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Ireland's political and cultural magazine
— March - April 2012
E
ven before it emerged that the National
Assets Management Agency (NAMA)
was definitively bailing out developers,
its dealings with banks were problematic.
NAMA is, as Enda Kenny said from the opposition
benches, “another blank cheque to bailout the
banks”. And, like the bank bailouts in general, there
has been a variety of voices pointing out the illegiti-
mate nature of the public debt generated by NAMA.
It’s not only that the € billion NAMA pumps into
the banks seems spectacularly unjust in the context
of budgetary cuts. NAMA is also a key part of our
sovereign-debt meltdown. The Irish government,
with the consent of Europe, offloaded NAMA’s
exposure via a Special Purpose Vehicle to keep it
off the state’s balance sheet. Unfortunately for us,
however, international credit ratings agencies like
Standard and Poor were quick to see through this
not-so-creative accounting and have considered
NAMA debt as public debt from the outset.
To make matters worse, NAMA has failed.
The objectives of the unorthodox agency were
to stabilise the banks and provide them with
liquidity, thus getting them lending again. Since
the NAMA Act of late the Irish banking sec-
tor has, however, required further recapitalisation
and even nationalisation. According to ISME and
others, the banks haven’t been lending either.
Moreover, while NAMA was supposed to raise
the € billion for the banks on the basis of the
property-related “assets” it acquired from the five
participating banks, the most likely outcome is
that NAMA won’t get anything near that amount
due to the continuing descent in property prices.
While the then Fianna Fáil government initially
claimed NAMA would make €. billion, the
agency reported losses of € billion in alone,
primarily because the value of its loan book has
been written down to reflect property-price drops.
If, or rather when, NAMA can’t come up with the
€ billion the Irish state picks up the tab.
The NAMA bank-bailout is too often filed under
the rather overcrowded category of ‘it already hap-
pened so there’s no point talking about it’. What many
people don’t know is that we haven’t paid the NAMA
debt yet: it’s not too late to say no to NAMA.
While NAMA is a vehicle for injecting money
into the participating banks, it does so by issuing
Government Guaranteed Securities, or NAMA
bonds, rather than hard cash. Nama bonds are
essentially IOUs which the banks can then use as
collateral to raise funds, mainly from the European
Central Bank. The Nama bonds themselves will be
news
mick o’broin
Let’s renege on €30bn NAMA bonds
Leave our useless banks with worthless IOUs
phOtO: williaM hederMan
phOtO: williaM hederMan
phOtO: paul reynOlds
