| 10.3°C Dublin

Nama is one big, fat Orwellian nightmare


QUANGO: Nama chairman Frank Daly, left, and chief executive Brendan McDonagh. Photo: Tom Burke

QUANGO: Nama chairman Frank Daly, left, and chief executive Brendan McDonagh. Photo: Tom Burke

QUANGO: Nama chairman Frank Daly, left, and chief executive Brendan McDonagh. Photo: Tom Burke

It's not easy, with so many crises on the go, to keep track of them all and give them all due attention and respect.

Things that would obsess us every day in the normal course of events often get forgotten about these days for weeks on end because we have even bigger fish to fry. Did you notice how we managed to put Nama to the back of our minds there for a while? Because Europe, or the world, was on the brink of disaster most days over the summer, Nama became just a little local difficulty and slipped down the hierarchy of disasters we should be paying attention to.

So well done to Prime Time the other night for reminding us again that Nama, the biggest secret society in the country, is still grinding on, the biggest quango ever, a state within a state. In fact, that notion of a state within a state was interesting because Nama, if anything, is more powerful than the Irish State; more powerful, in ways, than the Government. The Government, God bless it, can't do much off its own bat these days; it is just a bunch of local administrators who put into effect the whims of the troika and purr contentedly when they get a pat in the head from Olli Rehn or someone for being the poster boys for austerity.

But Nama essentially does what it wants, is effectively answerable to no one and has enormous power over everything from the property market to the future of the country. And, indeed, when Nama is asked to be accountable about all those billions of our money, it gets quite cranky. Frank Daly essentially told the Government on Friday that Nama could either be transparent or else could work as a commercial organisation to get back our money, but that it could not do both. In other words: back off and leave us alone to do whatever we want to do. Don't ask questions. We know what we're at. Do you want your money back or not?

Of course, the truth is that Nama offers neither commercial success nor accountability.

In the course of Friday's sitting of the Oireachtas Committee on Finance, Public Expenditure and Reform, Nama also informed us it would be making a profit, before loan impairments, of €500m in 2011. That's an interesting one. To the casual observer it could sound like Nama was doing well. As if it was making us all a few quid. But you need to put that kind of talk in context.

First, let us never forget that Nama lost us €40bn before it even started. Nama "bought" €72bn of loans from the banks for €32bn. This was kind of portrayed at the time as a win for Nama, as if we had got the loans cheap. Which we had, I suppose. But we'd got the loans cheap off ourselves. What you have to remember is that the selling of the loans to Nama caused €40bn in damage to the banks' balance sheets, money we had to put into the banks. So when Nama talks about making a profit, it is a very selective reading of the word "profit".

We have already accepted a loss of €40bn on Nama. The most we hope for now is that we get back most of the €32bn that's left. That's all Nama is looking for too. In reality, Nama, though it denied it on Friday, has effectively written off more than half all the developers' debts.

Also you should note that Nama's €500m profit for 2011 does not include impairments. In other words, the fall in the value of Nama's portfolio of property/loans this year needs to be taken off that €500m "profit". So if you include impairments, the profit figure is very different -- and, let's face it, given that Nama is essentially a giant property company whose business is property and property loans, then it is ludicrous to leave out annual losses on property from its profit figure. And one would have to suspect that the annual losses on a property portfolio of €30bn are going to be substantial. Even if you take into account that a lot of the Nama loans do not relate to Irish property, even London, property's last great hope, isn't booming like it was anymore. So if we, and Nama, are to be honest about it, there's going to be a hell of a lot of further impairment of those loans this year.

But, surprisingly, Nama's biggest problem is not that it is losing fortunes of money. You could say that Nama, by definition, is bound to lose money, it being essentially a property company. Indeed, you could say that we had accepted that that would be the case. The main problem with Nama is that it is not doing what it was supposed to do in return for us losing all this money. In fairness, if we just wanted to lose money on property and property loans, we could have just left them all in the banks and allowed the banks to lose the money on our behalf. But we moved the loans into Nama because it was supposed to give us a functioning banking system.

That, of course, has not happened. Now, Nama and its supporters will say that that is because the problems in the banks were far worse than anyone realised. Which is a fair enough answer. But it still doesn't change the fact that Nama has not served its primary purpose. So what is the point of it?

On the Prime Time show the other night Peter Bacon, the man who invented the notion of Nama, was just one of the people who pointed out that Nama has now become essentially a debt collecting agency. This is not what he envisaged. The clue, you see, was in the name -- National Asset Management Agency.

Again, you have to wonder, if Nama is just about collecting debts, then why didn't we just leave all those property loans in the bank and leave them to collect the debts. It would have saved us all the palaver of Nama, which is going to cost €2.5bn in professional fees alone over the course of its lifetime, and God knows, the banks might have been better at collecting money than Nama, if they found their survival was at stake.

And of course not only is Nama a big secretive quango which tells the Government where to go if anyone tries to find out what it's at, and not only has it failed to achieve its purpose, rendering it pointless, it is also threatening to slaughter the property market not only here, but, according to some reports, in London. You can be guaranteed that not a screed of property has moved here since Nama announced that it would be coming into the residential market this autumn with a built-in guarantee against 20 per cent more of a drop in property. You'd be mad to be buying from anyone else.

Indeed, in general now, it seems that the other side of Nama's business, apart from debt collection, is flogging property, and flogging it cheap. So instead of managing property Nama is conducting fire sales to get cash in.

Again, you have to wonder if this isn't something the banks

couldn't have done themselves if that was what we wanted. But then, we were told that fire sales were explicitly what we didn't want.

There are other issues too. On one hand there is the alleged virtual terrorism of some developers and their families, and the destruction of developers who think they could have paid back their loans if left alone.

On the other hand there is the fact that some developers, while being effectively forgiven hundreds of millions in debt, are being paid fat salaries by Nama to work out their loans. In a country where the little guy loses his house if he can't pay his little loans, and where we can't afford debt forgiveness for the little guy, this is a bit hard to swallow.

There is also the fact that developers are increasingly going off to the UK and bankrupting themselves, not exactly the ends of the earth to where we were promised Nama would follow them, but apparently far enough to get off their debts scot free.

And that's all before we even get into the dodgy paperwork on huge chunks of the stuff Nama took in in haste.

In short, Nama is a giant, big, fat ever growing Orwellian nightmare.

And if Nama is now pointless, why is it still there?

Peter Matthews said on Prime Time the other night that it could be unravelled very easily. But don't you know it won't be? Instead it will trundle on, providing plenty of highly paid jobs for quango merchants in the plush offices that Nama showed Prime Time around the other night in a kind of a bizarre Hello!-style, 'at home with Nama' feature. It will trundle on, pointless but potentially very dangerous, the biggest quango ever, a state within a state, answerable to no one.

Sunday Independent

Related Content

Breaking News