It is just over a year since the creation of the National Asset Management Agency (Nama), a key part of Ireland's response to its banking sector difficulties. Nama is unusual among financial institutions in that it very quickly had to acquire a large balance sheet, which it will now work assiduously to eliminate. In parallel, a whole new organisation has had to be created, staff recruited and procedures and controls developed - all in the public eye.
The more successful Nama is in dealing with its assets, the closer it will be to extinction. To understand that paradox is to understand the conditions that gave rise to the policy decision to create the agency. By 2008, the Irish banking system had lent far too much to one sector of the economy (property) and too much to a relatively small number of borrowers within that sector. Banks were paralysed as the economy contracted both in Ireland and internationally. And as impairments were inevitably building up, they knew their capital would be depleted.
