Eamon Gilmore (Dún Laoghaire, Labour)

Can the Minister continue indefinitely to call on the valuation panel to reconsider unless and until it comes up with an answer that suits him or her?

In setting up NAMA, the Government has sought to vest it with some of the authority of the NTMA. The Governor of the Central Bank is also mentioned in dispatches. It is clear from reading the Bill that NAMA will have very little real contact with the NTMA other than as a tenant. The Bill also provides the Minister with extensive powers in dealing with the restructuring of banks after the loans have been transferred. Under section 203, the Regulatory Authority may, but only with the approval of the Minister, give a direction to a participating institution in order to achieve the purposes of the Bill. One has to ask where the Oireachtas would stand in such a situation and why these powers are being handed over to the Minister. This continues a trend, established in the legislation underpinning the bank guarantee of extending extraordinary discretionary powers to a Minister and in this case to a Minister from a party which created the problems in the first instance.

There are other legal problems with the Bill, as identified by the Labour Party in its recently published critique. Some of these have been the subject of communication between my colleague, Deputy Joan Burton, and the Minister for Finance. There are also important features in regard to the manner in which NAMA will operate that are not mentioned in the Bill. For example, it is proposed that NAMA will assume ownership of the loans but that they will be managed by the banks that initiated them. Has the Minister considered the potential for conflicts of interest in this arrangement? How can a person who is an employee of a bank and whose career is based in that institution be expected to navigate any conflicts that might arise? Will the banks that originated loans be allowed to buy back those loans at market prices in several years time?

There continues to be many uncertainties about how NAMA will operate in practice. The Second Stage speech delivered by the Minister was replete with such uncertainties. The figures which gain most prominence in the media are inevitably the broad aggregates. These figures are described in the Minister's booklet as "top down, illustrative estimates of aggregate loan purchase prices ... for illustrative purposes only". Numbers that are absolutely vital to the entire enterprise are either heavily qualified or not included in the booklet. The much spoken of equity in the loans can be imputed only from an "approximate average LTV". Is it there or is it not? We do not know and will not know until NAMA goes through the loans one by one.

More important, we do not know the discount that ultimately will be applied. The figure of 30% is an industry-wide estimate. If it turns out to be inaccurate, the cost to the taxpayer will be high. It is important to remember that the discount that will apply at the end of the process will be different across the different banks. If it turns out that the figure of 30% is accurate overall but is much higher in Anglo Irish Bank than in the other banks, then the true picture is different from the one the Government is trying to paint. It is fair for the Government to point out that it will not know the final figures until NAMA has done its work. However, a year after the banking guarantee, it is striking that the estimates are still so shaky. The cost of Government borrowing has been profoundly affected by the uncertainties surrounding the banks. The slow pace at which this information has been released has contributed to that uncertainty.

I wish to comment on the section in the Minister's speech in which he purported to cost the Labour Party proposal. It was pretty pathetic stuff, unworthy of him and an inappropriate use of Civil Service resources. To clarify, the Labour Party does not propose blanket nationalisation. What we have suggested is a temporary nationalisation of Allied Irish Banks and Bank of Ireland. The Minister claims we have proposed a straight 50% write-down of bad loans. We made no such proposal. The Minister claims that, under nationalisation, we would have to borrow at market rates of 4% to recapitalise the banks. There is no evidence to support this claim. The Minister claims international markets would not lend to nationalised banks. There is no evidence to support that claim and no serious commentator accepts it. Many State-owned banks internationally have no difficulty in borrowing on world markets.

The Minister claims our party's proposal is based on an ideological preference for public ownership of the banks. As we have repeatedly pointed out, our proposal is to sell the banks back to the private sector as quickly as possible. In other words, we propose to nationalise where necessary and resell when possible. The reality is that Fianna Fáil is ideologically opposed to public ownership.

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