The FT’s Lex column gives its pithy assessment of Nama.
Nama is an odd creature: part debt collection agency, part property developer. As well as toxic loans, it may end up with a portfolio of property which was collateral for the banks’ lending binge. It was meant to fix the broken banks, convince taxpayers they might be repaid and reassure the markets the banks’ liabilities would be met in full. Facing in three directions, it has not appeared convincing in any: slow, bureaucratic, initially indecisive, almost excessively transparent (every toxic loan is assessed individually).
It concludes a bit more hopefully.
11 replies on “Lex on Nama”
John, the conclusion is
“But Anglo is still the rotting corpse in the disaster zone of Irish banking, so Nama has been unable so far to provide the certainty investors and taxpayers need on the real cost of the mess. With investor sentiment towards Ireland turning sceptical again – bond market spreads are near their May highs – it cannot come too soon.”
As I argue here http://www.irishtimes.com/newspaper/opinion/2010/0902/1224278050364.html
the taxpayer now needs to draw a line under its involvement in anglo. That means putting the Senior Debt in play. So be it.
Simon Johnson and Peter Boone aren’t so hopeful…:
Not the most incisive piece, for example should NAMA continue full steam ahead with transferring Anglo’s loans (on which it pays a 10-15% premium above current market values for long term economic value) when there seems to be extreme uncertainty over Anglo’s future.
And do the FT truly understand the NAMA principle – cleanse banks of toxic assets so that the banks can attract funding and restore credit. But after NAMA finishes its transfers there will still be an estimated €70bn of commercial (ie non residential mortgage) property loans. Should the DoF be planning now to extend NAMA’s scope?
A bit of a wonky article from the FT and where they are critical – NAMA being slow and “excessively transparent” (they’re talking about valuing each loan individually before you doubletake!), they are probably on weak ground as NAMA must be diligent with spending our money.
All in all, I can’t see anyone in Treasury Buildings being unhappy with Lex.
“…almost excessively transparent…”
Ho, ho, ho, ho, he, he, he etc
Interesting that the FT are starting to wake up and smell the coffee having lent their support to the nebulous NAMA for so long. So last week it was wondering about the government giving blank cheques and this week they finally get round to another prong of the government strategy.
Something like 90 people work for NAMA. The rest are working in the various “nama divisions” of the 6 building societies/banks. Meanwhile, the same professional bodies accountants, solicitors, valuers are employed to expedite the bad loan transfers. Lucky them to get paid twice. As more and more distressed loans pile up on the books of the state (NAMA) the more the property market stagnates and becomes even more zomified. We are witnessing the tentacles of the state stretch into every nook and cranny of the Irish economy. Will state intervention and the creation of this gigantic monopoly solve the problem, al a Brian Lenihan’s master plan? Will piigs fly?
Who would go out and buy commercial property tomorrow when we all know there will be massive bargains to be had in 9 months or 14 months when NAMA cannot hoard the LTEV stuff any longer and have to dump it straight back on to the still distressed market having converted the loans to assets. At that point, the banks themselves will also be starting to try to get rid of their own stockpile of repossessed properties, should make for some interesting fire sales.
The only way these property “assets” are going to be shifted is if the “nationalised banks” lend the money to “preferred individuals” to shift them off NAMA’S balance sheet. In other words, the developers who had to be brought into NAMA in the first place, will be back in business some of them bigger than ever, it is the taxpayer that will have been given a double crew cut. It is strange that having lived in the country for so long so few economists and analysts can see the woods for the trees. The only other solution is to bring in foreigners to mop up these assets but in a large number of cases the will be unable to eat the scenery. The government need to start listening to the alternatives to the only game in town.
“The only way these property “assets” are going to be shifted is if the “nationalised banks” lend the money to “preferred individuals” to shift them off NAMA’S balance sheet. ”
I think this is important. Lot of scope for golden ciricle/corruption here. Preferred clients will get sold the best stuff dirt cheap. Others will be ruined. A few bank officials have the power to decide who lives and dies…..
@ Sarah Carey
“Preferred clients will get sold the best stuff dirt cheap”.
Of course they will, it is as plain as a pikestaff. They will march off with the good stuff and then gradually the full horror of the losses that NAMA is going to inflict on the Irish tax payer will be “revealed”. Just as with Anglo, it’s only when the public started to hear figures ranging from 25bn to 35bn that they woke up! Same story with NAMA losses but it is not just that NAMA will only recover 16bn of the 40bn it will pay out, NAMA as the FT ponders, is not fit for any of its purposes. It stagnates the property market, competes directly with businesses that have no lines of credit and failed miserably to “get credit flowing’ which was supposed to be NAMA’s raison d’etre, from which the LTEV scam was derived.
NAMA presents more opportunities for corruption than anything that has ever gone before. The fact that NAMA even exists is testimony to the level of corruption, lack of decent opposition, naivete and crony capitalism in Ireland. The most important step was to get it through the Dail. I regard NAMA as being unconstitutional. Article 6.1 states, “All powers of government , legislative executive and judicial , derive under God from the people, whose right it is to designate the rulers of the state and, in final appeal, to decide all questions of national policy, according to the requirements of the common good.
There is little if any of the “common good” about NAMA which is for loans of over 5,000,000 Euro. That, by any standards, is some distortion of “common good”. In fact, is it not a distortion of Orwellian proportions? Remember Larry Goodman and the “Beef Tribunal”? People were saying he was ruined. Where is Larry Goodman today? He controls the beef industry in Ireland and has done so for many, many years. After NAMA ,there will be ten Larry Goodman’s wunderkind, NAMA types, floating around. None of these guys would be around were it not for Lehihan’s final solution.
You took the words right out of my mouth! Excessively transparent it ain’t!
As ever, the truth, plain and simple!
This was all obvious from the start but no one wanted to challenge it. So we get the mess we deserve. Still the truth faiols to sink into the critics. Why? They shelter behind their anonymity. To a casual observer, this looks like a debate with strength on both sides. But debt is simply debt. When it is too high to be paid off and permit a normal acceptable life we allow enforce bankruptcy.
We are Iceland! We just lie about it better!
As the muppets once sang in unison ‘na ma na ma doo doo doo doo doo’
Yes theres lots of doo doo after nama
& for the interested, NAMA is currently looking for “Senior Lending Officer – NAMA Unit (New Position)”. Ad is on Monster. Can’t/won’t check the details until I’m no longer using company access to internet 😉