had a panel with David McWilliams and some other members of the Irish social firmament bandying around yet more blah blah blah (excuse my sudden inability to articulate intelligently) about the Irish economy and our mess.

Yet again the cry for a "Peoples' NAMA", under the now common belief that NAMA was designed as a type of debt forgiveness program. Well, it may appear to be run that way, but the cold hard facts are that a "NAMA for the People" would do this:

  • Transfer all the outstanding mortgages of those people deemed to be in "negative equity" to a special purpose vehicle - that just means a new company of some sort.
  • Call in the mortgages of all those people.
  • Begin to foreclose on those people who can't repay and plan for an orderly disposal of the houses.
  • Pursue the outstanding amounts (the amount of the mortgage shortfall following the sale of the house) out of any other asset these people might have to the point of bankruptcy.

In theory, that is what a "NAMA for the People" would be. I was surprised that David MacWilliams failed to point that out to the journalist, lawyer, politician and broadcaster present and the many people listening.

I wish people with their hands on the microphones to the nation would stop perpetuating this fallacy that NAMA is a bailout. It is certainly the case that people who had command of tens or hundreds of millions of Euros - albeit borrowed - can legally squirrel a nice wedge away protected from future creditors. But it doesn't mean the process to recover as much money as possible from them and their companies is a "bailout" simply because it is frustrated by legal financial shenanigans and the underlying fact that there simply isn't enough money to repay all the debt.

So let's stop the cute hoor nonsense about "NAMA for the People" and start being honest. How about a "Money Grab for the Stupid People". Sound harsh? Well, not harsh enough for those who would insist I and other prudent savers in Ireland now pay to give them a fresh financial start. This isn't a diatribe against those people who are now in negative equity -mistakes are made. Many of those people will quietly and diligently save their way out of their predicament and as a nation we should hold them up as admirable. But I reserve disdain for those who would demand the government expropriate the savings or income of others so that they get a free ride.

No comments: