Brian Lenihan Jnr (Dublin West, Fianna Fail)

There are so many assumptions in the Deputy's questions that I wonder where to begin. NAMA is being established under the aegis of the National Treasury Management Agency. In bailing out Anglo Irish Bank it is bailing out the taxpayer, because the taxpayer now owns Anglo Irish Bank. Therefore, I do not see the relevance of the use of the word "bailout". The transactions that will take place between NAMA and the Anglo Irish Bank are transactions in which, in effect, distressed loans will be removed from the balance sheets. I am not in a position to put a figure on the record of the House this afternoon about the extent of that distress because we have not completed the valuation exercise for NAMA purposes. We are at the stage of establishing what the valuation procedure will be.

I am glad the Deputy asked me about the extension of the guarantee and the bonds. The reason the guarantee is proposed to be extended to medium term debt is that, as the Deputy is aware, the guarantee terminates at the end of September 2010 and the main banks have difficulties in accessing medium term debt financing beyond that period because of the total character of the cut-off date. It is not a matter, however, of guaranteeing existing subordinated debt or debt of that character which is an issue, but a question of assuring medium term finance is available to financial institutions. This course of action has been taken by many other European countries, as have all of the different courses of action we have taken, including giving the guarantee, capitalisation and nationalisation where appropriate. All these steps have been taken by countries throughout Europe to deal with the major crisis in the financial system, which will do incredible damage to our economies if it is not addressed.

On the specific question the Deputy asked about medium term finance, the answer is that the Government is working on proposals that will require approval from the European Commission. They will assure the various financial institutions in Ireland - in a currently improving money market - that they can access greater funding. This is very important for sustaining the viability of the banks and for the banks giving credit into the economy.

With regard to the suggestion that the Anglo Irish Bank should have been nationalised a few months before it was, it is clear from the discussion we are having today that when a bank is nationalised, the obligation to provide working capital for the bank rests on the taxpayer. I was determined to do all in my power to stave off that eventuality. The taxpayer has not had to commit a cent to the Anglo Irish Bank to date. Whether it would have been preferable to have nationalised the bank last September and immediately commit several billions of euro to it is a matter historians can debate. The course of ensuring the viability of the whole system as long as possible and using total nationalisation as a last resort was the correct route to follow.

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