NAMA

I was trying (not very hard) to come up with a clever acronym for NAMA, but I can't. Maybe it's just as well because I'm deeply suspicious of this Agency.

For those of you outside the Banana Republic of Ireland the National Asset Management Agency is being set up by the government to buy the dead wood assets off our banks, so that it will vastly improve their balance sheets and the risk from the banks' bad loans will pass from the shareholders to the Irish Taxpayer. The amount that will be paid by NAMA for these bad loans will be "somewhere" between 70-75% of the original high market value. However the actual price paid will not be disclosed "due to market sensitivities". An ongoing court case involving one of these bad debts has revealed that the approximate current market value of these bad assets is closer to 25% of the original high market value.

So, what we know is:

1. The total potential level of bad debts in Irish banks is €90bn (Irish annual expenditure is approximately €60bn!).
2. The Irish taxpayer will pay between 45-50% more than the asset is worth.
3. But we won't actually be told how much we are paying for the assets even though it's our tax money

Conclusion: NAMA = Sweet heart deal between politicians, bankers, shareholders and developers (who are currently on an interest free holiday on their outstanding debt).

PS. I have another question. Who is NAMA going to employ to manage the administration of the debt purchased?