Peter Kelly (Longford-Westmeath, Fianna Fail)

I take this opportunity to congratulate Deputy Seamus Kirk on his new job, which he fully deserves. I also thank Deputy John O'Donoghue for the help and courtesy he has shown me at all times.

The National Asset Management Agency will buy assets from banks, thereby taking the riskier loans off bank balance sheets and making banks safer and more secure for depositors and investors. This is the best approach to ensure stability in our financial system and free banks to lend to businesses and households. NAMA will buy loans at a discount of about 30%. It will do so on the basis of individual loan valuations carried out by experts and subject to European Commission approval. The payment for the loans will be in the form of Government bonds. NAMA will manage these loans either directly or indirectly to obtain the best achievable return from them. In the meantime, it will collect interest due and pursue debts owed by developers. The Minister for Finance, Deputy Brian Lenihan, has pledged that the full rigours of the law will be applied to do so.

We all know property and land prices are depressed. Owners of these assets will not be able to sell land or property until prices increase in an economic recovery. However, the economy will not recover unless the banks are able to lend to businesses and households once again. Banks cannot access funds to lend money given the uncertainty of the value of loans on balance sheets. This prevents prospective buyers entering the market, which ensures asset prices remain depressed. By establishing NAMA the Government is trying to unlock this catch-22.

We have no other option. We must address the health and stability of our banking system to ensure the credit required by the economy is provided and people's savings are protected. Banks need to be able to access cash so that they can lend this cash to viable businesses and households. At the moment, concerns about the impact of risky loans on the banking system are creating funding difficulties for the banks and restricting the flow of credit.

The replacing of property related loans with Government bonds will remove uncertainty about the soundness of banks' balance sheets. This will increase their capacity to access funds in the financial markets and, if necessary, from the ECB. This response will ensure the banking system's safety, stability and capability to lend, all of which are crucial for economic recovery.

NAMA is not a bailout for banks or developers. It is about getting the banks to a position where they can start lending to families and businesses once more. Banks will suffer substantial losses on the sale of assets to NAMA. It is not a rescue vehicle for developers or other borrowers as NAMA will expect to be repaid in exactly the same way as a bank would. NAMA is not about restoring the property bubble prices of 2007 and it is estimated that NAMA will have to achieve an uplift of less than 10% over the current market values on its assets over ten years to break even. Furthermore, there will be a fund available to allow some half-finished construction works to be completed. This is good news for those in new estates where work is unfinished, thereby making it even more difficult to sell remaining houses and apartments.

Naturally, there has been concern about what safeguards will be put in place to protect the taxpayer. Under the Bill there will be no easy terms available to borrowers from NAMA. All borrowers will be pursued by NAMA for their debts and it will be a crime for anyone to lobby NAMA in regard to any of its decisions. Only a borrower and his or her agents will be authorised to deal with NAMA.

The legislation has been changed to require more frequent reporting by the agency and the Minister for Finance to the Oireachtas. Any involvement by borrowers in the development or completion of property acquired by NAMA will be subject to strict limits and controls. Under the Bill there will be no easy terms available to borrowers from NAMA, and all of these will be pursued for their debts.

NAMA is not expected to make a loss over the long term but if it does, financial institutions will be levied. The Government is not bailing out the banks but is bailing out the economy. In the absence of a functioning banking sector, everything people have worked so hard for would be placed at risk. It is for this reason I will be voting for the speedy implementation of this legislation.

Bankers - I do not include staff at branch level in this - have let this country down. There is no excuse for greed. We now have a duty, for the good of the economy, to restore confidence in the banking system. It is estimated that the value of the bank loans to be taken over by NAMA is approximately €77 billion. NAMA is supposed to pay €54 billion for these and, as a result, the banks will suffer a loss of €23 billion. The banks are rightly sharing the losses. After all, it was they who engaged in approving crazy loans in the first instance.

The purpose of this legislation is to ensure the banks lend again. The European Central Bank, not taxpayers, will put up the money in respect of this matter. If NAMA covers its costs over ten years, taxpayers will pay nothing. If it makes a loss, a bank levy will be introduced to cover this.

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