European Commission rejects request for information on NAMA “negative equity mortgage” product, after intervention by Department of Finance

The European Commission has finally responded to a request made from here at the start of May 2012, asking for copies of documentation upon which the Commission based its decision to approve the NAMA “negative equity mortgage”, or as NAMA calls it “the 80:20 Deferred Payment Initiative” – remember this was launched by NAMA at the start of May 2012 and applied to 115 residences on a pilot basis, and offered buyers the opportunity to buy a home at a price which NAMA would discount by up to 20% depending on house prices in five years time.

The Commission has rejected the request for the documents, citing objections raised by the Department of Finance in Dublin. Remember there was an interim response from the Commission at the start of June 2012, in which it alluded to objections to the release of the requested information. The Commission’s position is subject to additional representations, and a request to review that position will be made from here later today. Despite the rejection, we do uncover some new information from the 6-page response.

Firstly, there was no Commission decision. This may surprise you, but it was the absence of any Commission announcement in May 2012 which prompted the initial request from here. What seemingly happened was that Ireland submitted information about the proposed scheme to the European Commission “to ascertain whether the envisaged scheme … could have State aid implications” and no “formal notification has been submitted thereafter”. So presumably, the European Commission didn’t consider the scheme to raise issues of state-aid which would require a “decision”.

But what about the documents requested anyway? It seems that the Department of Finance contacted the Commission on 1st June 2012 objecting to the granting of access to the requested documents* Apparently the objections were four-fold but included “the protection of financial, monetary and economic policy of the Member State” Who would have thought that a modest scheme covering up to 750 NAMA dwellings when fully rolled out in a country with 290,000 vacant dwellings – 230,000 excluding holiday homes – would have gone to the “financial, monetary and economic policy” of Ireland?! It is asserted by the Department of Finance that – according to the Commission – “the requested documents relate to the internal development of policy of aspects of the financial and economic policy of the Irish State”

And why should we feel at all entitled to information about the “development of policy of aspects of the financial and economic policy of Ireland” – did we somehow have the impression that we lived in a parliamentary democracy or something?!!

The Commission also claims that the requested documents* “include confidential and commercially sensitive information…Please note that I cannot be more specific with regard to the content of the individual documents concerned, since this would have the effect of partly revealing their content and, thereby, deprive the exception of its purpose”

The Commission’s response is available here, and you can see the initial request and other correspondence here.

*Requested documents
The Decision of the Competition Commissioner approving the Irish
National Asset Management Agency (NAMA) scheme – “the scheme” –
whereby homes are sold with buyers protected against 20% declines
in property values over a five year period.
Documentation and responses to queries provided by NAMA to the
Commission in relation to the scheme
Documentation and responses to queries provided by the Irish
Competition Authority to the Commission in relation to the scheme
Documentation and responses to queries provided by the government
of Ireland and its agencies to the Commission in relation to the
scheme
Copies of representations made by any party, including financial
institutions, to the Commission in relation to the scheme