A few years ago I remember the elder statesman of BBC foreign-correspondent journalism, Martin Bell, reminiscing about his experiences with Arkan, the Serbian warlord and gangster, who had just been gunned down in a “hit”. Now Martin Bell is a very well regarded journalist, widely travelled, educated and from all accounts a decent person. Arkan was accused of torturing, raping, terrorizing his way through the new states forming from the crumbling Yugoslavia and given he was indicted by the UN for crimes against humanity, there was probably more than a little truth in the accusations. It came as a bit of surprise then to hear Martin Bell talking about Arkan as a “friend” and that “I don’t think that you necessarily have to feel moral approval for people whose company your enjoy”
I am reminded of this incident today when reading NAMA Chairman, Frank Daly’s speech to the Association of Compliance Officers yesterday in which he described the origin of the term “Groupthink” and then applied it to borrowers whose loans are being transferred to NAMA. Whilst you wouldn’t expect NAMA to dehumanize developers, you would expect NAMA not to lower any stated standard in recovering loans which might involve NAMA being tough to the point of ruthlessness in pursuing borrowers. Some of these borrowers are big personalities, as genuinely charming and affable as you could hope to meet. They have in the past enjoyed (and indeed some in the present also enjoy), wealth beyond the previous horizons of the NAMA CEO or Chairman. It is to be hoped that NAMA personnel develop sustainable boundaries in dealing with developers. It wasn’t though Frank Daly’s description of groupthink as applying to “otherwise intelligent, well meaning and moral individuals” which gave rise to concern but the following:
“In essence, NAMA’s core objective will be to recover for the taxpayer whatever it has paid for the loans in addition to whatever it has invested to enhance property assets underlying those loans. It is expected that NAMA will have a lifespan of seven to ten years and when it has achieved its core objective, it will be wound up.”
Does this mean that NAMA has ditched the objective of trying to recover the nominal value of the loans and will now only focus on recovering the sum paid for the loans? Given the State’s expected €22.3bn dead-money injection into Anglo (and possibly €20bn of that will be to make up the haircut NAMA applies to Anglo loans), the public would be outraged if NAMA were moving goalposts and effectively writing off a large part of the original loan. Hopefully this interpretation is incorrect, and that NAMA will leave no stone unturned in pursuing the recovery of loans.
UPDATE: 30th May, 2010, The journalists Alan Ruddock and Ronald Quinlan go further in today’s Independent with their unequivocal headline ” NAMA: the truth it’s a bailout for developers”. They don’t, however, have any additional evidence to NAMA Chairman, Frank Daly’s perhaps ill-judged sentence reported above.
NAMA Wine Lake 
“Hopefully this interpretation is incorrect, and that NAMA will leave no stone unturned in pursuing the recovery of loans.”
Exactly. I don’t think that this has been widely recognised (not least by Nama). It would be completely unacceptable for Nama to merely breakeven on a cashflow basis. Instead, it must work to get as near breakeven as possible on a P&L basis i.e.pursue its newly acquired borrowers for as much of the outstanding loans and rolled up interest as possible. This would help offset the taxpayer injections in the banks – anything else is a pure bale out for developers and robbery of taxpayers.
This view is central to my recent “trilogy” of letters published in the Sunday Business Post at
http://www.planware.org/briansblog/2010/05/nama-and-the-banking-crisis.html
I certainly hope that interpretation [that NAMA will restrict its loan recovery to what it has paid and not what was originally owed] is incorrect.
I worry though that NAMA will test the waters to gauge opinion, particularly in respect of policies which might clash with wider economic considerations (eg demolishing buildings to put a floor under asset prices) or that might outrage public opinion (eg forgiving debt to developers).