Joe Costello (Dublin Central, Labour)

I thank Deputy Jan O'Sullivan for sharing her time with me. The issue we are debating today is probably one of the most important we will ever debate in this House because its implications are so enormous.

NAMA is the Government's second colossal emergency measure to bail out the banks and financial institutions which caused the economic crisis. The State's bank guarantee of nearly €500 billion in the Credit Institutions (Financial Support) Act 2008 is now being underpinned by an asset management agency to try to prevent that ill-thought out guarantee from exposing the taxpayer to grave financial losses. The reverse, however, is the case because this is a catch-22 for the taxpayer. If the financial institutions go bust, the taxpayer picks up the tab from the original guarantee; if the asset portfolio is maintained at an artificially high level of value to bolster the stability and viability of the financial institutions, the taxpayer picks up the tab. Heads or tails the banks win.

The entire banking system cannot be blanket guaranteed without the taxpayer picking up the tab for the moneys that have evaporated. That seems to be what has happened. Where has the money gone? It can not have disappeared into thin air but in this case it appears to have done so. The asset valuation that is now being projected at a 30% markdown is already dumping significantly on the taxpayer. The recent fiasco involving ACC Bank and Liam Carroll indicates that the real market value of property portfolios is the reverse of the Government's national valuation for NAMA. Mr. Carroll's properties, that were the subject of the court hearings, have a market value of only 25% to 30% of their original monetary valuation.

NAMA is the saviour of the property developers, speculators and the banking system precisely because this measure operates against the best interests of the taxpayers. It is a high price to pay for mismanagement, negligence, greed and fraud by those "pillars of society" who lived high on the hog for the duration of the Celtic Tiger. The stated purpose of the NAMA Bill is "to facilitate the availability of credit in the financial markets of the State." There is absolutely no assurance that the banks will extend credit to hard-pressed businesses in Ireland. The banks have been already financially guaranteed and refuse to part with this credit. They have received €7 billion of taxpayers' money and the credit purse strings have not loosened one whit. The European Investment Bank, EIB, extended a borrowing facility of €30 billion over a year ago to provide credit for small to medium enterprises. While the Irish banks have drawn down a mere €300 million between them, it is not clear whether they have lent any of that money to small and medium-sized enterprises which are daily going to the wall because they cannot get a credit facility from the financial institutions.

The banks are simply refusing to lend money to citizens and businesses. They have no faith in the Irish economy and will not necessarily have any faith in it when NAMA is in place. The irony is that they were responsible for causing the recession and now that it exists they will not lend money because they do not believe it is a good deal and feel that the small and medium-sized enterprises are too risky.

The Green Party, whose leader is in the House today, had a glorious opportunity last week when it was renegotiating the programme for government and seeking concessions on the content of NAMA. It should have insisted that the Minister for Finance make it a statutory condition of the NAMA legislation that there would be a correlation between the banks' participation in NAMA and their provision of credit to the business sector, particularly small to medium sized businesses which are the life blood of the economy and account for 50% of all employment, and that this be done at a reasonable rate of interest. It could and should have done that, but it did not. NAMA is a ticking time bomb for the taxpayer which may eventually explode causing serious collateral damage. There is a banking crisis and a modern economy cannot function without a functioning banking system. We need a functioning retail banking system that will provide credit to citizens and businesses. The Labour Party has proposed temporary nationalisation which would allow the banks to clean up their balance sheets without exposing the taxpayer to unnecessary risk.

The boardrooms of the banks remain essentially the same except for Anglo Irish Bank which has been nationalised. For example, nine of the ten directors of AIB are unchanged apart from the two public interest directors. The banks cannot be reformed without a clean out of the dysfunctional boardrooms which brought us to this sorry state. The Green Party should have targeted this too in the negotiations which took place recently but I did not see this happen. No country can allow its economy to be the plaything of private banks and financiers. We must establish a state bank which will cater to the needs of the Irish economy and the Irish people and not to the dividends of the private shareholders. This state bank will ensure the financial needs of small and medium-sized businesses are catered for and should also have a direct role in drawing down funds from the European Investment Bank, the European Reconstruction And Development Bank and the European Central Bank. This would be one way to ensure the economy becomes the main thrust of a particular aspect of the banking system rather than the private reward of shareholders and bonuses for directors. Finally, there is a need for a stimulus package. The haemorrhaging of jobs must be stopped and the creation of new jobs must be stimulated. The US and main EU economies have received substantial investment packages from their governments. All the Government seems able to think of is to raise taxes, impose cuts and bail out the banks. Such an approach can only deflate the economy, will reduce tax intake and increase unemployment.

For the Government, NAMA is the only show in town, or TOSIT, as it is called. It is its big idea and it is a dud.

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