Richard Bruton (Dublin North Central, Fine Gael)

Although it is only definitional, this amendment really raises the fundamental issue on which the whole debate in this Bill has hinged. What ought the State be paying for the acquisition of these loans? We now have three definitions of value on the table. Deputy Morgan's definition is some kind of competitive bidding situation. These loans are available now, so let us put them out to tender and see what we get. The second definition is that given by the Minister which is about willing buyers and willing sellers in an arm's length transaction without compulsion acting knowledgeably and prudently. That is clearly not the sort of situation in which many of the banks find themselves at the moment, but it is clearly a definition of market value that is substantially higher than the competitive bid model Deputy Morgan is suggesting. The third market definition of value is this long-term economic value, which deals with reasonable expectations having regard to the historical long-term average. In other words, a big survey of prices over time will project that they will head into the stratosphere along the same curve on which they had been proceeding.

We are being asked in here to decide on these definitions. While there is much to commend in Deputy Morgan's definition, as it is a value, the case could be made that it would lead to extremely stressed sales. Then we would go back to the willing buyer and willing seller scenario. That seems to be something we can estimate reasonably accurately. It is a better deal for those who are forced to sell loans than simply putting it out there to see what vulture fund might bid for it. It is also the limit to which the taxpayer should be asked to go, but the Government is asking us to go a further step, which is to pay €7 billion over the market value as defined. Not only that, we were told there is to be risk sharing, but there is no risk sharing. The maximum of the subordinated debt is not the €7 billion, but only a tiny fraction of that.

We will be coming back to this later, but Deputy Morgan raised the fundamental question as to which definition we should favour in the Oireachtas. I believe firmly that we should not be paying anything other than a market value. We are going to give more than €7 billion too much and forego the right to have shares in the bank, even though we could have used that €7 billion to acquire the shares because the banks would be drained of some capital and could have more interest in the upside of the banks and be rewarded for their recovery. In return, we could have shared risk with the banks so that they could benefit if NAMA did exceptionally well, having paid only what was a market value. That was available to us and there was broad consensus that this would be accepted on the Opposition side. Many Deputies from the Government side recognised the merit of our proposals, but when it came to the vote, they were not to be found.

I have much sympathy with the fundamental issue that is being raised here. It is a pity to remove the concept of long-term economic value entirely from the Bill. Although I do not believe Deputy Morgan's idea is the best, because we should be simply paying a market value as determined by the definition in the Bill, he is still raising a debate that we all want to have before Report Stage ends. It is a pity that the Minister is not willing to allow a more free flowing discussion of the issue, instead of trying to constrain us to a debate about a definition, rather than the use of the definition itself.

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