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NAMA business plan grossly over ambitious – Morgan

15 October, 2009

Sinn Féin Finance Spokesperson Arthur Morgan TD has described the NAMA Business plan, published by the Government last night, as grossly over ambitious. Speaking today Deputy Morgan accused the Government of massaging and manipulating figures and said, like the forecasts of the Department of Finance in recent years, the figures contained in the NAMA business plan are way out off the mark.

Deputy Morgan said:

“The NAMA business plan published by the Government last night is grossly over ambitious. Its figures, like the forecasts of the Department of Finance in recent years, are way off the mark.

“The business plan assumes that only 20% of the loans will default and it describes that figure as conservative. This is based on a comparison to Barclay's bank book defaults of 10% in the 90s, but that was based on their whole book. NAMA is a select number of loans that are inherently risky. The government is massaging and manipulating figures once again in a vain attempt to sell this financial black hole to the Irish people.

“The net profit NAMA assumes to make is based on fundamental numerically flawed arguments. One – that the full value of €88 billion assigned to these loans is correct, i.e. that developers put up 22% of all loans. Two – that property values have only fallen by 47% (when land values have in some cases fallen by 85% and land makes up 36% of NAMA's loan book. And three – that no more loans will default and that the minister won't take on more loans.

“Fees and expenses add up to €2.64 billion over ten years – this is outrageous. €2.64 billion would act as a real jobs stimulus for the economy, but this money been blown on advisors and expenses.

“By the end of the year, NAMA will have taken on only 10 loans amounting to 16 billion. If the loans are this large per developer, it only takes a couple of developers defaulting to go way over the 20% default assumption.

“A business plan for NAMA from the same government that year after year failed to predict the economic crisis that was coming, and in fact stoked it, is useless. They are heading towards further economic melt-down, again because of construction and the banks, only this time the instrument they are using is NAMA.” ENDS

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