NAMA: a first roll of the dice
SIX months after the Minister for Finance first unveiled to the Dail the draft legislation for the National Asset Management Agency, we are about to witness the first roll of the dice in the biggest economic gamble in the history of the State.
NAMA is completing its assessment of property loans of top borrowers, including some particularly complex ones, and is about to take over the first lot.
Both the minister and the head of NAMA have told us that, as the process unfolds, assets will be bought at a 30pc average discount, not the higher amounts predicted by critics.
However, it now appears that the discount to NAMA which applies to the first tranche, from Irish nationwide and Anglo Irish Bank, the lenders of choice to some of the biggest builders, is likely to be closer to 40pc. At first, this looks like good news for the taxpayer. After all, we will pay the banks less than we had thought for delinquent debts that we never wanted in the first place.
As always, there is a catch.
In that event, the banks will be left with bigger-than-expected holes in their balance sheets, and these will have to be filled with more fresh capital . . . by the Government.
It seems likely, therefore, that the Government is set to embed itself deeper into the banking system, having already injected billions.
However, the NAMA operation has just begun, and Mr McDonagh's spending prediction may prove to be correct and the banks may manage to raise capital under their own steam.
From the start, Brian Lenihan said that the NAMA process could not be rushed, but that change in the banking system had to take place within a realistic timeframe. Somewhere between rush and reality, Ireland's determination to solve her banking problems would be judged.
So, it has been a year since NAMA was first mooted, six months since it was launched and, even now, with a long way to go, it is not clear whether the State will be paying fair value for those toxic assets.
At the outset, the Taoiseach pledged that the taxpayer's interests would be protected at every step and the delivery of that promise will be the ultimate measure of the formidable NAMA gamble.