Thanks to pro-NAMA commenter AL for a useful contribution in a comment thread below. I think we probably need some more pro-NAMA commenters here, at least to give Zhou some company! But seriously, AL raises some useful issues. One in particular is the question of whether we should be worried about the pricing. AL states:
If we get the pricing wrong on the way in – there is the understanding that a levy will be imposed on the banking system (affecting equityholders in the future) to recoup any shortfall on the wind up of NAMA.
I think this is worth discussing more. My worries here are (a) It’s an “understanding” rather than anything that will appear in legislation, so I have no faith that it will ever appear or, that if it does, it will be based on anything like the actual combined cost of NAMA to the taxpayer. (b) If it really becomes apparent that a levy will apply and then NAMA is running losses, this will cast a shadow over our banks for years, so that NAMA will have failed in its goal to draw a line under the problem.
Here’s a question I’d be interested in getting more discussion on. Why not have risk-sharing as suggested by Patrick Honohan’s NAMA 2.0 (pay a low price for the assets today—Patrick phrases it as “what we can confidently expected to obtain”) and then compensate shareholders (not the banks) with a share in NAMA’s potential profits, should they ever appear? This protects the taxpayer, achieves risk-sharing, and gives us cleaned up banks with no “legacy” problems.