FG – Manama

It is interesting that some folks are caught up with the notion that it’s either NAMA or nothing or that the opposition don’t have any ideas of their own. People might not agree with what the opposition are offering but that doesn’t mean they aren’t offering anything. Labour are talking nationalisation, if temporarily, SF and Socialist Party would look for that to be a more permanent feature of the banking environment either partially or totally. Of course there will be those who believe that anything to do with the banks that doesn’t start with prep walks and end in incarceration is all much the same.

While there was some considerable media attention last week on the announcement by Enda Kenny that FG would be opposing NAMA it was always pretty obvious that this would be the view from once Richard Bruton’s blog post* referring to NAMA as a shotgun wedding.

And this is no recent conversion, FG has said for many months now that their Good Bank solution was the better alternative. In broad terms it means letting the market take its course like a dose of salts through the bond holders. They would have to accept that their risk coupled with the higher margin for profit than shareholders had not worked out and that they would lose money, a lot of money. They were offered a higher rate of return for what was a higher risk, and with greater profit typically come greater risk. It’s a bit like having shock absorbers between the shareholders and the consequences of the actions of banks management.

Once they had taken their hit and reduced the size of the gap between the banks’ capital and their losses, the state could then step in and from the wreckage of each of the banks individually create new ‘good’ banks. In doing so leaving the toxic assets behind in entities that would be managed until they either recovered their value or died and became parks or something. The point of the idea, is to minimise the exposure of the Irish state and thus the taxpayer.
Yet the big story for some was the reaction to Enda’s lack of a definite answer on how much it would all cost. In my own view, that is frankly impossible to put a number on right now as we’ve no concrete idea what specific loans would be transferred and what would be left behind. What is important would be the relative costs compared to NAMA. Fact is this process is going to cost us either way. People asking for exact cost for the Good Bank while ignoring the cost estimate free zone that is NAMA are being partisan, by all means ask how much might it cost but note also to the public that NAMA is cost unknown too. There again this government has previous in that many project such as the Dublin Metro is also a cost estimate free zones; €2 billion, €5 billion who knows.

So the question over the course of September up to the resumption of the Dáil will be how to get this message across to the public that there is more than one way to skin a cat, even a fat cat.


While all this is going on the Greens are talking tough, ok speaking strongly, well, maybe just sending out feelers that are a tad extra firm (they are the non-confrontational Greens after all) on changes to NAMA that might arise post their conference on the issue. The problem with marching the troops up to the line in the sand is that someone somewhere might just get trigger happy on the day and bounce them into something they weren’t expecting to have to put forward.

As for where all this speculative NAMA talk leaves us I may well be in a minority but I still believe that the Green party convention forms part of a potential exit strategy which maps to my expectation in the aftermath of the local elections for the party. My thinking then was that we do contrition less than the Yanks but it is still possible to move for supplication. If the Greens were to spend the summer during the recess reflecting on their position, their future and what mistakes they had made and asked for forgiveness for doing what they did but that their motives were genuine, it could, just could, be enough to save a few of their seats, enough to be able to rebuild in opposition. And what might convince them is if FG/Labour were to commit to not reversing Green policies thus far implemented – it might give them comfort politically if not personally.

But I would admit the odds still favour them remaining in government, but they are setting up the mechanisms at least that would allow them to leave.

*A recent addition to the world of political blogging which has passed somewhat unheralded is the deputy leader of Fine Gael, Richard Bruton.