A couple of interesting trends reappeared last week in the world of Irish banking. The attention for the past 12 months has been on the developers and their debts, which are bound for Nama. It is now slowly being discovered that the banks' non-developer loans are in equally bad shape. If the developers were the bad guys, how could this be?

Over the past few months we have had AIB and Anglo parking debt in non-recourse vehicles to avoid taking losses and bad debt provisions. I am not privy to the details of these transactions, but they look a lot like Special Purpose Vehicles, which are basically vehicles to hide the true state of the companies' balance sheet, and in effect cook the books. Non-recourse after all means that 100% of the risk is still with the bank.

The government has led this trend by example. It has set up Nama as an SPV to keep the debt off the balance sheet of Ireland. Clearly following this lead, the banks seem to be setting up SPV entities for large portfolios of non-Nama-bound loans.

All of this means that the banks are still cooking their books and hiding the true extent of their losses. The collapse in the property market offers Ireland a unique opportunity to fix once and for all its fixation with property. Hiding the losses and pushing the problem off to the future will not achieve this.

I think, at this point, we all know that the banks and the banking system are bankrupt and that further state intervention is still required. So Mr Banker, stop the lies. I think we can handle the truth.

With this kind of leadership from the government and the "respectable" banks, shouldn't we all do this kind of accounting?

Indebted citizens could move their bad loans into an SPV. These vehicles would be off balance sheet and hide losses in the same way that Nama and now AIB/Anglo have done. With all those pesky bad debts now off balance sheet, we could go about our merry way, working and earning a living while ignoring the giant off balance sheet problems that lie ahead. I might try explaining this new structure at my next bank meeting and we will see how I get on. I can tell them that I am in great shape financially as all my problem loans are now in an SPV called SK Toxic Developer 1.

Assuming the bank doesn't fall for it (but you never know as they are not that smart), this is another example of one law for the individual and another law for the big bank or state. They can hide their financial black holes, whereas we cannot.

Apparently all of this financial engineering is to avoid "vulture funds" which is another word for true market pricing. Let's not knock this very important bird. In the ecosystem of the African savannah, the vulture is integral to a good and healthy food chain. They clear up the dead carcasses and stop rotting flesh from spreading disease. They have special stomach acids that can dissolve almost anything including anthrax.

This is what the Irish property and banking system needs. Let's have all the vultures in to clear up the dead and dying. They will come, feed, process and move on, and the system will be cleansed. Hiding the rotting carcass off in a shed outside will not stop it stinking up the house and garden. Bad lending is bad lending and the vultures are needed to clean it up. The banks alone will only prolong the problem and put Ireland into a depression rather than a recession.

In the beginning the banks told us that they had no problems and that they would be fine by themselves. Then they rush to Government Buildings to get a blank cheque guarantee for the entire financial system. They still continue to lie and deceive regarding the extent and nature of their bad lending and losses. Can the management of the banks please come clean about this, so the country can take its medicine and move forward?

Ireland's financial bailout plan must win the prize for being the slowest and most inefficient. Most of the US financial institutions have now paid back their bailout funds and are back in business. In Ireland, we are going so slowly that it is crippling
the wider economy, which is causing long-term damage, job losses, and economic apathy.

Nama was a brave move as it is in effect a giant vulture fund. Let's not mess up what remains of the system by letting the banks hide their bad loans and problems.

Simon Kelly is a former property developer. The views expressed here are his own and not necessarily those of the 'Sunday Tribune'