Making NAMA Work – Complete the Money Circle

How to make NAMA work and remove all the risk from the taxpayer.

An article by Fintan O’Toole in today’s Irish Times got me thinking about how we might solve the NAMA conundrum.

Fintan pointed out  what might seem obvious, but which nobody mentions.  The developers who overpaid for all this land and property gave the money to somebody. It didn’t just evaporate into thin air.

Somebody got too much for their land or their buildings, they have it in a bank somewhere, and now the Irish taxpayer is picking up the tab.

Well, look.  How about this for an idea?

Under the government’s current plan, NAMA will have the authority to tell the banks how much it’s going to pay them for their distressed assets.  It will be able to say, No, we won’t give you the €77 billion you lent.  We’ll give you €54 billion instead.  NAMA will be given the power of valuation.

Leave aside for a moment the fact that NAMA is still paying the banks too much.  Look instead at its powers to determine the discount.  Look also at the government’s powers to take money from you and me by way of taxation and levies.

Here’s my suggestion.

Since NAMA is going to value and take over all these bad assets, why not go one step further?

Why not give NAMA the power to look into the transaction when the land or buildings were bought, and see if the person who sold them was paid too much?

And if NAMA decides the vendor was paid too much, why not take the excessive  profits back from them and put it into the fund that buys the assets from the bank?

This would mean that the people whose greed caused the whole mess would end up paying for it, instead of the little people like you and me.  After all, these people’s unreasonable profits are why the loans were overvalued in the first place.

Yes, it’s true that a lot of the money went this way and that: to the percentage merchants like estate agents who grew fat on their inflated fees, and the design teams who were paid on the gross price of the developments, right down to the greedy blocklayers who charged €2 per block to build the goddamn things.  But if our system is capable of tracking down a poor man on the dole for accepting a day’s work, it should surely be capable of unravelling who got what out of all the billions.


Tell me.  What would be wrong with doing this?


Meanwhile, on more NAMA-related matters, here’s something from one of those very clever fellows who know how to do hard sums.

And here’s McWilliams on protecting the rich.

28 thoughts on “Making NAMA Work – Complete the Money Circle

  1. A perfect and very sensible solution. Much too perfect and sensible. The vendors are living it up in their castles in an other jurisdiction. Where they are untouchable. Ireland needs the Banks, the Banks need money and lot’s of it, therefore screw the taxpayer. That is what Governments do. In an ideal world public executions for so called Bankers and Developers. I suppose I should include Politicians and most of the legal system as well. However “we are where we are” how we got here is of no consequence to our Lords and Masters. They are much too busy pissing up the few bob left in the kitty .

  2. There is only one problem, that money is gone. Wiped out by the drop in the stock markets. Some of it may remain but I suspect very very little. O’Toole is not very good at this sort of thing as he gets the solid aspect of economics but not the liquid.

    There is only one way to halt the issue with development land and that is for the State to buy it, then sell it on to developers. They can do this now using at least three instruments of CPO. The only problem is that this is Ireland.

  3. Whatever proportion of the money was invested in the stock markets might be reduced, but the shares it bought still exist. By the same token I don’t know how you can say it was all put into shares. Where did you get that information?

  4. This gets better by the second. Now we have “Special Purpose Vehicle” or S.P.V.? this is it seems ,set up to keep the N.A.M.A. gold off the books of Ireland Inc.
    “O what a woeful web we weave when first we practise to deceive” I am of the opinion this may be referred to as “constructive accountancy”. I think I smell the Books cooking. Private investors it seems will gain from N.A.M.A. if it works. When it goes pear shaped the taxpayer shall pick up the bill. It is a great little world when one has money.

  5. The Special Purpose Investment Vehicle (SPIV) Really! I’m not making that up, is.. wait for it:

    49% owned by the government and 51% owned by as yet unnamed private investors.

    Unfortunately I can’t find a link to it but in yesterday’s Irish Examiner there was an article by Bill Hobbs, former director of ACC Bank which explained it all.

  6. Bock neither Robert nor I are making it up. There had to be some way the Golden Circle could muscle in on the goodies. The old snout in the trough syndrome. It seems Brian needed to keep this whole sorry mess off the books and the Boys required a payback. Enjoy the brave new world Folks.

  7. There are very few who would sit on the money, Bock. And that is what you and O’Toole are on about. As soon as that moneys crossed they were invested. And all investments across all areas fell.
    This is the real issue. The Banks and the investment houses were trading with paper that the Governments had yet to authorise/print.
    That is what Obama is up to in the States, Brown in the UK and for what it’s worth the Brians here. Trying to cover the shortfall, caused by lack of regulation and reasonable accountancy.
    Our problem, the real one, is not the over-value of property assets for NAMA, but the lack of protection of those locked into debt they are very unlikely to be able to pay. In a pessimistic world, anyone who bought since 1998. There needs to be something which allows for massive write-downs without the prospect of bankruptcy.
    On NAMA and the overvalue, this is not the first time that this has happened. In the 1930’s the land annuities were bought from the UK Government. Something which caused the prolonging of the post-WW1 depression until the mid-70’s. This coupled with a Civil Service pay scale tied to Whitehall and a currency to Sterling.
    To my mind, if they continue on this track, our only hope is that there is massive global inflation.

  8. Now this might show a text book case of having missed the point but…

    When the developers bought the land, they did so with loans from the banks. The banks did not trandfer any real money as they use fractional reserves. It was a digital number on a screen that the bank promessed to honour. So the person who got the money for the land didn’t really get any money, but rather a computer screen digit (or several) with gaurentees to pay. So in fact the “money” they have in their account is only worth anything if the first ban can honour it. Isn’t that where NAMA comes in? Didn’t we just finance a giant game of manopoly, and now that eveyone is leaving the party we have to change their monopoly money for gold?

  9. No. People such as the Doyle family turned those electronic blips into billions in hard cash and transferred it offshore.

  10. Personaly I wouldn’t except any electronic blip that is guarenteed by Anglo but hey. But aren’t banks now asking the government to honour all those blips they sent out of the country as well?

  11. C’est La Craic N.A.M.A. is like buying a “pig in a poke”. A wriggling sack for all our Gold that we may not open until the vendor has long gone. It may very well contain a pig. However it is more likely to contain a rabid dog which we shall have to put down at our expense and with great difficulty . It will almost certainly infect our decedents for generations.
    Capitol rules! The little People are put on the Earth to serve.

  12. Gary this isn’t Capitalism, if it was the banks would now be on the floor, this is Feudalism.

  13. Actaully Vincent I don’t think he said it was capitalism, he said that capitol rules, and he would seem to be right.

    I think what I’m trying to get at though is that, as most people now realise, no money went missing. Some numbers on a screen lost the hypothetical value previously assigned to them. But if we go ahead with NAMA, Irish tax payers will pay money traded for REAL LABOUR, which has a real physical value, in exchange for a hypothetical debt. It seems like we are the person at the Casino giving out cash inexchange for those plastic chips, except it’s not the Casinos money

  14. Bock
    Maybe you should think about Fintan’s allegation that …”now the Irish taxpayer is picking up the tab.”
    Ask him: “When would that be?” and “How much will we taxpayers be paying?”
    The reality is that the NAMA scheme provides for the banks to lend their property -whatever it might be worth- to the State/ taxpayer. Then, commencing in 4 years time and stretching over 4-10 years, the property will be returned in the form of cash- the sale proceeds of the property – which is estimated to amount to €54 bn in total- the same as €47 bn today , the distressed market value, + 1.5% interest. If NAMA, on behalf of the taxpayer, doesn’t get that much for the property, then the banks will have to make do with whatever it does get, less NAMA’s billions in costs. If, on the other hand, NAMA’s property realises much More than € 54 bn, ..well, the taxpayer will keep the profit, thanks. At no stage according to projections, will the taxpayer have to front up a penny. Meantime, he will have use of billions of the banks’ assets, to help finance budget deficits, saving him the need to borrow the same billions in international markets, or pay the same in extra taxes.
    If this viewpoint shocks, then you can read more of the same at

  15. Remember that game “Ring a ring a rosie pocket full of taxpayers money” Yea! the adult version.
    Well twenty comments and nobody gets it.
    You were all meant to lose your yer legal tender, and yer country and anything else ye might have on the road to serfdom. Brian Lenihan is a professional ye see, from a long line of professionals so he knows from family history that you, thinking that he is a fool, always works well. Daddy could sell ice to the Eskimo’s but junior knows the Eskimo’s were just robbed by da royalty so he sold da whole country complete with the lot of youse freshly indebted tenants. Aint he a chip off the ould block! Now remember, they all serve YOU and whatever they do, they do it for YOU!
    Now back to da TV to watch the X-Factor. The nice man from the IMF will give ye a holler the minute the chains are ready.
    See ya in the dundgeon!

  16. “Somebody got too much for their land or their buildings, they have it in a bank somewhere, and now the Irish taxpayer is picking up the tab”
    More likely they invested it in buying a skyscraper in Dubai, or Poland-and they are shagged like everybody else.

  17. It is confromnting to know that the Quinn family are not guilty of any form of abuse of the system by getting money from Anglo to buy shares in Anglo that is O.K. What a wonderful world.

  18. Maybe this is simplified too much but doesn’t basic secondary school economics tell us that a bank loans out ten times more cash then it actually has, if that is the case why are the government buying a debt of 77billion for 54billion? Why don’t they give the banks the cash value of 7.7billion fuck em off and let em be lucky they got that. The government are quids in the banks have broke even, social housing problems are solved. If you or I are skint and went to pawn something i doubt the pawn broker would give you roughly 60% of the items original value based on what he thinks he might sell it for, like fuck he would.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.