Biggest gamble in our history
Finance Minister Brian Lenihan published the draft legislation on the National Assets Management Agency (NAMA) and warned speculative developers they will be chased with greater vigour than they faced up to now.
He said our “adventure” in the property market was over.
The bill, released for public consultation, outlined how taxpayers will take ownership of €90 billion of the riskiest loans on the banks’ balance sheets at knockdown prices.
Participating banks will be compensated in Government-backed bonds which they can use to get cash from international markets.
The bill will be brought into a recalled Dáil on September 16. The same morning, Mr Lenihan will publish the formula the agency will use to value the assets.
He will also tell people exactly how much NAMA is expected to cost. “The Government has responsibility to parliament and to the people of Ireland to give an estimate and that estimate will be given [in September],” he said.
The full impact on taxpayers will not be known until an estimated 10,000 risky loans are transferred on to NAMA’s books by June 2010.
At no stage will the Government detail exactly what it is willing to pay for each individually assessed site and instead, will use trends going back 35 years to decide what it gives the banks. Nor will it identify the developers nor the sites that fall under NAMA’s remit.
The legislation was launched yesterday in briefings conducted by Mr Lenihan.
Brendan McDonagh, the interim managing director of the agency, was also present.
They set out how NAMA is expected to be functioning immediately after the bill is passed by the Oireachtas.
It will have an initial staff of approximately 50.
It will dwell on resources of the National Management Treasury Agency and is expected to be self-financing from the interest paid by developers.
Mr Lenihan said the “bulk of the work of NAMA will be done within seven to 10 years”.
However, he warned it is likely to linger for much longer as it works its way through the worst performing loans.
The agency will be given unique powers to stymie any attempt to hamper its progress.
It can issue compulsory purchase orders for strips developers retain to block selling on. The agency can take control of land to protect its value.
It may appoint a statutory receiver to manage holding companies and a liquidator if necessary.
To speed up proceedings, NAMA will have the ability to secure High Court vesting orders to seize all the assets of the debtor — except the family home unless it was otherwise put up as collateral.
Regarding the fate of the developers, they were warned they will have to accept a write-off in their equity and will owe the state agency the same as they owed the banks.
Developers will not enjoy the same shelter as they have under the domestic banks, Mr Lenihan said.
“One senses that in the banking system there was a reluctance to deal with this issue because it would have an effect on the banks’ own capital positions.
“NAMA will have no incentive to postpone their losses. NAMA has every incentive to acquire value out of its book. That’s NAMA’s mandate as far as the taxpayer is concerned.”
But the opposition rounded on the Government’s effort and said it was the biggest gamble ever taken.
Fine Gael’s finance spokesman Richard Bruton said taxpayers would be left to pay for the Government’s folly.
“Effectively the taxpayer is being asked to sign a blank cheque.
“The Government are saying ‘trust me on this’ and I think many people would feel that they don’t deserve that trust.”
