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Irish economists' opposition to

Source: Reuters - Wed 26th Aug 2009

The Irish government should payno more than current market prices for the property loans itplans to transfer into its "bad bank", a group of 46 academiceconomists said on Wednesday.

Ireland's plans to take risky commercial property loans witha nominal value of 90 billion euros from its banks and transferthem to a state-run National Asset Management Agency (NAMA) have generated much controversy, particularly over the price Dublinwill pay for the assets.

Finance Minister Brian Lenihan has said he will value theloans, some of which are still performing, to reflect their "long-term economic value" and has said he will not force banksto accept fire-sale prices.

But the economists, writing in The Irish Times newspaper,disagreed.

"We therefore urge the government to reconsider its approachto payment for loans to be taken into NAMA, to pay no more thancurrent market value... and to require the investors in thebanks to bear some of the cost of restructuring the system."

The opinion piece was signed by 46 economists, more thantwice the number that signed a similar article in April.

But Lenihan's economic advisor, Alan Ahearne, told The Irish Times that a number of claims in the article were incorrect, andhe said most of the economists in the country had not signed theopinion piece, which was drafted by Professor Brian Lucey of Trinity College Dublin.

Lucey said he had contacted around 250 lecturers and nonehad disagreed with the views in the article. However, he said anumber did not sign because they did not want to get involved ina back-and-forth exchange.

Lenihan will give investors an indication of the cost of NAMA when he opens a parliamentary debate on the plan on Sept.16.

The 46 academic economists, along with some opposition parties, favour temporary nationalisation of the banks as a wayof dealing with the legacy of a property crash that brought the Irish financial system to the brink of collapse.

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