State Street chief warns 'crazy' NAMA scheme will waste €15bn
STATE Street's Irish boss Willie Slattery said the National Asset Management Agency (NAMA) is "crazy", too secretive and could waste as much as €15bn.
Mr Slattery, who is regarded as one of the leading figures in Irish business life and who is one of the authors of the An Bord Snip report, said that the problem represented by NAMA is an even more difficult one than some of its critics have identified to date.
"It is not credible to put all of the private sector infrastructure assets of the country, equivalent to 60pc of an economy, into one body with no transparency, subject potentially to political influence, in any way," Mr Slattery told KCLR radio.
Mr Slattery added that it was "ridiculous" that the country was not taking a cheaper solution to our problems.
It is "ridiculous that we are not taking the least-cost way in relation to the banking system resolution and at the moment it looks to me we are going to waste €10bn to €15bn if we continue with the current policy", Mr Slattery told presenter John Purcell.
The head of State Street's Irish operations, who spent more than 20 years working in the Central Bank, said that the resolution of the collapse of property prices and its fallout for bankers and developers should be sorted without state intervention.
"The advice I would give is that I would leave the resolution of the difficulties of the developers with the banks, I would leave it to the banks to manage. The banks have the incentive to maximise the outcome of this process.
"They have the commercial wherewithal and the toughness to make sure that in their negotiations with developers they will get the best results. That will involve taking losses, it may involve doing deals, but the banks want to rebuild their profitability and their share prices and they have a huge incentive to get that right."
He noted some banks are already allowing the market to operate.
"The foreign banks, for example the Scottish banks and ACC etc, are already working their way through it.
"You know some of the stuff that they have taken on board, they have appointed receivers and sold the property.
"There was a fire sale of property in Mullingar last week. That is the sort of thing that needs to happen in the next number of years. Get the surplus property out into the market place, get it absorbed, let the prices go to where they go and lets move on from here."
Mr Slattery was very critical of the way NAMA is currently constructed and questioned the involvement of political appointees to the board of the Agency.
He was also critical of what he called a "lack of transparency" in relation to the enormous sums of money involved in NAMA.
"Who is going to do the deals now to sell the €50bn or the €70bn of property that is in NAMA? It is going to be a board that is politically appointed and a group of public sector individuals who have no experience in banking system resolution, in a non-transparent way where no one knows and there is no provision for anyone knowing, what specific deals are going to be done," the presenter told the 'Bottom Line' programme.
The secrecy surrounding NAMA made no sense, Mr Slattery added. "Effectively all of the stuff going into NAMA is insolvent and if it had not gone into NAMA would be subject to the insolvency laws, the oversight of the court and decisions of that nature," he said.