NAMA was promised to you as the saviour of the banking system and therefore the country. This is now clearly a lie. It was meant to free up credit to allow business to maintain and increase employment. This is also clearly a lie. Willie O'Dea has just resigned for failing to tell the truth. Should the two Brians follow his lead? Not in Ireland, I suspect. Telling lies is what we call politics in Ireland.
Nama means more tax for you and a fee bonanza for the lawyers and accountants. This is a timely development given the drying up of tribunal work.
What does Nama mean to me as a developer?
Nama is a mirage. It is the same bank employees dealing with the same developers on the same loans. The only difference between Nama and the old banking system is that the stake money is now provided by the taxpayer, and not the bank.
I have yet to meet Nama. I am told this may happen later in the summer. Hey, what's the rush?
When I finally get there, it will only be to meet the same people who I have dealt with over the past few years. They will now line out for the Nama team rather than the Anglo team.
This is probably a good thing.
God help us if Nama was real and if the government was actually going to try to manage a property portfolio which had a value of €120bn and is now maybe worth €50bn. I suspect that the NTMA will be a little busy filling in the black hole that is the public finances to have time to deal with rogue developers, hence the need for a pretend agency called Nama. This is really the same banks continuing the same business, only with no upside or downside.
To put it simply Nama is a fantasy, but almost a good one. For once we should rejoice in the government's lies. We just need to change the rules a little.
Why do we think that a government agency will do a better job than private agencies or banks?
The answer to this is that they won't and we should not think this way.
The once effective bank employees who move to Nama will slowly catch civilservantitis.
Their focus will move from profit to acceptable loss. The profit motive will be lost on both sides. The ex-bank employee will act like a civil servant, and the developer will act like a drone; they'll slowly realise that they cannot profit and therefore will start to wonder why they should hang around. There is no point just making up the numbers.
There was and is a better way. Everybody needs skin in the game. We all – the developer included – need to be able to profit. If nobody has a profit motive, nothing good will happen. We can see this in the actions and activities of almost all state and semi-state agencies.
The NTMA has done a reasonable job in raising and managing debt for Ireland during the boom. This does not mean that it can do a good job during the bust. The working out of distressed property loans is a different business to managing state debt and investments.
Its work to date on Nama should be utilised but the final destination needs to be changed.
Nama needs to be managed by real people with a real profit motive and this motive needs to permeate through all its dealings. We need an external set of professionals such as Goldman Sachs to do this work.
Politics needs to be removed from the game. Deals need to be done with developers and the fallout from these deals would be too hot for politicians to handle.
Reality and truth need to be delivered. The best financial solution to the property problem is a long-term workout by the banks/ Nama (managed by somebody like Goldman Sachs), in conjunction with the developers. All parties need to target profit as their motive. Basically a great debt-for-equity swap, with the developers staying in the game.
Before you go wild about this, think about it. If not them, who? The government, the lawyers, the accountants? Please. Business is for business people. Love them or loathe them, they are the best placed to work out the problems.
Simon Kelly is a former property developer. The views expressed here are his own and not necessarily those of the 'Sunday Tribune'
Stop picking on the lawyers!