Dr Michael Somers, former head of the National Treasury Management Agency and a man with a considerable reputation addressed the Fine Gael gathering in Waterford yesterday and although his presentation has not been made public, FG deputy party leader Dr James Reilly has been telling journalists about what was said.
James tells the Independent that Michael Somers told the gathering that NAMA was employing 380 people at a cost of €140m. Though what is probably meant by this is NAMA is employing directly some 90 people and the banks have dedicated NAMA teams (numbering 90 staff alone in Anglo according to the Interim Report last week). There are an unknown number of people receiving fees from NAMA in valuing loans, derivatives and undertaking the legal due diligence – the panels for these services show 100-odd firms engaged. As to the €140m, the draft NAMA Business Plan projected due diligence fees in the first year of €165m. However I think it is worth pausing and considering what a huge undertaking NAMA is, and again should Anglo’s non-NAMA loans be valued and bought by the existing NAMA superstructure rather than set up a completely new entity in an Asset Recovery Bank.
On the subject of the new Anglo restructuring plan (Version 3.0) Michael Somers appears to have been critical saying that there is a duplication of effort with having two asset management organizations. Of course he has been critical of NAMA in the recent past – at the MacGill Summer School in August he stated that a better option for dealing with the financial crisis would have been forcing the banks (“strong-arming” was the term he used) to deal with their own problem loans. He is reported as saying yesterday that there was “confused thinking” on NAMA and Anglo.
Of course because Dr Somers’ speech has not been published we are relying on Dr Reilly’s version of what was said, and as a political animal there is naturally the potential for spin. But the key point, the existing NAMA structure for valuing and buying loans is in place and operating and to date it has valued and transferred €27bn of loans at face value (with €16bn being approved by the EU) – the government should seriously consider expanding NAMA’s scope in the version 3.0 Anglo restructuring plan.
NAMA Wine Lake 
“worth pausing and considering what a huge undertaking NAMA”.
Aside from political interference and more straightforward “mission creep”, my major concenrns* about Nama relate to its management/direction and strategies. It is a massive operation and needs to be done right. Doing it right includes being transparent and open rather than secretive and all the indications on this aspect of its work are very negative.
*See http://www.planware.org/briansblog/banks/nama/
Finally NWL, can I say that you are doing a super job in the public interest. I don’t know your “real agenda” but you come across as a very competent, neutral and concerned observer. Thanks.
Thanks for the comment and compliment! Agree with everything you say. On NAMA I am neutral on the concept, it is one of several ways of addressing a banking/asset crisis. There may be better ways but NAMA is the adopted means in this crisis and the remit here is to focus on implementation. As you say political interference, transparency, unconsidered and unagreed mission creep are all issues and they will be pursued – I note that your publichsed letters to national newspaper have a similar public interest objective and that the letters are reproduced at http://www.planware.org/briansblog/banks/nama/
I have to agree with Michael Somers. Everything that I have seen emanating from Nama to date confirms his criticism.
Consider, the cost of packaging and selling a loan portfolio of €500 million with running costs of €140 million per annum at the rate that Nama is disposing of its assets!
But the costs don’t end there. There is serious duplication in executive time, documentation and professional fees. It does beg the question how all this can be recouped from a devastated property market. Add to that the future costs to be added when the Nama hit squad mows down all the non complying developers and their assets have to be managed and disposed of by a burgeoning army of Receivers and Liquidators. The mind boggles at the added costs to come.
So far, all that has happened, is that Nama is acting as a “rubber stamp” overarching credit committee layer to the banks, who still manage all except the first 30 debtor loan portfolios. So far, therefore, we are only experiencing small initial costs – wait until Nama really gets going!
This Nama / banks (or participating institutes, if you prefer) structure is causing serious conflicts of interest in the banks. The conflicts are most obviously reflected in the valuation process that assesses the Nama bound loans.
The executives whose loyalties are firmly tied to the participating bank but are paid by Nama do not know whether they are Arthur or Martha but are generally coming down on the side of their loyalties.
Michael somers is quite correct. IMHO, the seeds of huge expense and even of Nama’s own eventual destruction have already been sown – as has the potential for corruption!