The National Asset Management Agency (Nama) , one of the legacies of the financial crash, is no more, formally dissolved by the Government. To paraphrase TS Elliot, after arriving with a bang 17 years ago, Nama is now leaving with a whimper. It is easy to forget the all-consuming focus – both in Government and the media – when Nama was set up to help in the rescue of the Irish banking system as part of the bail-out of the State by the IMF, along with the EU and the ECB.
Having gorged on property loans for a decade, Irish banks faced the threat of bankruptcy when the world turned in 2008. Part bad band and part avenging angel, the new agency was mandated to buy the banks’ property loans, with a face value of €74 billion, at a cost of €31.8 billion. The plan was that the agency would then sell off the loans to private buyers and repay its borrowings.
Part and parcel of this would be holding to account the handful of large property developers who were central figures, along with the banks, in the profligate borrowing and commercial property boom that preceded the bust. The Government was clear that no developer could exit Nama without repaying their loans in full. Those that did not do so would be effectively bankrupted, it said.
It is equally hard looking back to recall just how ambitious this seemed. It is to the enduring credit of all involved, including the Nama chief executive Brendan McDonagh, that it achieved its objective and returned €5.6 billion in a so-called “lifetime surplus” to the State.
READ MORE
The extent to which Nama succeeded in holding property developers to account is less clear. There were several high-profile bankruptcies and others who worked with the agency to restructure their finances and emerge from Nama. A new cohort of property developers did appear, but many of the old names remained in business.
Nama may have been a success on its own terms, but it is important not to lose sight of the wider catastrophe that befell the State. As with the money recouped by the State from selling off the banks it nationalised as part of the rescue, Nama’s surplus must be balanced by the unquantified social and personal costs of the austerity that followed the bail out. Ireland is still living with the consequences, of which the housing shortage is the most damaging. With hindsight, Nama’s mandate could have involved a greater focus on State housing provision, as part of a wider policy. It did deliver social housing, but getting as much cash back as possible was its key remit.
The question of whether Nama was the correct response to the problem will remain unanswered and unanswerable. The bigger lesson is that, when necessary, the State can move decisively, quickly and at scale. The corollary, however, is that the circumstances needed to verge on the apocalyptic for it to do so.
