The Irish Times today (Dec 17th) features an excellent opinion piece (here) by Karl Whelan dispelling the myth of NAMA’s abilility to “get credit flowing”.  A number of recent developments in the “NAMA-story” outlined in the article give a glimpse of how the key actors have been weighing up the odds. In particular, the comments emanating from AIB and BOI indicate that their  interest in NAMA is along the lines of gaining perceived credibility in the eyes of the international financial markets rather than increasing domestic lending, while it seems the ECB wants to see the Irish government take an ECB-endorsed course of  action but without the ECB itself  being called upon to bankroll it. None of this augers very well for the general public, of course. What’s more, as Karl Whelan notes, it seems that the problem of undercapitalised banks (which NAMA was created to tackle) still hasn’t been addressed.

Declan Curran

NAMA not a panacea, warns Sheehy – Irish Independent

Nama will not leave country awash with cash, says AIB – Irish Times

“If people think the day after Nama that the country is going to be awash with money – that is not going to happen,” he said. “The banks’ balance sheets will be stronger. That will help the banks access long-term funding cheaper and there will be a trickle down effect.” (Eugene Sheedy, AIB)

So NAMA will help the banks of a hole then and the rest us might – despite it being taxpayers who have bailed the banks out – get a small trickle down effect.  For an initiative that is meant to get liquidity back into the market as quickly as possible to help out small and medium sized businesses this statement from AIB’s head honcho doesn’t inspire a lot of confidence.

Rob Kitchin