Monday 22 January 2018

Maeve Dineen: Forget schoolboy morality, we need debt enlightenment

THERE was some predictable hand-wringing last week when NAMA officials told the Dail that two developers were being paid €200,000 to manage their own portfolios. A further 120 are pulling in between €70,000 and €100,000.

I understand why it sticks in many people's craws that developers are being paid by the State -- but it makes sense to me. The real injustice would be if NAMA paid more attention to public opinion than getting our money back.

At every step in this crisis, we have seen people objecting to reforms because their sense of morality was offended. Many object to helping those who took out big mortgages. Others object to helping people who are up to their eyeballs in debt thanks to buying apartments in Bulgaria or going on shopping trips to New York.

We are told banks should be allowed to go to the wall and bondholders should be burned. We are told all sorts of things based on a schoolboy's sense of right and wrong.

The truth is rather more complicated.

When those who object to helping indebted mortgage borrowers really stop and think about the issue, most of them will admit that they do not want to live in a society where 100,000 families are turfed out of their homes for non-payment.

Economists and moral philosophers may well be right when they tell us the housing market should be allowed to function properly -- but the truth is that a properly functioning housing market would mean that many people would be thrown on to the streets and society would crumble, making life tough for everyone.

People who do not own a home or who are still in a job help those struggling with mortgage or with consumer debt, not because it is right but because it makes sense; a sort of enlightened self-help.

Paying property developers is much the same: morally repugnant but socially responsible. The last Dail took the decision to create NAMA and the new Dail has indicated that it will continue this policy. The dilemma for NAMA's bosses is how to ensure that the will of the people is respected while the agency retrieves as much squandered cash as possible.

If this means paying bankers or receivers or developers money, then we should do it. Sometimes receivers will be the best option but they can be much more expensive than other alternatives and not as effective. Sometimes, NAMA should and does rely on the discredited banks to untangle the disastrous deals that have been struck over the years. Sometimes NAMA should just call in the gardai.

If this means jailing some developers for their failure to co-operate while paying others, then we should do it. NAMA must have both carrots and sticks at its disposal if it is to get our money back. It is naive to believe otherwise.

Putting the country back together again is a very difficult task. NAMA has a big part to play in this process. Too many people who criticise NAMA fail to offer real alternatives.

It is worth remembering that the agency was created by the Dail following huge debate and is now too complicated to abolish. "You cannot unscramble an egg," as Finance Minister Michael Noonan put it during this year's election campaign.

Of course NAMA needs reform. The privacy that surrounds almost everything it does makes North Korea look like a poster boy for openness and transparency. But the reality remains that NAMA is operating in a far from perfect world.

Simple, knee-jerk reactions to its often sophisticated efforts to prevent any further loss of taxpayer funds are not helpful. NAMA, like the Government and the Irish people, must be pragmatic and do what works to restore this country's independence.

We do not have the luxury of objecting to enlightened self-help because it offends some sense of schoolboy morality.

Irish Independent

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