'It is very frustrating to see it': Developers buy back Nama loans at discounts

Nama developers have been able to buy back billions of euro worth of loans at massive discounts because of a major flaw in the laws which set the bad bank up a decade ago.

This was revealed at a meeting of the Oireachtas public accounts committee (PAC) where it was confirmed one of the major protections to the taxpayer in the original Nama Act is “effectively meaningless”.

Section 172 is a legal prohibition on Nama which stops them selling an asset back to an owner or someone with an interest in that asset.

The Comptroller and Auditor General, Seamus McCarthy, revealed that section 172 is “a very restricted provision in the law” which “only applies to a sale by Nama, not by a borrower or a receiver. It only applies to the sale of a property and not to the sale of a loan.”

The significance is that the vast majority of the sales involving Nama relate to the loans and not the assets, therefore the provision has been rendered ineffective.

PAC member and Social Democrats TD Catherine Murphy said the key protection of the taxpayer heralded by then finance minister Brian Lenihan “is not worth the paper it is written on”.

Speaking under privilege, Ms Murphy said:

I have no doubt in my minds there are people back in control of their assets. It is very frustrating to see it. It is certainly not the way the public expected the law to operate in practice.

In response, Nama said it has a policy of obtaining written confirmation from purchasers of loan assets which confirm that, among other things, the purchaser is not a party precluded from completing the purchase, such as would fall within the scope of section 172.