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Bacon: 'Sell NAMA and create a new national mortgage bank'

Peter Bacon, the man who invented NAMA, believes the time has come for the State to consider a privatisation.

Peter Bacon has previously accused NAMA of becoming more of a 'debt collector' than an 'asset manager'.
Peter Bacon has previously accused NAMA of becoming more of a 'debt collector' than an 'asset manager'.
Image: Laura Hutton/Photocall Ireland

THE ECONOMIST credited with creating the concept of the National Asset Management Agency has recommended that the government sell off some, or all, of the agency – and instead create a new National Mortgage Bank.

Peter Bacon makes the proposals in a document commissioned by Treasury Holdings, one of NAMA’s best-known debtors, hoping to contribute to ‘the debate on national economic recovery’.

In the document Bacon – who was appointed by the previous government to advise on solutions to the banking crisis – makes the case for the government to consider privatising the agency in order to realise some of its value.

“It would be consistent with the approach being considered in relation to other State-owned assets,” Bacon suggests.

At a minimum the Government should undertake a review of the business strategy of NAMA, including the statutory basis on which it is based, to determine if it offers the best prospect of securing the best return for the taxpayer in the longer term.

The report also suggests that NAMA should try to move away from the lender-borrower relationship it has with its debtors, and instead look to work on a ‘joint venture partnership’ basis – some of which could be big enough to be floated on a stock exchange and release cash for NAMA.

Separately, Bacon recommends the creation of a new National Mortgage Bank, a proposed joint venture between the State and a private partner, which would offer “competitive mortgages for residential purchase that address the issues that are current keeping potential buyers out of the market”.

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Bacon sets a target of 10,000 mortgage loans per year for this institution, or around €9.5 billion in total lending within its first five years.

He also argues for:

  • Speeding up the timetable for selling state assets
  • Considering the sale of other State assets like Government buildings and schools
  • Asking the Central Bank to put greater pressure on banks to address problematic mortgages
  • Introducing the planned Personal Insolvency Legislation as a matter of urgency
  • Amending the current plans for that legislation so that banks do not have a veto over the plans
  • A major expansion of NAMA’s current pilot ’80:20′ mortgage scheme
  • The creation of a State Investment Bank, to be spun off from Enterprise Ireland which already fulfils some roles
  • The formulation of a National Growth Programme, similar to those created in the 1990s

In full: Peter Bacon’s proposals for a national economic recovery (PDF) >

More: NAMA architect fears agency’s pursuit of debts is “not sufficient”

About the author:

Gavan Reilly

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