NAMA is barely up and running, and already we have confirmation of what we suspected. The situation is far, far worse than they told us.
NAMA’s chief executive has told an Oireachtas committee that of the €81 billion in loans to be taken over from the banks, developers are only paying interest on €27 billion. Originally, we were told that 40% of the loans were performing and would help to cover the cost of the bad loans. This assumption was made on the basis of information supplied to the Minister by the banks.
Brendan McDonagh informed the committee that in about €2 billion of the first €16 billion loans transferred, no payments at all had been paid.
He went on to say that NAMA would consider sending in the bulldozers to demolish some of the developments, and that NAMA would start to foreclose on bankrupt developers by September.
McDonagh described a mindless scramble to funnel lending into one sector at considerable pace and of a reckless abandonment of basic principles of credit risk and prudent lending.
This included failure to do very basic things like recording the right names of people who had borrowed bilions from the banks, or recording details of the properties correctly. It included issuing loans that were not secured against anything, and it included issuing multiple loans all secured against the same property. It included issuing loans to buy agricultural land at commercial prices in the hope of securing rezoning.
He wasn’t sure, he told the committee, if all this was due to fraud or incompetence, but I think I can tell him the answer to that. It was both.
The banks lied and lied and lied, to Lenihan and to the rest of us. They’re still lying. They were incompetent and they were dishonest. They defrauded the country.
On the basis of these lies, Lenihan and Cowen panicked and put the guarantee scheme in place which ultimately forced the country to nationalise the filth that is Anglo.
On the basis of these lies, Lenihan persuaded himself that Nama could somehow magic away the losses that had been incurred through the criminal lending practices of the banks. It was never going to work, and now we can see it unravelling. The government was incompetent and was built on the deeply dishonest Fianna Fáil, which was in cahoots with the crooked bankers and the dodgy builders.
Theres simply no getting away from these losses. Anyone with an eye in their head could see this was going to happen.
Fianna Fáil TD Michael McGrath, chairman of the meeting, at least provided a grim laugh when he observed that this would shock many people.
Previously on Bock : NAMA