State's bad bank is doomed to fail, says builders' chief
THE State's newly formed bad bank, Nama, won't be operational for more than a year, is fraught with difficulties and could be "doomed to failure" before it begins, according to construction chief Tom Parlon.
Mr Parlon, director general of the Construction Industry Federation (CIF) also said that the Nama fire sale of lands could leave Ireland exposed to what he described as "foreign vulture capitalists".
Mr Parlon also lashed out at the lack of consultation by the Government before the Budget and the lack of stimulus measures in it; and he said nationalisation of the country's top two banks is "extremely likely" if Nama is to work. Speaking to the Sunday Independent, Mr Parlon, said the whole Nama issue is surrounded by confusion and is lacking a clear vision of how it will work.
"The jury is out on it and it's fraught with many difficulties. The more we think about it, about how it is going to work, it is worrying to see there is no clear vision yet. Who's going to run it? There are big question marks over it, and it could be at least 12 months before it is up and running. It could be doomed to failure."
Mr Parlon also called into question the role of Dr Peter Bacon, the man behind the Nama plan, who is currently working as a special advisor to the National Treasury Management Agency (NTMA).
"Peter Bacon has looked at international models but in terms of the practical workings of the scheme, he doesn't have the skills. I'm sure he doesn't, so it's in that detail where the nitty gritty is going to come. He doesn't have that experience."
In response to his comments, Mr Bacon -- who proposed and is overseeing the setting up of Nama -- said he recognises Mr Parlon's right to be angry but said it is time to get on with setting up the agency.
He told the Sunday Independent: "He's perfectly within his rights to be angry, but I have had my day in the sun, and have said what I have wanted to say.
"Now it's about getting on with the job." He declined to discuss the matter further. Mr Parlon also said that Nama cannot be used merely as a "hanging" exercise for the so-called bad developers, but rather it has to be a practical vehicle for working out all these bad debts.
He was speaking on the same day 20 economists published an article in the Irish Times saying that the proposed form of Nama would not work and that nationalisation of the banks is the best course of action for the Government and taxpayer.
"Nama will only work if we get the best price for each site. But we will have a fire sale. We will have a flooding of the market. Then you will have a situation of foreign vulture capitalists coming in and making profits off the back of Irish sites and taking the money overseas.
"That is not what should happen," said Mr Parlon, a former Progressive Democrat minister. Mr Parlon said that mistakes were made by the Government and builders in over extending the market, but said many builders are suffering. He added: "Yes, some will be wiped out, some have already been wiped out."
He also was critical of the banks' refusal to date to be realistic about the valuations of land banks on their books.
"Banks have stonewalled our guys, they are not writing down their bad debts.They gave a figure on their bad debts but the dogs in the street know it's much more than that. The banks are in denial."
- DANIEL McCONNELL Chief Reporter
