As expected, a challenge has been launched against the legality of the NAMA state agency and the policy of all loans of €5m or more being transferred to the agency from the five banks, regardless of whether they are performing or not.  Developer Paddy McKillen is seeking to prevent the transfer of personal and business loans from 15 companies being transferred to NAMA from Bank of Ireland and Anglo Irish Bank.  His reasoning is that it will negatively affect his business interests.  One interpretation of that is that NAMA won’t let them get away with some of the kinds of arrangements that developers seem to have had with the banks over the past few years and be more rigorous in how they oversee their finances and business plans.

Admittedly NAMA tars all businessmen and developers with the same brush, and they are all having to participate in NAMA whether they have been reckless or lawless or not, which may seem unfair to some of them. Nonetheless it is developers, bankers and politicians who got us into this mess, and if we start trying to disentangle them and create loopholes for certain parties/assets, you can be sure that all and sundry will be trying to find ways through to ensure that they retain the good, performing stuff and the taxpayer, through NAMA, will hold all the dead weight in the system.

For NAMA to stand any chance of working it has to performing assets as part of its portfolio.  We’ve already seen over the past couple of days the effect of a downgrading of the number of performing assets on the likely success of the agency.  NAMA is supposedly a plan to save the banks and inject liquidity into the system and try and save the state/taxpayers billions of euro.  It is meant to act for the collective good of the nation.  It may well need revisions to its strategy and implementation, but enabling the selective transfer of assets is unlikely to aid anybody with the exception of developers and their interests. It’ll be interesting to see the outcome of this and other challenges going forward as its going to potentially open the ‘individual rights vs collective good’ debate.

Rob Kitchin