Bobby Aylward (Carlow-Kilkenny, Fianna Fail)

I welcome the opportunity to speak in support of the NAMA legislation. I wish to set out why I support the concept of NAMA and explore some of the ridiculous myths which have been peddled about the NAMA project during the course of the frenzied public debate over the summer.

It is high time for us to address the grave difficulties besetting the banks. We must address them with an air of plain realism, unpalatable and all as that reality may be. There is no instant panacea for this crisis. We must adopt a practical, structured and workable approach which pays proper regard to the context in which we find ourselves from the points of view of the European Commission, the European Central Bank and the international financial markets. We are only deluding ourselves if we believe we can operate in a vacuum on this. All our actions to do with the banks and how we propose to clean them up will have knock-on consequences in the markets and we must be constantly mindful of that fact and of the profound long-term effect all our policy decisions will have. The key issue is to repair the banking system and to maintain international confidence in investing in this country while ensuring the taxpayer is not unduly exposed.

Whether we like it or not, we all need banks. They are a fact of life. Banks which function properly are critical to a vibrant economy and represent its beating heart. Credit is the lifeblood which maintains every facet of the economy. It enables business, it facilitates enterprise and it keeps the household going. Now that we have experienced a banking crisis and the near collapse of the entire system, we know what it is like when credit dries up and most of us know that it is a very uncomfortable and debilitating situation.

The former beating hearts, which are the banks, are now going through a type of cardiac arrest and business is withering because it cannot get access to vital credit. Enterprise is nearing stagnation, farmers cannot get loans, young people find it difficult to get mortgages, households are unable to get loans for purchases or improvements and individuals cannot get personal loans or overdraft facilities. The banks simply cannot lend because they do not have the money to do so. There is an acute shortage of cash and people are losing jobs at an alarming rate.

That situation is intolerable and dangerous and cannot be allowed to go on much longer. There is a dire urgency about this. The banks are paralysed because they are seriously choked up with all these toxic loans so we must take corrective action. I am afraid we do not have the luxury of choice or time. It is my firm and honest view that an asset management agency represents the best formula to tackle this problem in a comprehensive way. We must restore a functioning banking system which will ensure a flow of credit into the real economy. If they are to survive and do the job they are supposed to do, the banks must get a clean bill of health, their balance sheets must be strengthened and all the uncertainty surrounding bad debts must be reduced.

The Minister for Finance is to be complimented on the model he is recommending. It is worth reminding people that this model is not unique. Around the globe, similar models have been adopted to deal with distressed loans in banks and the Minister has availed of the very best international and domestic advice and expertise in formulating the NAMA proposal. NAMA has received the very important blessings of the European Commission, the European Central Bank, the OECD and the International Monetary Fund. In formulating the best vehicle to resolve our problems, the Minister has adopted a measured and considered approach, based on the principles of best international practice.

NAMA has enormous merit in that it addresses the two most critical issues confronting the banks at present, namely, solvency and liquidity. Throughout this process, we must achieve the orderly disposition of assets and ensure the various developments in question continue to earn economic value over time. It is without doubt the best and most workable solution we have and it has a proven track record of success internationally. Around the world, it is consistently recommended by banking experts and economists as the most effective method of managing distressed assets and troubled loans in a fragile banking system.

A number of schools of thought emerged over the summer about how we should clean up the balance sheets. Much of what passed for honest debate only served to confuse the public and that opportunity was used very cynically to distort the truth about NAMA, what it seeks to achieve and how it will set about its business of cleaning up the banks.

First and foremost, NAMA will acquire all the loans secured on properties and other assets. It is not only buying the bad or non-performing loans. Furthermore, we must bear in mind that 40% of these loans are good loans, that is, the borrowers continue to service these loans and they are not impaired. That fact has been lost or ignored in much of the controversy which has been generated by academics and the like.

I am disgusted that NAMA has been deliberately depicted as a bailout for builders and developers. It is nothing of the sort. To suggest otherwise is to fail completely to understand NAMA and how it will work in principle and in practice. The legal obligations of borrowers do not change in any way simply because the loans are transferred to NAMA. It is NAMA's clear objective and duty to continue to manage these loans and to ensure that all the obligations of the borrowers are met in full. Indeed, the Minister has said on several occasions that NAMA will be ruthless and relentless and will pursue every borrower, builder and developer alike, for every last cent they owe. All borrowers will continue to owe what they owe until their debts are discharged in full and that is the way it should be.

This Government is most certainly not in the business of rewarding failure or reckless borrowing and nobody but nobody will escape their legal and moral duties to the State. They will continue to be liable for the entire face value of their loans and I heard the Minister state that he will consider pretty far-reaching penalties against any builders or developers who might default on these loans. I hope the Minister will pursue this and that, if it is lawful, he will consider measures to curtail their future involvement in the building industry.

The Minister's attitude in his preparation of this legislation has been commendable and mature. He has shown himself at all times to be amenable to proposals and possible amendments from the public and parties in this House. He has engaged in a constructive process of consultation and dialogue with all interested people which is a very enlightened and pragmatic approach to such a fundamentally serious issue. I hope the Opposition parties will respond and avail of the opportunity when this Bill reaches Committee State to put forward meaningful and concrete proposals to improve on the structure and the process which the Minister seeks to adopt in the nation's interest.

In this respect, I welcome the proposal to introduce a substantial element of risk-sharing into the legislation.

It is entirely fair and reasonable to apportion risk to the banks and to avoid any possibility of enriching shareholders. After all, it is the banks' shameful and naked avarice which has visited so many problems upon this nation and the ordinary taxpayer. The banks engaged in a wild orgy of irresponsible and unscrupulous lending in the past several years. Their behaviour and singular lack of any ethical standards are despicable and have served to compound many of the problems this recession has brought.

Not alone do I support the notion of risk-sharing for the banks if NAMA does not succeed fully, but I am also anxious to ensure the full rigours of the law are applied to all of those bankers who are found to be in breach of their duties. I hope the Office of the Director of Corporate Enforcement will be able to bring successful prosecutions through the courts against all of those who have violated the law in pursuit of profit, satisfying their naked greed without any regard to the catastrophic consequences of their wilful deeds. In a nutshell, I want to see them serving severe jail sentences where necessary. We are all suffering the hangover which their scandalous orgy of greed has inflicted. Risk-sharing is appropriate for the banks and custodial sentences are appropriate for those proved to have been engaged in criminal or fraudulent activities.

I welcome that the Government is still considering the option of applying a levy on future profits of the banking industry to make up any shortfall if NAMA fails to break even over its lifetime. We need a strong element of justice and fair play for the tax payer in this entire process.

I have been disappointed by the tenor of the NAMA debate and the lack of any viable alternative being put forward. There has been too much heat and not enough light in this discussion. Ideas have been high on aspiration but sketchy on cost and detail. In typical fashion, the Opposition has a problem for every solution. It is noteworthy that a former Fine Gael Taoiseach, Dr. Garret FitzGerald, and former party leader, Mr. Alan Dukes, have come forward in favour of NAMA, as has Mr. Ray MacSharry and many other prominent and respected business leaders, economists, and commentators.

The Financial Times is well-disposed to NAMA. The current edition of The Economist describes the NAMA plan as seeming, "like an advance over those in some countries—at least it gets something done. America's scheme to buy toxic assets never got off the ground, while Germany's bad bank is so punitive that most banks would rather stop lending than turn to it for help."

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