More NAMA – AIB – Dictatorship and ECB fears

President Mary McAleese has signed Credit Institutions Stabilisation Bill into law and thus sets up a clash with the ECB who are most concerned about the implications for the collateral that they hold for the massive >€130 billion loans that they have with Irish banks. I think that the ECB is correct and I reckon that the law is unconstitutional as it interferes greatly with the right to private property. I think that the Minister for Finance has aggregated to himself too much power. In summary, yet another FF mistake.

Michael Noonan FG maestro said that while some of the issues raised related to theoretical powers being conferred on the Minister for Finance his primary concern was Section 28 of the Bill which might expose the taxpayer to further losses of billions of euro and that was why it needed to be tested in the Court.

Joan Burton of the Labour Party said that her party’s principal concern related to Section 53 of the Bill which vested power in the Minister for Finance to make orders notwithstanding any other enacthment.
“We do not believe there are any Articles of the Irish Constitution that could justify a usurpation of powers by a minister of the government to make laws on behalf of the State, instead of those laws being made by the national parliament,” “The Bill seems to us to have one essential purpose: to provide for the power to amend the law by ministerial order,” Ms Burton added.

From the Daily Telegraph

Allied Irish Banks moves £7.9bn property loans to country’s ‘bad bank’

Allied Irish Banks has handed over property loans worth €9.3bn (£7.9bn) to the country’s bad bank as the lender’s debt was downgraded along with that of many of Ireland’s other major banks.

By Harry Wilson 5:27PM GMT 20 Dec 2010
Allied transferred the loans to the National Asset Management Agency, the state-controlled toxic debt holder, at an average discount of about 60pc to the face value of the debts.

The transfer came as ratings agency Moody’s followed up last week’s five-notch downgrade of Irish sovereign debt with the downgrade of most of the country’s large financial institutions.

Debt issued by Allied, Bank of Ireland, EBS Building Society and Irish Life & Permanent was marked down by between three and five notches by Moody’s. The ratings agency added that further downgrades could follow and put a “negative” outlook on the banks’ debt.

“Moody’s expects that, over the foreseeable future, Irish banks are likely to continue to face very difficult conditions in the wholesale markets and will therefore continue to rely on central bank funding,” said the ratings agency.

The downgrades come despite the pumping of €8bn of new capital into the banks as well as a further €25bn in contingency funding that was agreed last month as part of a €85bn bail-out package provided to Ireland by the European Union and the International Monetary Fund.

Irish banks have been the biggest individual borrowers in the eurozone and before the bail-out had become increasingly dependent on the European Central Bank (ECB).

In Ireland calls have grown for the country and its banks to renege on their debts and the government is currently in the process of drawing up new laws that will enable politicians to force losses on bondholders as part of a burden sharing process.

A position paper from the ECB published last week said it had “serious concerns” about the implications of the new legislation.