Just wondering where did the idea of NAMA come from? Have other countries historically tried something similar and if so what was the outcome?
Please tell me we are not winging this and that there is evidence of success?????
Various forms of state-owned and private sector-owned bad banks have been used to help resolve dozens of financial crises, big and small, for decades. Sweden's is generally considered a success (they turned their economy around in little over two years), although they used several bad banks, not just one like Nama, and several of their bad banks were privately owned. The Japanese made a balls of it (they dragged out the process and did massive damage to their economy). Dresdener bank, earlier this decade, is considered one of the most successful private sector examples.
But the Nama proposal - a single state agency forcibly buying a massive volume of assets from all of the state's home-grown financial institutions, the majority of whom are still privately owned - is truly a new departure. Nothing as big as this, on a relative scale, has ever been tried before.
Nama dwarfs the Swedish example of the early 1990s, and is a completely different concept.
The reason we are supposed to be doing this is to clean the banks so they can start lending again. In theory, when the banks are cleaned after Nama, there is no reason why lending should not pick up because they will have to lend to make future profits and protect their future capital bases. Banks must lend to survive over the long term. It's natural order. In this regard, it is fairly likely we will have a moderate level of success with Nama.
The part where we are winging it is regarding how much it will cost taxpayers over the long term. Sweden almost broke even over the long term, (there is a long-running debate over this, depending upon which valution methods you use).
We need a moderate pick up in the property market over the next decade or so to break even. IMHO it is unlikely we will break even, but the final price that we eventually end up paying will probably be worth it, I believe.