Very specific elite is being protected

“TOTALLY dishonest” that’s how a senior economist at the University of Limerick describes the recently created National Assets Management Agency (NAMA).

Prof Bernadette Andreosso O’Callaghan, a leading economist in the Kemmy Business School, believes that the interests of the taxpayer are being ignored while a “very specific elite is being protected”.

It emerged this week that a small number of developers have loans in excess of one billion euro each, to which the taxpayer will be exposed.

Speaking before last week’s Construction Industry Federation Midwest AGM Tony Ryan, Chairman of the Construction Industry Federation, was strongly in favour of NAMA.

He stated, “We need to remove these toxic assets to make the banks liquid again which will allow them to lend again and simulate the property market”

Prof O’Callaghan is adamant that NAMA is the worst possible solution to the problems within the banking sector and it will not serve the interests of the people of Limerick.

Although she accepts that we need the banks, she does not think we need bad banks, “if a business doesn’t perform in real life it is let go”.

Recent analysis by the economist showed that the model adopted by the German government would be a healthier alternative to NAMA.

The German model leaves the burden of bad loans and toxic assets with the shareholders of the bank, while taxpayers money is reinvested in the economy.

Andreosso O’Callaghan expressed fears that NAMA will depress the property market even further resulting in increased job losses.

The academic was damning of the NAMA rescue model. She stated: “People would be happier if these higher taxes they have been paying were used to create jobs rather than rescuing ailing banks”.

The professor argues that a model similar to that in Germany would stimulate the local economy.

Rather than investing enormous amounts in NAMA some of this money, she believes, could be used to create a rescue fund for small and medium businesses in regions like Limerick which have been hit hard by unemployment.

While she accepts that every solution to problems within the banking sector will be costly, she argued that NAMA will be the most expensive.

She highlighted that recent estimations by economists from Trinity College predict that it will cost the taxpayer 20-40 billion euro over 15 years.

The UL lecturer stated that these were conservative figures and if the rate of unemployment remains high, she fears for what will happen during these years.

She echoed calls from her colleague Prof Martin Mullins and the trade union IBEC, for a national employment plan: “It is important to try to stop the haemorrhage from the labour market”.

The majority of the economists are opposed to NAMA which she described as, “a strange way of doing business”.

Although she acknowledges that we need the banks, she does not think we need bad banks, “if a business doesn’t perform in real life it is let go”.