NAMA won't be given any 'super powers' to deal with borrowers
The National Asset Management Agency (NAMA), which is taking over up to €90bn of banks' risky property loans, will not be given any "super powers" as the Government wants to get legislation over the line without major legal challenges.
The steering committee behind the setting up of the so-called 'bad bank' had looked at obtaining powers to deploy compulsory purchase orders (CPOs) and grant planning permission, similar to that enjoyed by the Dublin Docklands Development Authority.
However, it is understood that the attorney general, who is also on the committee, advised that building such overarching powers into NAMA legislation could drown the whole process in a quagmire of legal proceedings.
CPOs are an existing power used by the State to acquire lands in private ownership. They are used by local authorities to acquire lands for road construction or other public purposes.
NAMA, which is being set up as a commercial venture, will have the same rights as the original banks to call in security on loans to developers and move to appoint receivers if the lending terms are not being met -- leading to liquidations and bankruptcies.
The Government has promised a hardening of approach to borrowers who do not meet their full legal obligations.
But sweeping CPO powers would have made it quicker for NAMA to get hold of clean titles, particularly on properties caught up in complex legal holdings such as syndicates, partnerships or off-shore companies.
It is understood that Finance Minister Brian Lenihan will bring an outline of NAMA legislation to the Cabinet tomorrow after mulling the long document over the weekend.
The actual bill is expected to be published next month. This will pave the way for the houses of the Oireachtas to be recalled in early September to vote on the ambitious plan to clean up the guaranteed institutions' balance sheets.
The hope is that the lenders will, as a result, be able to attract more deposits and wholesale funding -- enabling them to provide much-needed credit to the struggling economy.
Measures are being taken to ensure NAMA will be separated by Chinese walls from its sister body, the National Pension Reserve Fund Commission, which has become a major investor in the country's two top banks.
Separately, the Government has reportedly decided not to tap the NPRF for the €4bn needed to recapitalise Anglo Irish Bank. The fund is governed by a strict commercial mandate which means it cannot invest unless they can deliver an "optimal" return.
The funds will come, instead, from the €20bn of cash balances built up by the NTMA late last year to ensure that the State will have access to enough liquidity this year.