Pressure Mounts As Economists Criticise NAMA Plans

The Government is facing fresh opposition against its plans to implement a so-called 'toxic loans' agency as a group of influential economists have publicly aligned themselves against the project.

The group of 46 economists signed an article by a Trinity professor in the Irish Times, calling on the Government to reconsider the National Asset Management (NAMA) project.

In the article, the economists say the Government will pay significantly above market value for the bad loans advanced by the banks. They contend this overpaying would lead to sums equalling the yearly take of the ex-chequer moving into private hands.

Instead, according to the article, the Government should temporarily nationalise the banking system and allow those holding toxic assets, such as major developers who cannot afford their loans, to default.

This is the second campaign urging the Government to nationalize the banks. In April, 20 economists signed a letter, again in the Irish Times, saying that in the "current circumstances" nationalisation had become the "best option to the government".

The Labour Party's Eamon Gilmore has issued a statement in support of the Nationalisation plan also, saying the government should look again at temporary nationalisation of the banks.

"With public opposition to NAMA growing by the day, with many economists continuing to express serious concerns about the plan and with the Greens at sixes and sevens on the issue, the government should look again," Mr Gilmore said.

He added: "It is ironic that while Minister Lenihan refuses to consider temporary nationalisation and insists on going the NAMA road, he acknowledges that NAMA may not work and that the government may have to take the banks into public ownership eventually.

"Surely it would be prudent to take this action now, rather than taking a huge gamble with taxpayers money on NAMA."

(DW/BMcC)