Séamus Kirk (Louth, Fianna Fail)

I wish to share my time with Deputy Niall Collins.

The legislation to establish the National Asset Management Agency is one of the most important Bills that has ever been debated in the Dáil. The decision to set up NAMA was taken last April and the draft proposals were published in July last. Never in the history of the State has one subject been so extensively and passionately debated both in the House and outside. The Government is acting decisively because we simply cannot have economic recovery without a fully functioning banking system. We are determined to re-fashion the financial and banking system, and to address and correct all regulatory and governance shortcomings, which the problems we have experienced in the past year or so have graphically illustrated. NAMA will facilitate the speedy removal of high risk property-related assets from the banks books and enable banks to start lending to families and businesses again.

Much of the criticism of the legislation has concerned the price the Government will pay for the bad debts. The Minister, Deputy Brian Lenihan, said he expects NAMA will purchase loans with a book value of approximately €77 billion for a 30% discount at a price of approximately €54 billion. Each loan will be individually valued, meaning that in some cases NAMA will only pay the agricultural value of the land, while in other, more viable projects, it will pay the long-term economic value.

We must remember that we need to get the economy back on track as quickly as possible. We cannot do that by forcing a fire sale of assets at below what would be rational prices for them. Despite what the Opposition would have us believe, the success of NAMA is not dependent on property prices going back up to 2007 bubble prices. In fact, NAMA will have to achieve less than a 10% uplift over current market values on its assets over ten years to break even. Another allegation being made is that NAMA is a bailout or rescue for builders or developers. The Minister has confirmed that developers who are insolvent will be liquidated and NAMA will have the full range of remedies already available to the banking system, including repossession, enforcement of mortgages, the appointment of a receiver and the liquidation of companies.

Members of the Opposition have tried to argue that NAMA poses too big a threat to the taxpayer. The biggest risk of all would be to do nothing while the economy continues to stagnate.

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