Richard Bruton (Dublin North Central, Fine Gael)
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Question 55: To ask the Minister for Finance if he will publish the heads of legislation on the National Assets Management Agency and an evaluation of the way it will work in order that there can be a broad based debate on the proposal before final decisions are made. [19125/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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It is my stated intention that enabling legislation for the establishment of NAMA will be introduced during the summer Dáil session. As is the case with all legislation, the Dáil will have the opportunity to debate the Bill when it is brought before the House. I have established a steering group comprising representatives of my Department, the Office of the Attorney General and the NTMA to oversee preparatory work for the establishment of NAMA on a statutory basis.

However, to avoid uncertainty and minimise further deterioration in the banks' loan books, it is important that NAMA is established on an interim basis as soon as possible. This will also allow preparatory work on the necessary legislation to be informed by the initial work of the interim agency. The interim agency will be well positioned to help identify the technical issues which will have to be addressed in that legislation and to assist in discussions with the EU Commission.

I recently announced the appointment of Mr. Brendan McDonagh as interim managing director of NAMA. The appointment of an interim managing director will ensure the implementation process is driven forward in the interim period pending legislation. Mr. McDonagh will be assisted by a high level interim advisory committee, whose names I am finalising. I have also directed the NTMA to provide the necessary staffing and other facilities through its existing resourcing arrangements to support the interim operation of NAMA, pending its establishment on a statutory basis.

I appreciate that the question is whether I will publish the heads of legislation on NAMA in advance of the legislation. Draft heads of legislation are not normally published and it is not my intention that the draft heads of this Bill will be published. However, it is important that the maximum amount of briefing be provided on the proposed legislation and it is my intention to provide that briefing to Opposition spokespersons in advance of the legislation.

Richard Bruton (Dublin North Central, Fine Gael)
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While I thank the Minister for briefing us, the question is very clear, will we have an evaluation of this project? This is on the scale of Napoleon's invasion of Russia. We are undertaking huge risks on the part of the taxpayer in saying the taxpayer will shoulder up to €90 billion in impaired loans. Does the Minister think it is acceptable that all that has been published is a ten-page document summarising a report that has not been seen? Is that enough for the Oireachtas to have confidence in the course the Government is taking? Why should the Oireachtas participate solely in processes designed to implement this when it is clear there is major scepticism on whether this is the correct way to go, on whether it will get credit moving quickly and on whether it will prove one of the most costly ways of dealing with the problem, and the taxpayer shoulder everything? Does the Minister agree we have time to have a proper evaluation of this? Let us get all the opinions on the table and make our decisions based on the best possible information, not simply on the basis of just one approach to this that has been pioneered by one group.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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This is not a matter of one approach pioneered by one group. This was a very detailed exercise carried out within the NTMA, which advises the State on financial matters, building on its expertise and the analysis of the banks' loan books, which has been demonstrated since last September. The Government examined matters carefully. The Government and I agree with Deputy Bruton to the extent that the crucial issue regarding the operation of NAMA is the valuation of the books and the precise price at which the agency will acquire the assets. That is at the heart of the successful operation of the agency. That is why I have confined myself to date to a general statement of principle about how we will go about this approach. If we predetermine the valuation without further expert advice and analysis, we would expose the taxpayer. It is essential that a proper evaluation procedure be elaborated.

As I indicated in yesterday evening's debate on this, I am open to constructive suggestions from the Opposition on how we can proceed on valuation. No alternative system has been advanced in this House to address the question of how credit can be made to flow in the banking system again and how the banking system can be repaired. The approach taken by the Government is in accordance with best international practice and advice and the IMF has repeated again and again the need for states to clean up the balance sheets of the banks. If an alternative proposal exists, it can be evaluated, but no valid alternative proposal has been advanced from the Opposition benches.

Richard Bruton (Dublin North Central, Fine Gael)
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Has the Minister examined the evidence that other attempts to do this ended in less recovery on behalf of the national agency than private sector recovery of this loan? That is the French example. Has he examined the fact that this will get bogged down in legal wrangling? This will be a bonanza for lawyers and accountants, not for those awaiting credit. That is clear. Does he agree there are many more disputes about the validity of this than simply the valuation? People have asked why non-performing loans in sectors other than development would not be included. Why does the Government want to take on €90 billion - a truly enormous portfolio for the taxpayer to shoulder - in a single State agency? Why have such a Napoleonic vision? Why should Ireland try to design something in a highly risky world? It is a single throw of the dice, a major gamble which we should not embrace.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I have discussed approaches taken in the French Republic with individuals who administered them, and what we propose is in line with what was proposed there.

Kieran O'Donnell (Limerick East, Fine Gael)
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Which did not work.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Government will act on legal challenges on sound legal advice provided by the Attorney General and will ensure anything proposed is in accordance with the Constitution and law. It is incorrect to suggest that non-performing loans outside the land and development books will be taken over, other than non-performing loans associated with persons who are non-performing in the land and development category.

Richard Bruton (Dublin North Central, Fine Gael)
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Why?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Because clearly, if they are non-performing in the land and development category they are seriously exposed and it would be irrational not to include the totality of their exposures.

Richard Bruton (Dublin North Central, Fine Gael)
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Why will the scheme not include non-performing loans outside the development category if they are impairing our banks?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Because the degree of impairment to our banks is greatest in the land and development book. That is why that section of the banks' exposures is being systematically tackled.

Richard Bruton (Dublin North Central, Fine Gael)
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So the Minister wants to take on this entire €90 billion. It is enormous.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The crucial point about all these figures is book value and that brings us back to the crucial question of valuations.