Richard Bruton (Dublin North Central, Fine Gael)
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Question 25: To ask the Minister for Finance the changes he plans to make to the proposals for the National Asset Management Agency as originally outlined. [28106/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The initial preparations for the establishment and operation of NAMA are being managed by a steering group. The group is tasked with overseeing the preparation of the legislation in parallel to the practical preparations for the establishment of NAMA and is made up of representatives of the Department of Finance, the Office of the Attorney General and the National Treasury Management Agency, NTMA. The Government's approach to the unprecedented crisis in global financial markets has been structured and considered at all times.

There have been no significant changes to the proposals for NAMA that I announced on 7 April. At that stage I was quite clear that the details would be complex and would take time to work through, not least because of the potential difficulties that had to be dealt with from the operational, legal and constitutional perspectives. These details are still being worked through by the steering group I established for the purpose of overseeing the preparation of the legislation in parallel to the practical preparations for the establishment of NAMA.

Substantial progress has been made in the practical preparations for the establishment of NAMA in tandem with the drafting of legislation to establish the agency on a statutory basis and it is my intention to publish the legislation towards the end of this month.

Richard Bruton (Dublin North Central, Fine Gael)
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I want to ask questions to shed more light on what is happening. At the initial stages, we heard that every development loan, totalling €90 billion, was to be taken on by NAMA. More recently, it was indicated that it will be based on screening. Will the taxpayer take on the worst loans after this screening? What is the screening that will narrow it down?

What will be the role of the political process in approving and scrutinising the decisions of NAMA? Yesterday we heard that political consensus and buy-in across the spectrum was an important factor in gaining confidence in Sweden. Will the political process have a role in overseeing price setting and the markdowns? Will there be a system where there can be transparency and political accountability for this body, which looks as if it will be divorced from the political area?

The IMF suggested that if the write-downs are likely to have the banks below the waterline it would be preferable to adopt a model of nationalisation to avoid some of the extreme difficulties in valuation. The IMF presented figures that showed that the banks are potentially below water. What is the view of the advice tendered to the Minister?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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There has been no change in policy on development loans. I am not sure about Deputy Bruton's reference to screening. The position on the transfer of loan assets remains as stated in the budget speech. The land and development loans of each bank involved will be transferred. This includes loans secured on development land and property under development, whether performing or non-performing. The book value referred to by the Deputy is not accurate in respect of the total value of the performing or non-performing loans. In addition to landbank loans, the associated exposures in commercial loans where there is a common link between the commercial and development loan are also included in the total book value figure.

Regarding political participation, the legislation will be published later this month. The legislation will contain legal formulae and the House will want much more information on the strategy of the Government and NAMA prior to the enactment of the legislation. It is a start to have the legal framework available to Deputies over the summer because it will give them an opportunity to evaluate a basic framework. I am interested in hearing the opinions of Deputies in that regard.

I am not involved in price setting and I do not know how anyone would want to be involved in it. Criteria must be laid down in legislation and must be worked out in detail. The NTMA has retained the services of the HSBC and Jones Lang LaSalle for the valuation of the loans. They are valuing the loans on a commercial, market basis. The EU is laying down guidelines on how loans should be valued and we must follow them.

Regarding nationalisation, there is nothing new in what the IMF said. I said it in the supplementary budget speech. If the result of the NAMA exercise and the scale of the losses occasioned by NAMA is such that the bank requires fresh capitalisation, I indicated in the budget speech that the State would capitalise by ordinary equity investment in the relevant institution.

Richard Bruton (Dublin North Central, Fine Gael)
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Can I take it from the reply that there will be no political oversight of this process of valuation and execution against the criteria? Can I also take it that NAMA will decide if we nationalise? If it gives a haircut that is more than shareholders' funds, we will nationalise and if it gives a haircut less than shareholders' funds we will not nationalise. That decision has been devolved to NAMA.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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There must be political oversight, first by me as the responsible Minister and by accountability to the House.

Richard Bruton (Dublin North Central, Fine Gael)
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How will that happen?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The principles of valuation will be laid out in legislation and will be subject to political debate. No valuation can take place until the principles are approved by the House. Each asset must be valued individually under EU rules.

Richard Bruton (Dublin North Central, Fine Gael)
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If shareholders are wiped out, are we not into nationalisation?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I will not interfere in the valuation of individual assets. Regarding the question of whether there should be cross-party participation in the oversight of the NAMA structure, I am open to constructive suggestions in that regard.