April 2017        

Vulture funds being enriched by NAMA

Sebastian Müller

In the wake of the 2008 financial crisis the Government was faced with several political and economic choices in the face of a failing financial sector. As is well known, the Government at the time (and also the two subsequent Governments) pursued a conscious strategy of bailing out the banking industry at the expense of the Irish people. The bank guarantee, the recapitalisation of the major banks and the consecutive austerity budgets have all been enacted at the behest of finance capital, the European Union, and the capitalist class generally.
     A vital component of the Government’s plan over the past decade has been to remove non-performing assets from the private sector while simultaneously re-inflating the housing bubble to raise property prices (most blatantly with the 2017 budget, which saw some houses increase in value by as much as €45,000 in a matter of hours after its announcement). This strategy had the dual advantage of serving the needs of finance capital in Ireland while also appealing to a squeezed middle class terrified of the spectre of negative equity, a fear that the establishment media in Ireland did much to generate in the immediate aftermath of the collapse in the housing market.
     One essential element of the Government’s toolkit over this period has been the National Asset Management Agency, established in late 2009. One of the least transparent aspects of the Government’s response to the crisis, NAMA originally took over a nominal €74.2 billion in bad or non-performing loans from five major banks, at a cost of about €32 billion. What NAMA has done with these 12,000 loans from only 780 debtors has largely remained unknown; but now a new report prepared by the economist Jim Power sheds some light on the question.
     The report, which examines eleven transactions conducted by NAMA over the period 2009–2016, finds that it has grossly mismanaged and undersold its assets, to the benefit of private companies and vulture funds, in some cases egregiously so. One Dublin property was sold for a paltry €1.3 million by NAMA before being sold on within the year for €13 million—a gain of 1,000 per cent for the private investors.
     In another example a property at Sir John Rogerson’s Quay in Dublin was sold by NAMA for €7½ million before being turned over two years later for €10 million more than the price paid to the state.
     Even prime real estate, such as New Century House in the Financial Services Centre in Dublin, was sold to private investors for €28 million in September 2013 and was then sold on for a staggering €47 million just six months later.
     As a result of these bargain-basement sell-offs, NAMA hopes to achieve a maximum surplus of €2.3 billion on its €31.8 billion worth of assets over a period of eleven years, or what amounts to a dismal 0.65 per cent return per annum.
     By way of comparison, in the eleven sales analysed in the report the private purchasers of NAMA assets resold them for an uplift of 47 per cent over a period of two to three years. Even the €2.3 billion return expected is wholly dwarfed by the more than €40 billion not recovered from the original nominal €74.2 billion in loans taken over, not to mention the enormous and odious bank bail-outs and guarantees.
     Meanwhile the brutal consequences of the Government’s strategy are being felt in the housing sector, where a collapse in housing construction from a peak of 90,000 units per year before the crash to a bare 15,000 in 2016 has seen an explosion in rental prices and a shocking increase in the number of people without a home. While it is estimated that 30,000 housing units will be required each year for the next decade to meet demand, the Government has done little to attain such a figures, instead hoping that an artificial shortage will further inflate the new property bubble, further enriching the owner class.
     It remains as clear as ever that NAMA has not been managed in the public interest and has instead served only to enrich vulture funds and developers at the expense of the majority of Irish people.


      Michael Cogley, “New homes soar €45,000 in the hours after Budget,” Irish Independent, 28 March 2017.
      David Daly, “How Nama’s billions fed the vulture funds,” Business Post, 28 March 2017.

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