Leadership

Lenihan hits back at NAMA ‘trickle-down’ effect comments

27.11.2009
Minister for Finance Brian Lenihan TD has hit back at recent comments by outgoing AIB CEO Eugene Sheehy that NAMA would not get credit flowing automatically in the Irish economy once its operations are up and running.

Sheehy made the comments yesterday while appearing before the Oireachtas Joint Committee on Finance and the Public Service, saying that NAMA would only have a “trickle-down effect” on consumer lending and that people were mistaken if they thought that Ireland was going to be “awash with money” the day after NAMA is established.

However, Minster Lenihan disagreed, the Irish Examiner reports, telling attendees at the American Chamber of Commerce’s Annual Thanksgiving Lunch yesterday that “Government has taken specific powers in the NAMA legislation to make credit available to support the economy. Those powers are in the legislation; the president has signed it”.

Up the garden path
Following AIB’s appearance before the Oireachtas Committe, Fine Gael’s spokesperson on finance Richard Bruton TD claimed AIB was walking the Government “up the garden path” when it comes to NAMA.

Bruton claimed AIB would not be channelling cheap money from the European Central Bank into the Irish economy.

When asked what AIB will do with the bonds given to it through the transfer of its loans to NAMA, Sheehy told the Committee that the bonds would go to improve the bank’s overall funding position.

When pressed if AIB would be taking those bonds to the European Central Bank (ECB) to acquire funding, Sheehy said that was one of the options for the bank, which it would consider.

“The NAMA bonds will be part of bank’s overall liquidity position. It will improve the overall funding position of the bank and the country,” he told the committee.

According to Bruton, rather than exchanging NAMA bonds with the ECB in exchange for cheap credit, AIB will be hanging on to the bonds in order to strengthen its own balance sheet.

“This is totally contrary to what Fianna Fáil promised NAMA would do, and to what AIB promised the Government,” he said.