Brian Lenihan Jnr (Dublin West, Fianna Fail)

Several Deputies have complained that the valuation is too generous or that there are insufficient safeguards to ensure the banks have to bear an appropriate share of the risks involved but this is not the case. The valuation methodology used to estimate the price paid for the loans must accord with EU guidance. Each loan will be valued in accordance with this methodology, which takes into account both market conditions and long-term economic returns. Long-term economic returns in the valuation process are necessary to achieve the goal of stabilising the financial system and to ensure that it is in a position to support economic recovery. This objective could not be achieved if the banks were forced to accept fire sale prices.

Deputy Bruton commented that the ECB recommends paying the current market value for assets. On the contrary, the bank recommended that we avoid paying too great a premium over the market value, which is quite a different matter. Furthermore, as I stated in my opening contribution, the Governor of the Central Bank and his predecessor have confirmed that the proposed allowance for long-term economic value is not unreasonable or disproportionate. The cash flow produced by NAMA will be sufficient to cover interest payments on the NAMA bonds and operating assets. Details of this are set out in the document I circulated.

Several Members made reference to the increase in the share prices of the two main banks since 16 September as proof that we overpaid for the loans. This is not necessarily the case, as on the day in question share prices for financial institutions around the globe generally increased. It was also the case that the increase in share values was an expression of confidence in the Government's ability to take the decisive action necessary to deliver a restructured and cleansed banking system that can support economic recovery. The share prices have reduced since.

Many Deputies correctly highlighted the importance of the availability of credit to the wider economy. This is the crucial issue relating to the legislation and I will take into account every improvement to the Bill and the operation of NAMA that can facilitate the extension of credit during the remainder of the debate.

Mortgage lending is supported by a statutory code of conduct, which has been in effect since February. We secured the agreement of the two recapitalised banks, Allied Irish Banks and Bank of Ireland, not to initiate legal proceedings for repossession within 12 months of arrears appearing. This will be complemented by new measures in the revised programme for Government to protect families experiencing difficulty meeting their mortgage repayments.

I reject the scaremongering in which Deputy Gilmore engaged this morning in the House. He said "it was well known" that the banks were waiting for the Bill to pass before moving in a serious way on homeowners in trouble. Well known by whom? What is the evidence for this? Has Deputy Gilmore been briefed on this? Has he concrete information to put on the table or is this scaremongering? At a time of economic recession, sending out a signal to homeowners who have difficulties making their repayments that a massive pounce is being planned on them in the banking system on the enactment of the legislation-----

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