Nama's role must be defined (Irish Times)

04 November 2011
The acknowledgement by the head of the National Treasury Management Agency that he has no clear idea how the Government’s proposed solution to the bad debt problems of the banks will work in practice has underlined the reality of the situation: it is impossible at this juncture to say categorically what is the right course of action.

That should not come as a big surprise. We are in uncharted territory. Admittedly, there are parallels between the situation in which we find ourselves and the experience of other countries, particularly in Scandinavia. But there are significant differences too. Economic theory and fresh thinking only gets us so far down the road of trying to plot the best course. Fine Gael’s alternative proposal to the Government’s National Asset Management Agency (Nama) – based around the establishment of a new National Recovery Bank – is equally complex and unwieldy.

The important issue – and it was underlined by the Economic and Social Research Institute in its latest contribution to the debate last week – is that the banks are fixed quickly as part of a wider plan to return the economy to health. The strength of the Nama approach is that it offers, on the face of it, an opportunity to move relatively swiftly by transferring property loans and assets out of the banks. A quick fix is desirable for many reasons, including allowing the Government to unwind the €440 billion guarantee which weighs so heavily on the mind of international markets from which we will be borrowing extensively in the years ahead.