Toxic debt 'shadow' agency planned as delays hit NAMA
Related Articles
THE new state agency which will take over up to €90bn of toxic property loans from the country's banks may have to be set up in "shadow form" to avoid long delays.
The legislation to establish the National Asset Management Agency (NAMA) was due to be drawn up before the end of the summer, but it may take until at least October due to the complex issues involved. This means the agency may not be fully up and running until next year.
According to a senior government source, there are plans to set up the agency on a temporary basis with a chief executive and a number of key staff.
This would enable it to get up and running as soon as the legislation is passed by the Dail and Seanad.
The agency may employ up to 1,000 staff eventually to carry out the work of valuing toxic property loans given out by the banks, acquiring them and then selling them off over a 10 to 15 year period.
Taoiseach Brian Cowen said yesterday that the work to set up the agency was being given priority.
"The legislation is not yet in place, there's a very detailed amount of work that now has to take place. (It) will be prepared in the coming months," he said.
The Government source said that despite the urgent need to clean up the banking system, the NAMA legislation could not be rushed because it needed to be able to withstand challenges from the banks and property developers.
Legislation
State bodies have previously been set up in "shadow form" before the implementing legislation is passed. This happened in the case of the Private Residential Tenancies Board, which regulates the rental sector.
The Government is due to publish its legislative programme for the Dail's summer session after tomorrow's cabinet meeting. This will give a clear indication of the timeframe for producing the legislation.
NAMA is expected to insist on reducing the value of the property loans it takes from the banks by up to 50pc, so that it minimises the risk of losses to the taxpayer. It intends to hold onto the property loans for up to 15 years in the hope that the property market will eventually recover.
But 20 leading academic economists have argued that the Government had got it wrong in establishing NAMA.
They have said that nationalising the main banks is far more likely to produce a banking system "free from the toxic reputation that our current financial institutions have deservedly earned".
- Michael Brennan Political Correspondent
