Wexford's NAMA 'designer' says it is 'more of a debt collection agency'
wexford-BASED economist Peter Bacon told the Banking Inquiry that NAMA, the agency he helped design, had become 'more of a debt collection agency than a property value maximiser'.
And speaking in response to questions from Deputy Joe Higgins he said he believed the measure with the most significant impact in the subsequent rise of house prices was the decision to reverse the exclusion of tax deductions of interest for investors.
Dr Bacon described the 'enormous potential' of NAMA with its biggest property portfolio in Europe acquired at rock bottom prices.
But he said his criticism was about the 'ethos' of NAMA and not about the 'general approach'.
Dr Bacon told how he had been called to a meeting with the then Finance Minister Brian Lenihan at the height of the banking crisis in November or December 2008 and had 'walked away scratching my head'.
He had been called in again for a further meeting in January 2009 and when he gave the same opinions again Mr Lenihan said that he (Dr Bacon) seemed to have developed his thoughts more and the Minister asked him to prepared a report on the crisis.
Dr Bacon explained how recommendations made by him and his team brought house prices under control in the late 1990s.
He had not been consulted, however, when these were overturned two years later and prices spiralled upwards, he told Chairman Ciaran Lynch.
He said measures recommended by him had halved the inflation in the new house and existing house market between 1998 and 2000 when new houses dropped from a peak rate of 24.6 per cent countrywide to 12.9 per cent countrywide.