Joe O'Toole (Independent)

I welcome the Minister of State, Deputy Mansergh. I am glad we are having a general debate in advance of our consideration of the important Bill that will establish NAMA. My tendency is to support NAMA, although I would like certain changes to be made to the legislation. I certainly believe this can work. A great deal of the nonsense surrounding it needs to be cleared up. It is not unreasonable for the Minister for Finance to work on the basis of an expectation that property will rise in value by 10% over the next ten years. Any ordinary person would go along with that. It should be explained to some members of the Minister's party that selling bonds in Europe is not like selling cars. They are like loans in the sense that they have to be repaid at the end of a certain period of time. I assure the Minister of State that there is a complete misunderstanding of that point among certain people in his party. I have spoken to some Members of the Lower House who do not seem to understand what bonds are.

I would like to mention another crucial point that is not fully understood. I refer to the tier 1 requirements of the banks. Many people have asked why the banks are not releasing credit. As Senator MacSharry said, it is not a question of turning it on like a tap. People believe credit should be made available as long as it is a good or appropriate risk, but that is not happening. A banking agreement that was reached two or three years ago increased the tier 1 capital requirement to approximately 7% or 7.5%. Since then, however, the market has determined that the requirement should be closer to 10%. The banks are putting every bit of profit they can make into their reserves, in effect as part of their effort to build up to the 10% level. We should be straight and honest with people by telling them that until the banks reach the 10% level, everything we put into them will go into a black hole and will not come out again. Therefore, Fine Gael is quite correct to make the point that the money we are providing could be simply locked up. There needs to be an understanding that things might not change until we get over that level. I would like the Minister of State to respond to that suggestion.

It is fair to say that much of what is going on at the moment is hard to take. Many of those who are complaining about the decrease in the price of houses were celebrating not that long ago when prices increased by between 10% and 20% over a couple of years. There is a huge element of hypocrisy out there. I agree with Fine Gael that we should not forget some of the economic decisions which were taken over the past ten years. I was glad to hear the Taoiseach acknowledge that too. Similarly, it is important to acknowledge that everybody can make mistakes. When people in leadership positions admit they are working on that basis, it gives people a sense of confidence. We have learned other things as well. We have learned that we were being screwed into the ground left, right and centre. I refer not only to the price of houses but also to the price of cars and eating out, etc. When one considers the manner in which prices have dropped over the past year, one has to ask who was driving the high costs of previous years. We need to examine that aspect of the matter.

It is important to clarify where NAMA is coming from. As almost all Senators have said, it is a source of anger among the public. If one can get people to listen for long enough, one can explain the importance of NAMA to them. They might agree or disagree with it, but they can accept that it might work even if they conclude that it will not. However, they cannot accept the one-sided nature of the NAMA proposal which does not contain anything to meet the needs of ordinary people. As I said on the Order of Business this morning, it is a vicious circle. I may be at risk of boring my colleagues. The banks gave huge sums of money to developers and speculators who caused the price of land to increase beyond a reasonable level by bidding more than it was worth. When they built houses on those lands, they had to drive the prices up to ensure they got their money back. The same banks that were giving money to the speculators were also giving mortgages to people to buy the houses the speculators had developed.

Now that the banks have gone bust, we have to support our banking system in some way. The banks are turning their backs on the people whom they got into this mess in the first place. The banks are closing in on them, but they cannot be allowed to take their property from them. It is not as if we have not seen similar problems in the past. The Minister of State, Deputy Mansergh, will agree that the same thing happened in the 1970s, when the banks shoved money at farmers to build milking parlours. They offered other moneys in similar circumstances in the intervening period. It is irresponsible, unjust and inequitable that working people who did everything right - they saved, skimped and put everything together to get themselves a home - now find themselves in negative equity. I am not too pushed about negative equity for its own sake but I am pushed about people who are not able to meet their repayments.

I spoke this morning to a man in the Swords area who has been in the taxi business for approximately 30 years. He said he does not owe anyone anything because he has always repaid his loans. He was off the road recently because he had to go into hospital for a short period of time. When he went into his building society to ask for a two-month holiday from his repayments, he could not believe how well he was treated. The officials in the building society agreed to give him two months of respite, which made a huge difference because his wife had lost her job a couple of months earlier. He then contacted his bank to discuss the repayments on his car, which is the basis of his business. He explained that he had to go to hospital for a couple of weeks and would be recuperating for a further couple of weeks. When he asked the officials in the bank for a break of one month from his repayments, they said that under no circumstances would they agree to it. It is absolutely appalling. He told me he has done business with the bank in question - National Irish Bank - for 30 years without ever owing a penny more than he should. He has repaid every loan, generally ahead of time. While I do not blame the Minister of State for such problems, there is on onus on politicians and leaders to do something about it. I want the Government to state that this should not be allowed to happen.

The Government should support what the President of France, Mr. Sarkozy, has said about bonuses that are earned in a certain way. He has said he will walk out of the G20 summit if international agreement is not reached on huge salaries and bonuses. Bankers' rewards have to be dealt with internationally. It cannot be done in any one country. I would like our Government to come out in favour of that.