NAMA

I have to say, like everyone in my e-business class, I had to do my homework on writing up a blog about NAMA. I am going to give you my understanding of NAMA. NAMA stands for The National Asset Management Agency. It is a new scheme that has been designed to relieve the banking sector of up to 90 billion worth of property loans. They say it is set to “cleanse” five financial institutions, them being AIB, Anglo Irish Bank, Bank of Ireland, EBS Building society and Irish Nationwide. When I use the term cleanse I mean to get rid of the bad debts and toxic loans that was taken out during the property bubble. This scheme was passed by the Governmental body to relieve Irish banks of the bad debts and give them a chance in the economic times that are presently in. The bank says that this is the only chance they have to get the bank’s lending again and to stimulate economic growth. There is a great amount of controversy over NAMA, and whether or not it is a good thing in today’s economic crisis. I do feel it is a good thing because if the legislation is passed, the Government will pay the banks €54 billion in the form of bonds, or IOUs, in exchange for the loans. Nama will then manage these loans on behalf of the State and try to “achieve the best possible return” for taxpayers, according to Minister for Finance Brian Lenihan. So this will also mean that repayments that are made by banking customers but it will be payed into the new NAMA scheme. Although there is allot of information about NAMA out there, people do not believe that this will work. From what I have read I do feel that it will but there is the "but factor" this all depends on the future direction of the property market. Under Nama, the Government is assuming that the average value of the bank borrowers’ property portfolios has fallen by 47 per cent. The current market value of the assets is estimated to be €47 billion, although it could be more or it could be less. But the State is paying €7 billion extra for the loans. it is making the assumtion that prices will go up again. I do feel that from researching NAMA, I have gained a better understanding on the new bill that will be passed. In my views it should be passed otherwise we will never get out of the financial difficulties that we are in today! The government got us into this rut, and in my opinion it is about time they found a way to relieve us from this financial strain Ireland is under.
People also pose the question of how will Nama shape the company in years to come.
Nama means the economy’s prospects remain inextricably linked to the fortunes of the property market. It may take decades for the economy to be fully “cleansed” of these bad debts. The legacy of the property bubble means that taxation is likely to increase and Government spending continue to be constrained for years to come. Here are some of the references i used in gaining a better understanding of this subject:
http://www.irishtimes.com/newspaper/ireland/2009/0917/1224254726800.html
http://www.ireland.com/home/Government_unveils_Nama_Bill_to_establish_new_agency/maxi/fast/news/irnews/238120