Ok so I’m not really or wasn't up to date on the in's and out's of NAMA so I thought I’d put the main points out here as a little guide. So what is it, what does N.A.M.A. mean and what does it mean for us as taxpayers?
Well NAMA means National Assest Management Company. They were setup when the economic crisis hit and their aim is to acquire all the good and bad loans from organisations participating. Over seven to ten years they aim to get the best possible return for the taxpayer on acquired loans. The Irish Times just published an article on the first loan transfers to NAMA. Take a look here. The picture here shows the prjected loan schedule.
The total of these loan transfers goes over €10 billion!!!!!!! The types of loans that can be absorbed by NAMA are generally for those large developers that can't pay the mortgage on the land/development they own. The other one is associated loans and that is something that is neither land nor development but can be used as collateral against other loans of that kind. In other words they (the developers) could possibly not lose their development even though they deserve too! They say this is to ensure no one gets out if it but I think it’s a skape goat for the developers.
So what do NAMA do with the loan then? They give a guarantee to the bank for the security of that money to keep the bank going and take over the management of the loan. This security amount is chosen by NAMA and then the person owing the loan must pay the full amount back to NAMA. But there is a lot of speculation as to whether that will happen or not.
How much will NAMA absorb and how much will it cost us? It won't be known until June 2010 how much NAMA will absorb or the price that they will pay the banks. We do know that the first loans taken over are at a discount of 47%. Not knowing the amount absorbed or the time period it will run for means the taxpayer could suffer with this for over a decade. I know I don't want to be saddled with this, do you?
Realistically the people can't pay their debt now what difference will it make transferring it from the bank to NAMA. The only difference is we as taxpayers now have to cover the bad debt instead of the greedy banks. It makes me so angry that we suffer because the banks and developers couldn't get enough. What do you think? If I’ve missed any points on it you have something to add please comment! :)
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