Brian Cowen (Laois-Offaly, Fianna Fail)

We will come to that, if that is the point the Deputy wishes to make. More than €300 billion has been offered in recapitalisation schemes of different types by various EU countries.

The means by which we obtain liquidity is to take the illiquid assets - that is, the billions of euro worth of property and development loans - off the balance sheets of the banks, put them into NAMA and trade them for Government bonds. This will provide the reserve liquidity that is required so that people can go on to the wholesale markets and obtain funds in the sure knowledge that the difficulties with the banks' balance sheets have been properly priced in. NAMA is proceeding with this and ensuring that banks face up to their losses. The losses announced today by AIB and those of other banks are precisely because the NAMA vehicle is involved. Were it not involved, banks would be seeking to protect their interests by spreading those losses over a longer period in order to protect shareholder interests only. That was the experience in Japan in the 1990s.

NAMA is bringing things forward. It is providing, through the exchange of Government bonds for illiquid assets - that is, the loans - the means for banks to access funding at an affordable cost. At the moment, banking institutions are chasing deposits. The interest rate they are paying on those deposits is greater than the amount they are lending out. That is not a sustainable position in the long term. We have implemented a policy which has the support of those independent commentators who are not partisan on the issue, such as the Governor of the Central Bank.

The question Deputies opposite need to answer is this: how do they propose to ensure credit is released? We all know the banks have curtailed lending, mainly because they are finding it a challenge to obtain funds, and the reason for this is that providers of funds are reluctant to deposit their money in banks with balance sheets of questionable quality. NAMA will remove that uncertainty and allow the banks to attract sufficient funding again. None of the parties opposite has come up with a workable proposal to achieve that end.

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