THE MORE we learn about the National Asset Management Agency (Nama), the more there is reason to be apprehensive. The draft business plan for the agency published on Wednesday lays out in stark terms the risks being incurred by the taxpayer to bail out five banks which take much of the credit for wrecking the Irish economy. The Minister for Finance may argue that, all being well, the process will return a dividend to the taxpayer of €5.5 billion but even he must know that financial projections extending out over 10 years are all but meaningless.
The only comfort for the taxpayer in the Minister’s figures is that there is a theoretical possibility that Nama will not incur losses running into billions. The flip side is that there is every chance that it will. Change a few numbers in the Minister’s spread sheet and pretty quickly the whole thing turns red.
The list of risk factors given at the end of the plan bluntly sets out all the things that could go wrong. Some are obvious and pretty much beyond the control of Nama and the Government. Certain assumptions have been made, the main one being that Nama will operate against the background of a gradual and sustained improvement in the economy and the property markets as well as in a benign interest and foreign exchange environment.
Far more worrying is the list of risks that are very much within the ambit of the Government and Nama to control. Put simply, there is a huge possibility that Nama will not be very good at the job it has been given; valuing the banks’ land and development loans, buying them and then managing them along with the associated assets. Nothing about this is certain, warns the business plan, right down to the question of whether Nama will be able hire staff of sufficient calibre.
The real danger – and this is alluded to in the plan – is that Nama becomes some sort of self-perpetuating bureaucratic monster that fails to deliver on its mission while paying €240 million a year in fees and expenses to various advisers. The extent to which the bankers, auctioneers, lawyers and accountants, who participated enthusiastically in the madness that was the property boom, will now share in the advisory bonanza that will be Nama is little short of sickening.
The legislation to establish Nama has now passed its first legislative hurdle. The publication of the draft business plan ahead of the next stage is welcome. But the various amendments that will be considered at the committee stage are unlikely to reduce significantly the risks involved in this project.
We now have a better idea of what we are getting ourselves into and the refusal of the Coalition to countenance alternative and arguably less risky approaches is their right. This is, after all, the elected Government. Nama, as constituted, represents a massive calculated gamble on behalf of a generation of citizens. It must be made to work. Any worthwhile amendments from the Opposition parties should be given serious consideration at Committee Stage.
