Originally Posted by realcam
we're giving them 54 billion. I'm not saying its a gift and its entirely free money or anything, but we're giving them 54 billion.
Nah mate, you've got it wrong here.
NAMA is buying
loans from the banks, and paying them with government securities (bonds).
Hence, they/we are not giving away anything, there is an exchange taking place.
This means that the banks clean their balance sheet, because they have a solid guaranteed bond that has a definite value. They are not given a big whack of cash. The bonds will be payable over a fixed term, but I'd say it would be a minimum of ten years.
Then the government can sell the asset (loan) at a later date - hopefully at an increase on what they paid. Also, the banks have taken a significant loss on these loans (30%), they don't view it as good business but its necessary to stabilize cash flow, liquidity and share price.