Paul Coghlan (Fine Gael)

I welcome the Minister of State to the House and wish him well in the future. I recognise the quality of his work. I will allow my colleague, Senator Buttimer, to deal with the budgetary imbalance between taxation, spending and job creation and instead concentrate on the portion of the Minister's Budget Statement that dealt with the proposed national asset management agency under the aegis of the National Treasury Management Agency.

Like my colleagues, I welcome the comments this morning of Mr. Peter Sutherland on "Morning Ireland". He was absolutely excellent, as stated on the Order of Business. Dr. Bacon was good also. I agree with the proposal of Senator Buttimer on the Order of Business that this House could perform a very useful and beneficial exercise by having Dr. Bacon present to make a presentation and answer questions. There is much detail to be considered in the establishment of the new agency. We recognise that we will not have all the detail and answers to all our questions until we see the legislation. The Minister for Finance intends to produce it before the summer. The sooner, the better. It will answer our questions.

What loans will be transferred to the asset management agency? I understand there will be a portfolio approach. Which banks' eligible land and development loans will be transferred? I presume it will be the six institutions covered by the Credit Institutions (Financial Support) Scheme Act. With regard to the appropriate price, will loan agreements be honoured in full? What will be the position on the new and old loan agreements following the write-downs? How can performing loans be transferred and on what grounds? We understand from the press conference yesterday that some of the loans will be performing loans or healthy loans. I, therefore, do not agree with the use of the word "toxic". The loans are impaired property loans and do not represent toxic debt. We did not get involved in sub-prime lending such as that in the United States but we need answers to the questions I have asked.

Why would any party pay interest and attempt to service loans if its assets were to be purchased compulsorily by the new agency? We will have to know the answer to this. What is a written down value and how does one assess the risk? Where there is a dispute, as there probably will be in many instances, how will it be resolved? Will there be a proper facility in this regard? We must await the legislation to find out. What will be the position on property arbitrators? I would like to hear the Minister of State's views on this when he is responding.

Will the banks or developers be able to write off future profits against the written-off losses following the transfer? How does one apply the written down value when the Government concedes that the worth of a class of assets is harder to assess in the current constrained economic environment? These are all very tricky areas.

Will Anglo Irish Bank, which has already been nationalised, be regarded as a bad bank, so to speak? Will it operate separately or will it transfer assets to the asset management agency?

With regard to cross-collateralisation, it is suggested that entire portfolios will be required. Will this be a question of pursuing individuals rather than asset classes? This is a key question in respect of the portfolio approach. If there is disagreement, will there be an arbitrator and, if so, who will it be? We will need to see the legislation to know the answer.

The markets have taken the view that the Government has set its face against nationalisation. At the same time, it has conceded and acknowledged that it will end up with a stake amounting to more than 25%. It could end up with 50%. However, the markets are now taking the view that the stake will not be between 50% and 70%. Will the Government put a cap on its stake and ensure it does not exceed 50%? I refer primarily to AIB and Bank of Ireland.

One must determine the value of what remains in the banks and how profitable the good banks will be. I like the part of the proposed model that, like the guard to the knave, imposes the levy to recoup any shortfall that may exist down the line when the national asset management agency has finished its work.