The setting up of the National Asset Management Agency was one of the most controversial decisions taken by the last government.
he criticism levelled against the agency has drifted over time -- often a sign that the critics are on weak ground. NAMA nowadays is under attack from some quarters for supposedly being an overly-secretive, expensive, overzealous institution. In some ways, the criticism is understandable.
The amount of public money involved in NAMA is very large, and the agency is restricted in how much information about borrowers and their loans it can put out in the public domain. Moreover, the property market remains depressed, with few transactions and prices still falling.
On closer inspection, however, most of the arguments put forward by the critics of NAMA simply do not hold water.
For starters, NAMA is criticised for being non-transparent. It bought €32bn of mostly distressed property-related loans from the Irish banks. Since the banks are now largely in public ownership, these purchases effectively involve the transfer of loans from one state-owned financial institution to another.
There are significant benefits to the State from such transfers, since banks need to attract deposits and other funding. NAMA does not.
It is simply not plausible that the stability in bank deposits recorded over the past six months could have been achieved if toxic loans had remained on the books of the banks.
Is it reasonable to claim that had these transfers not taken place, the banks would be making available detailed information to the public about how they are working out these loans? Hardly.
It is sometimes forgotten that not all land and development loans were acquired by NAMA. The two main banks held on to property loans below a €20m threshold.
How much more information does the public have on these loans -- or, for that matter, on mortgages, SME and personal loans -- compared with the loans that transferred to NAMA?
For reasons of legal confidentiality and commercial best practice, lenders are rightly restricted in what they can disclose publicly about borrowers and their loans.
Much has been made over recent weeks of the reported €1m per day that NAMA is spending on running costs. Critics point to this expenditure as evidence of waste.
Some of these costs relate to legal and accountancy fees, prompting those with a disposition to engage in class warfare to claim that NAMA was set up to be a gravy train for the legal and accounting professions. But these claims ignore the fact that Irish banks had dished out €75bn of speculative property loans during the boom.
One way or the other, these loans have to be resolved. Resolving distressed loans involves property management, property rights and complex financial transactions. That means work for lawyers, accountants and other professionals.
Like everyone else, these people don't work for nothing. So the real question is whether NAMA is paying above market rates for the work that needs to be done. Critics have provided no evidence that this is the case.
More generally, it is sometimes claimed that NAMA has proven expensive for the taxpayer because it applied a steep discount of 58pc on average to the loans that it purchased. Some of the loans bought by NAMA are good loans.
The claim is that by only paying 42 cent in the euro for these good loans, NAMA created a hole in the banks' capital positions that had to be filled by State injections of money.
This line of argument displays a remarkable ignorance of basic arithmetic. The 58pc figure is an average. Since each loan was valued individually, a different discount was applied to each loan.
Good loans would have attracted a small discount and therefore their sale to NAMA would have required little or no new capital. Bad loans were deeply discounted, but heavy losses on speculative property were inevitable once the bubble burst.
It is deliciously ironic that NAMA was initially opposed by some commentators because they claimed NAMA would apply too small a discount.
A strand of this debate focused on whether NAMA should value loans using market values or "long-term economic value".
Given the large average discount applied, this debate turned out to be irrelevant. NAMA left nothing on the table.
It was, as the late Brian Lenihan described it at the time, like arguing over how many angels could fit on the head of a pin. Of course, robust debate about economic issues should be welcomed.
More's the pity there wasn't more of it during the bubble years when the damage was being done.
What seems to be completely overlooked in recent commentary are the savings to the taxpayer from NAMA having helped to deleverage the banking system.
Over the period 2011-2013, the Irish banks are required by the troika to sell €70bn of non-core loans to private investors to shrink their balance sheets. Losses to the banks (and the taxpayer) on deleveraging these loans are estimated at €13bn. A chunk of these losses arise because financial sweeteners must be offered to potential buyers.
Deleveraging by selling to the market over a relatively short period of time is an expensive business.
Had NAMA not relieved the banks of €75bn of non-core property loans, what amount of sweeteners would have been required to entice investors to buy these loans before end-2013? The mind boggles.
Finally, NAMA has been accused of being overzealous in dealing with debtors.
The old charge that NAMA is a bailout for developers seems to have gone by the wayside.
NAMA this week pointed to "a significant increase in the number of baseless, critical stories relating to the agency as the level of enforcement activity by NAMA has increased in recent months and also where it has increased pressure on some debtors to reverse asset transfers, reduce overheads or provide unencumbered assets."
In dealing with deeply insolvent debtors, every euro concession in the debtor's favour is a euro lost for the taxpayer. NAMA's stated determination not to be diverted by dirty tricks is encouraging.
Dr Alan Ahearne was an adviser to former Finance Minister Brian Lenihan. He is currently an economist at NUI Galway
