National Assets Management Agency, aka NAMA

The National Asset Management Agency, aka Nama, is basically a debt collection agency. It is one of these things that confuses a lot of people and people don't know whether to back it or not. Nama is known as a bad bank that will take on all the debts from the banks and cleanse the five institution, AIB, Bank of Ireland, Anglo Irish Bank, EBS Building Society and Irish Nationwide. During the 'boom' years, Irish people/companies were borrowing money they couldn't afford and the Irish banks were throwing the money at them. Now we are living in recessionary times and the Irish banks are up to their eyes in debt that people cannot pay. The banks never thought of the consequences. Nama will take over the bad debt portfolio's of the banks and in turn hopefully stabilise the financial system. When and if this occurs, the banks will return to 'normal' life and start lending once again. One of the outlooks is that if Nama does not materialise then the banks will be managing debts for years to come as opposed to concentrating on lending to the 'good' customers and Ireland will never pull out of the recession. The cost of these bad debts to Nama don't run in the millions, but have come in at a figure of €90 billion. One of the conspiracies of Nama is that the government will deliberately pay too much for the toxic loans. The banks will then go on relativley healthy dumping the bad debts on the taxpayer.

The government is assuming that the property portfolios have fallen 47% and are estimating that the loans amount to €47 billion give or take, but are paying €7 billion extra. They are paying the extra €7 billion assuming the prices will go up again. They describe this as 'allowing for the long term economic value' of the assets.

Will Nama work or will it fail, only time will tell.