Niall Collins (Limerick West, Fianna Fail)

I am grateful for the opportunity to partake in the debate. It was opportune that the draft legislation was published as early as possible during the summer to allow us to have a national debate in the House and around the country in the manner in which it is taking place. The longer the debate goes on the better and the more informed we will all become.

One of the issues of concern is the level of misunderstanding about the intent of the proposed legislation and the Fine Gael proposal. I was gripped with interest listening to the accounts of Deputy Ulick Burke's constituent, Deputy Feighan's own circumstances and the deplorable treatment they have suffered at the hands of the banks. We are all familiar with such cases from our clinics. Ultimately, the purpose of NAMA is to address such issues. The longer it takes to devise a method to sort out the situation, the worse it will get. It would be a dereliction of the Government's responsibility if we did not get NAMA or some other such vehicle up and running in order to address the situation.

We know all about the lack of credit that is available to small businesses but we must not forget about everybody else. We hold a brief for everybody. I refer to the farming community and to young married couples trying to access mortgages. Value is available currently in the property sector but young couples are not able to secure mortgages. Every sector of society is discommoded. The problem with the banks is that they have impaired loans on their books and that is restricting their ability to raise credit on the international markets. In its crudest sense, a bank is a shop. In this case the shop buys money at a cost and sells it to the market at a margin. Unfortunately, currently the bank does not have the ability to raise loans and, therefore, it does not have stock to sell. We must act to improve the availability of funds and to increase liquidity. The way forward is not to sit back and do nothing.

I wish to refer briefly to the bank guarantee scheme that has passed its first anniversary. That was an important first step in addressing the banking crisis. Many positive effects are evident as a result of that scheme, for example, the appointment of the public interest directors to the banks. The Minister for Finance made a cross-party spread of appointees, which was important. The fact that the individuals concerned were from various political backgrounds instilled a degree of confidence in the public.

I welcome the placing of a cap on salaries payable to chief executive officers and senior bank executives. Prior to the banking crisis there were front page newspaper reports of millions being spent by banking executives taking their trophy clients to the Ryder Cup in the United States at a cost of millions. That type of activity must stop. Every crisis presents an opportunity to address the anomalies that have built up in the system. The Minister deserves great credit for addressing such issues head on.

It was believed in some quarters that if we set the cap on those salaries too low we would not attract the right kind of people. We have a wealth of people both in the country and abroad who would be keen to fill those positions in spite of the cap. I do not know any of the bank directors who were in place at the time the bank guarantee scheme was introduced but it is time they moved on. I do not know who they are but I do not hold any brief for them. A cap should be also imposed on the term of appointment of any of the directors appointed in their place.

Legislation is due to be introduced to the House on the new FÁS board of directors. It is envisaged that a cap of two terms will be placed on the new directors. Those recommendations have been made for other State bodies in draft legislation due to come before this House. Accordingly, it would be opportune and correct to place time limits on the duration of service a director can sit on the board of a bank.

I sometimes wonder whether the public has a full understanding of the bank guarantee scheme. Fundamentally, it is an insurance policy for every member of the public who holds a bank account. If a bank fails, whatever money he or she has in a bank would be honoured. In other words, when a person puts an ATM card into an ATM the money one seeks would be available to him or her. That is the purpose of the scheme. It was not to bail out developers. It was to ensure that if a bank was threatened with collapse that the State would honour its liabilities. That is as it should be.

Fixing our banking system is imperative for our international credit rating. We must have a functioning banking system in this country. It was not an option to sit back, do nothing and allow our banks to collapse. The notion being proffered by some people was that we should let Anglo Irish Bank go to the wall. However, we must keep our international credit rating in mind. Why is that important? When our international credit rating was downgraded, the subject was brought up in this House. People are very concerned about it. We cannot let our banking system collapse and affect our international credit rating. Consider the cost of funds. With our current spending we are borrowing €400 million per week. The cost of international funds will increase if our credit rating is downgraded.

There are many upsides to the NAMA legislation, but there is a risk. It is not a risk free operation. We must address the issue and there is a downside. However, there are many upsides, one of which is the opportunity to secure a social dividend. All Members know areas in their constituencies and throughout the country where there is a deficit of infrastructure in terms of schools, hospitals or community health facilities and so forth. Much of that is due to bad zoning. Local authorities made wrong decisions by zoning areas for residential use when they should probably never have been zoned for such use. If one looks at a map of the country, one can see the surplus of zoned land. It could take up to 50 years to build on the zoned land in some parts of the country. However, there are opportunities for the State to provide for the deficit of infrastructure in those areas. NAMA can play an important role in that.

The Planning and Development (Amendment) Bill has been published. There is a proposal in that legislation to permit the extension of planning permission from five to ten years. It is imperative that this legislation comes before this House as soon as possible. It should be discussed in conjunction with the NAMA legislation because NAMA, in taking over these asset-backed loans, many of which will have planning permission attached to them which could be approaching the five year expiry date, will need that permission to be extended for a further five-year period. It is important that the legislation is brought through the House as soon as possible.

With regard to the Minister's role in dispute resolution with people who are in dispute with NAMA, my colleague, Deputy Seán Fleming, proposed an amendment when the legislation was published. It is a common sense approach. I agree with Deputy Fleming that the Minister should not have a function or role in dispute resolution. There is much merit in providing that any dispute that exists between NAMA and a loan-holder should go before the Commercial Court. The handling of the Zoe Group proceedings recently has shown the Commercial Court has the ability and personnel to deal with these complex commercial disputes. Removing the Minister of the day from that role is very important.

I turn now to the issue of phoenix directorships. This subject has been discussed at the Committee of Public Accounts in both private and public session. There has been a trend in this country of people winding down and liquidating businesses and leaving debts unpaid. In the case of NAMA, there must be provision for these phoenix-type creatures who think they can walk away from a commitment they have to NAMA and subsequently engage in a transaction with NAMA by buying, for example, a performing loan from the agency further down the road. There must be a clear statement that NAMA will not tolerate any phoenix-type transactions, where people who have defaulted on a loan or transaction can later engage in a different transaction with the agency and conclude it successfully. That is most important. That is the course we must take.

During this debate on the principle of NAMA there was a reference to the 40 economists who had put their names to a document which stated that NAMA was not the way forward. NAMA is one proposal and there were many other proposals, including a proposal from the Labour Party and one from Fine Gael. In the interests of balance, it should be pointed out that more than 250 economists were contacted and asked to put their names to the document. Certainly, that is the information circulating in the public domain. If 250 were contacted and 40 put their names to the document, 210 did not. People will have different opinions as to how we should proceed.

There is a risk with NAMA. It is not a bailout for developers. The Minister has stated categorically that NAMA will pursue each developer to comply with the requirements of their loan obligations. Each loan as it is being taken over requires 300 separate pieces of information. This is a thorough approach, which is important. NAMA is a bailout for the banks, as has been said by other speakers. We are helping the banking system by bailing it out, but we are not bailing out developers. They will be pursued rigorously. However, we must have a banking system. There has always been a functioning banking system in this country. We rely on it for every aspect of life. Whether one is a child or old age pensioner, one needs a functioning banking system, and to sit back and allow it to collapse would be a dereliction of responsibility. It is a necessity.

We must proceed by addressing the issues, such as the concerns and examples raised by Deputies Feighan and Burke. To sit back and do nothing would only make the situation worse.

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