Feargal Quinn (Independent)

I welcome the Minister of State, Deputy Mansergh. It is very tough to stand up and speak after Senator MacSharry, who spent four hours with me at the committee meeting today, because he has given a full report of it. I am delighted I attended the meeting.

I went to it feeling doubtful, questioning and unsure whether this was the right thing to do. I was influenced by the amount of media reports and the number of academics who said this was the wrong thing to do. I was very impressed with Dr. Bacon and the words he used. I was also impressed with Mr. Brendan McDonagh and the Minister, Deputy Brian Lenihan, who, we were told, had to leave at 1 o'clock and was still there when I left at 3.45 p.m.

The one thing I learned from the meeting was there is no silver bullet or easy answer to this problem. I understand why there is questioning from both sides. Whatever solution we come up with will have its supporters, detractors and critics. The impaired loans are clogging up the banking system and the onus is on the State to facilitate a solution. If the banking system is to begin to work again, we must overcome that problem.

The objective must be to establish a banking system that will ensure a flow of credit to the economy to enable trade and industry to go about their business. I am not just talking about SMEs, but about industry, trade and large businesses. The decision to establish NAMA is aimed at that particular objective, that is, to buy property and development loans from the banks at, I understand, a large discount, through the issue of Government loans to the banks.

There are a number of benefits to establishing NAMA. The first is transferring development loans to a State-owned asset management company. It protects the taxpayer, which is a major query people had. It seemed those who objected to the project asked why it was being done to help the banks. However, that is not the objective. The objective is to ensure we get the banking system working again. Transferring development loans to a State-owned asset management company protects taxpayers.

Dr. Alan Ahern said the evidence from property bursts in other countries showed the longer bankers and developers are allowed to deny the reality of the losses they face, the greater the ultimate cost to the taxpayer and economy in general. He also said troubled developers should not be allowed to use taxpayers' funds to gamble on resurrection. He has a great way with words and I agree with him entirely.

Managing distressed assets needs expertise and the belief is the NTMA can source this expertise, even if it does not have it already. At the meeting today, which Senator MacSharry touched on already, I asked about the timeframe. I understood the Resolution Trust Corporation, created in the United States in 1989, lasted until 1995, which was a short period. Mr. McDonagh, the chief executive of NAMA, referred to the fact he expected NAMA would be in place for ten to 15 years. Given that we have a tradition in this country of not being able to stick to our budgets, timeframes and schedules I wonder whether we are wise to set out a ten to 15 year timeframe for the agency. It looks as though NAMA will be in place forever. The timespan for the Resolution Trust Corporation, RTC, in the United States turned out to be only five and a half years. The Minister gave me a competent answer to the effect the rush to get things done within five and a half years was the reason for the $90 billion loss that the RTC made. I hope nothing like that will happen with NAMA.

Another query I had was about where we would find people with the expertise to work with NAMA. The chief executive of NAMA gave an efficient reply to the effect the agency sees itself using the support of the banks and that it will employ only approximately 30 to 40 people. That gives me some confidence we will not end up employing a corresponding figure to the 9,000 that were employed in RTC in the United States.

On the other hand, given the restriction we have placed on the amount bankers can earn, I am concerned about the ability to employ suitable people. The restriction is understandable but my query is whether we are likely to get the required expertise. I am not sure we will be capable of doing so. Sometimes one has to pay to get the right help. We should be careful not to place restrictions on those who will work in NAMA if we want to achieve the right results.

Clearing the bank balance sheets will allow bank management to concentrate on its core business, namely, lending to small and medium-sized businesses, as well as to large businesses. We must consider what has been done in other countries. A different problem is evident in Germany where a bad bank was created. Property was not the problem there, it was financial tools. Germany may well be able to solve that with a bad bank as opposed to what we are doing.

Senator MacSharry referred to the example of Indonesia. The International Monetary Fund, IMF, pointed out that it approves of the way we are going about things and setting up NAMA. It said that is the sort of action that was taken in Indonesia, which had a much bigger problem, but it solved it on the same basis as we are doing with NAMA. Mr. Seelig of the IMF approves of NAMA. He compared it with what was achieved in Indonesia in 1997.

The German approach of setting up a bad bank would not suit this country, as the German problem is different to ours. It is due to toxic financial products not property loans. The other banking crisis was in Japan in the early 1990s and the government there did not do anything at first. The crisis did not get resolved and the country went from having a healthy economy to ten years or more of stagnation before it introduced a NAMA-type organisation. However, it was too late in the day to achieve its aims.

We discussed the Ombudsman and freedom of information in the previous debate. I mentioned to the Minister of State that there was a great air of transparency about what was done in Finland and Sweden. We do not seem to have that here because the freedom of information legislation does not apply to this issue. The Minister of State said he would give it serious consideration. We will see whether there is a benefit to be had from that and whether he will do it.

Earlier today I was still doubtful about whether setting up NAMA was the right way to go. I am now of the opinion that the Government is going in the correct direction. It is following the clear, concise and articulate explanation of Dr. Peter Bacon's suggestion on the setting up of NAMA. He was supported in that by Professor Alan Ahearne. Those two men, along with their team, were able to combat the long list of academics who had written to the newspapers to say it was the wrong way to go.

I wish to inform Senator Coghlan of the Fine Gael Party that I was also impressed by Deputy Bruton who attended the committee meeting this morning. He said he wanted to query the setting up of NAMA but he did so in a positive manner. He outlined the alternatives.