Pat Rabbitte (Dublin South West, Labour)

I have often quoted Mr. Desmond. Regarding this legislation, he stated:

Nama as conceived will do untold long-term damage to Ireland Inc. It will result in paralysis for decades to come. Ireland's key focus must be to get the economy moving again and start to promote the real economy. Without this tax revenues will continue at the current low levels and unemployment outside the public sector will continue to grow. Everything must be done to avoid ongoing stagnation.

If I had the same antipathy to taking the banks into public ownership, as articulated by the Government, I would burn the midnight oil studying Mr. Desmond's proposals for an alternative to NAMA. Mr Desmond acknowledges where the blanket guarantee has landed us. He points out that the shareholders of the banks and their bondholders should suffer the cost of failure. These bondholders are private institutions, including hedge funds, which took a calculated business risk in subscribing to these bonds. Why should they not be required to share the cost involved? I do not believe that forcing these institutions to engage in such a renegotiation of their bonds will cause difficulty to Irish banks raising funds in the future.

We cannot further recapitalise the Irish banking sector without first entering into discussions with these bondholders to agree a significant write down in the amount of moneys owed to them for which they might be compensated in terms of equity if that was considered appropriate. I am not advocating defaulting and do not want to be construed as advocating it but they should take their share of the pain. It was a calculated business risk on their part and we should enter negotiations to cause them to write down the moneys owing to them and take their share of the pain.

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