Larry Butler (Fianna Fail)

I was speaking before the sos about the availability of credit. There is a general perception that the banking system is not lending currently and that the reason for this is insufficient capital. As a result of recapitalisation via NAMA, banks will be able to resume prudent lending, but - and it is important to emphasise this - they will not be in a position to offer the same degree of credit as they did prior to the crisis. We all must get used to that new reality. There has been much comment to the effect that the NAMA legislation should include a provision compelling the banks to lend. That is impossible to do, mainly because each individual credit application is different. The reason the banks find themselves in such difficulty is that they lent unwisely in the past. It is our job to encourage and facilitate them to be more prudent in the future. People simply cannot borrow at the same level as they did last year and the year before. The reality is that we must shrink the economy back down to its 2004 level. That will not be pleasant but there is no point in misleading people. There is no escaping the reality that credit will no longer be available to the extent to which we had become accustomed.

The Minister of State told the House that the book value of €77 billion for the loans to be taken over by NAMA includes €28 billion in loans for land purchase and €28 billion in loans associated with land and development loans, and that the current estimated market value of the loans being transferred is €47 billion. The Minister of State also told the House that approximately 40% of those loans are generating income, something not generally taken into consideration when criticism is levelled at the NAMA initiative. Moreover, 30% of loans relate to assets outside the State, including in Northern Ireland, Britain and the United States. Given that the global upturn, when it comes, will likely benefit those economies before our own, that 30% could come good very quickly as places like London, Manchester and cities in the United States begin to recover.

It is important to bear facts such as these in mind when appraising the points made by those who are opposed to NAMA and who would offer alternative proposals. I value everybody's proposal, but when I hear somebody like Senator Doherty of Sinn Féin make statements about estimated valuations and so on, I have to laugh because I do not think Sinn Féin has an economic policy.