Paul Gogarty (Dublin Mid West, Green Party)

I take the Deputy's point and do not disagree with it in general. I am merely pointing out the reality in some areas.

In regard to NAMA, there will always be something of a guessing game in regard to the valuation issue, and there has been much talk of risk-sharing. The estimated valuation draw-down has been put at €47 billion, with the €54 billion being paid representing a premium of €7 billion. Some €2.7 billion of that is incumbent on the banks to cover, with the rest incumbent on the State. It is reasonable to argue that this does not represent a fair sharing of the risk element. I expect my party members to have strong views on this. However, it has also been widely acknowledged that the capitalisation of the banks will not be complete even at these calculations and it may well be that further investment in either or both of the two major commercial banks will be necessary. I heard a suggestion on "Drivetime" this evening that a stake of 40% in AIB is likely. It could well be 60%, which would amount to nationalisation without the drawbacks. We do not know precisely what is going to happen but it is clear that the State's take-up of the banking sector will increase, which means the risk is then shared on what would work out at a 50:50 basis, primarily because if the banks benefit, the taxpayer, via the State, will also benefit. It is a no-brainer in one sense but highly risky in another. There is no way around the taking of that risk.

I acknowledge that Fine Gael's proposal was diligently researched and put forward in the best interests of the State. The same is true of the plan put forward by the Labour Party. I do not accept for one minute that either party is motivated by blind ideology or pure populism. I accept that a case can be made for nationalisation on a temporary basis, as proposed by the Labour Party. However, a consideration of the risks and drawbacks of each of the proposals makes clear that a finely honed version of NAMA is the least risky of all. This is not to say there is no risk involved.

I will conclude by referring to an e-mail received from one of our members pointing out the similarities between NAMA and a story he proceeded to relate. He spoke of a friend who put a younger brother through university, providing accommodation in his family home and subsidising his expenses as he studied for his doctorate. The young man went to on graduate and a week after securing employment asked to borrow his older brother's car. The latter's car was being serviced so he allowed his younger brother to borrow his wife's motor. The next morning the keys appeared on the hall table with a note apologising for scratching the car which had been left at a local garage to be repaired.

The correspondent's friend apologised to his wife and promised to sort out the damage. However, he received a telephone call in work later that day explaining that his younger brother had also caused serious damage to a neighbour's car. The man promised to reimburse the neighbour and proceeded to lodge €3,000 to the latter's account as settlement of the damage. At this stage it would have been cheaper to claim on the insurance but once the money was handed over it was too late. The damage to the spouse's car was also greater than first reported. The man was not sure whether his younger brother qualified for open driving because he was 30 years of age and the policy specified that the driver must be over 30. Savings for holidays were now committed to the neighbour. When the repair estimate came in at €7,500, the man's wife was furious and demanded that his younger brother be reported to the Garda or thrown out of the house. The brother showed little remorse, merely shrugging his shoulders and mumbling a half-hearted apology. This immediately calls to mind the comment by the Minister, Deputy Brian Lenihan, that the banks should be grateful for the help they are receiving. Will they be grateful? To paraphrase the Bailey brothers: Will they damn.

There was no question of the correspondent's friend securing the money from his younger brother because the latter had huge debts for which the former was guarantor. Moreover, the younger brother was on probation in his new job. Throwing him out of the house would only delay any chance of repayment. Involving the Garda might endanger the new job and the bank might call in the loan for which the older brother was guarantor as they were rolling over the debt at student interest rates - something similar to the European Central Bank rate of 1.5% - but with an option to terminate. If the bank called in the loan to the younger brother, it would have tipped the family finances deeply into the red as a result of the punitive interest rates. The correspondent's friend is still seething over the situation, suffering bad feeling from his wife, children and neighbour and a lack of meaningful compensation from his brother. The latter has as yet no resources worth speaking of.

As a nation, we have a similar problem with banks and developers. The Government acted on insufficient information, as provided by the banks, and made promises in the form of guarantees to deposit and bond holders. Nationalising the banks would be the equivalent of throwing the younger brother out of the house. It might make us feel better but would probably cost more in the long run. Reneging on promises would cause the bond markets to charge higher interest assuming we were even able to obtain loans. NAMA is essentially unfair in this respect but the reality is-----

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