Ivana Bacik (Independent)

I am very grateful to Senator Alex White for sharing his time with me.

I welcome the opportunity to debate the NAMA legislation in the House, as many of us had sought that opportunity. As I said on the Order of Business, it is unfortunate the business has been ordered by the leader of Fianna Fáil in the House in the way it has been. I cannot understand why we cannot have more time to consider NAMA, particularly on Committee Stage. Given that the legislation was published more than three months ago, on 13 July, it appears there is a certain macho posturing on the idea that the Seanad should have to sit through the night. A more efficient and orderly way to allocate the same length of time to the debate could have been found.

I would describe NAMA as the biggest gamble the taxpayer has ever been asked to take. Deputy Joan Burton, the Labour Party spokesperson on finance, described the €54 billion NAMA gamble in the Dáil as a debt of €12,000 for every man, woman and child in the country. Therefore, as has been acknowledged by everyone in the House, the legislation is of major importance. The debt will bind our children and grandchildren. Those of us who are critical of the legislation are trying to be constructive and make our criticisms in the hope the plan will succeed. This is the gamble on which the Government is placing all its bets. I have described it earlier as the triumph of optimism over aggression. It is too optimistic in its attempt to rescue or bail out banks, and insufficiently aggressive in terms of pursuing those who owe such enormous sums to the banks. The Minister stated the asset management approach was best for ensuring a properly functioning banking sector. However, as Senator Alex White said, it was never the only game in town. The Government has presented it as the only game, but it is not. The Minister in his speech essentially acknowledged this, saying it was his preferred option, but clearly there were other approaches. The alternative of temporary nationalisation, which the Labour Party has been pressing and which Senator Ross spoke in favour of, clearly should not have been ruled out by the Minister and should have been favoured over the asset management approach. The Minister said his proposal received backing from the IMF, the European Central Bank and the OECD and dismissed, essentially, Fitch's downgrading of the Irish credit rating.

The alternative read on this, as Senator Alex White said, is that the international financial markets and the organisations mentioned require stability and certainty in the Irish response to the crash. The worst thing is to be indecisive. They seek a decision, something that achieves certainty. Temporary nationalisation could equally have done that. The bank guarantee scheme last December was an example of decisive action by the Minister. We acknowledged that, but we said it was the wrong decision at that time. It was somewhat akin to Tony Blair and the war in Iraq. He made his decision in that regard for his own particular reasons, but for the wrong reasons. Once the bank guarantee scheme had been passed, NAMA appeared to have been developed as a consequence, as were the nationalisation of Anglo Irish Bank and the recapitalisation of AIB and Bank of Ireland. Once we had shored up or guaranteed all the bad debts without selectivity, we were faced with having to deal with the consequences and yet the dogs in the street knew before the vote on the bank guarantee scheme in September 2008 that Anglo Irish Bank was already a dead bank walking. It has since been described as a zombie bank. We now know the enormous exposure to a very small number of developers with that particular bank, and of course that ultimately led to its nationalisation. I well recall the debate through the night where the only people to vote against the bank guarantee scheme were the Labour Party Senators and I, as an Independent Member. We voted against it because we did not believe a wholesale guarantee methodology was the correct approach. The news we received, subsequently, about the behaviour of Anglo Irish Bank in particular, and other financial institutions such as Irish Nationwide, has really borne that out.

There is no point in dwelling on the past, however. In the short time left I want to ask the Minister some key questions, to which he might respond when he returns to the House. I am glad to see the proposals for the surcharge and a windfall tax which essentially flowed from the NAMA proposal. We hope the NAMA scheme will work, but we are very fearful it will be too big a risk for the taxpayer and we will all be paying for it for generations. I ask the Minister, specifically, whether he has considered introducing a Tobin tax. What about looking at ways to make the financial sector pay through a tax on international transactions? The Tobin tax idea has been around for a long time. Prime Minister Gordon Brown embraced it at the weekend in a somewhat surprise move. It is something that is gaining traction and I ask whether the Minister might contemplate introducing that.

Again, Deputy Joan Burton has spoken about the need for an ethical framework for banks. Lest it be said we are just being critical, I was interested to see at the weekend that there are alternative approaches. Christine Lagarde, the French Minister for Economic Affairs, Industry and Employment, instead of relying on exhortations to the French banks to free up credit and lend to small businesses, has taken what is described as a more directive based approach. She has appointed a credit mediator and insisted that banks that fail to extend credit lines to viable businesses are named and shamed. So far, some 10,000 firms have been helped and the French economy, it must be noted, has been receiving much more positive financial ratings in recent quarters. She has introduced regulations placing limits on banker bonuses. A much more directive based approach could have been taken here, therefore, rather than the provision to which Senator Alex White referred, namely, the power of the Minister to issue guidelines, only introduced in the Dáil in section 210, which does not go far enough in ensuring the desired result of NAMA is achieved, namely, that banks free up credit for small businesses which are struggling so hard.

I have a few other key questions. The elephant in the room is the haircut or discount on the NAMA assets, €77 billion on which a discount of more than 30% has been given. We debated the NAMA business plan in this House and I raised the question of the haircut of 37% of the overall value and the enormous proportion of the €77 billion NAMA loan portfolio relating to Anglo Irish Bank, equivalent to a €28 billion exposure. The Minister and his advisers, of course, will be well aware of this, but it means that what has been described as a bailout for banks is in particular a bailout for Anglo Irish Bank, which will account for more than one third of the assets taken by NAMA. Others have asked the reason for this discount and how this figure was reached. The idea of long-term economic value, which has been extensively teased out, still remains fictional in essence. We still have not seen the real basis for this fictional notion that is so crucial to the working of NAMA.

One thing that jumped out at me from the NAMA business plan, about which I asked in a different stage of the debate, was why the administration of all but the top borrowers was to stay with the institutions rather than with the agency. Again, I cite my comment that NAMA appears to be a triumph of optimism over aggression. The Minister has told us before that NAMA will pursue aggressively the borrowers, those who are exposed, and yet we saw with ICC how some banks are pursuing aggressively, and the Irish banks were not prepared to do this in that particular case. We see in the NAMA business plan that the administration of the top 100 to 150 borrowers and their loans is to stay with the institutions rather than being transferred to the agency. Will the Minister say why NAMA is not going to take on the task of administration, pursuing all the borrowers rather than just the top 100 to 150?

A further question is how the assets will transfer ownership from individual lenders to NAMA. Clearly NAMA is taking on the management of some of the top assets. It is taking, in some cases, enormous powers over half-completed construction sites, including the power to complete construction in some cases. There will have to be transfers of title. Again, there is a great deal of detail, some of which is in the Bill, in terms of vesting, but some of which is not.

The points raised by Senator Ross in terms of the immense benefit that nationalisation could have offered, instead of the NAMA approach, is an argument that must be answered by the Minister. Again, I ask him why we have simply nationalised the worst of the banks and not the others. Why are we not willing to accept control by the State of the other banks, some of which clearly have much healthier loan portfolios than Anglo Irish Bank? There would be a much lower rate of default on those loans. Why is the State not doing so it could control the operation of those banks in the public interest? We are merely talking about temporary nationalisation, not a permanent state of affairs. We are talking about the need to ensure certainty and the effective and efficient operation of the banking system. The need for the State to take over and control the way the banks act is to ensure they act no longer in their own self-interest, but rather in the public interest so that, in the words of Senator Ross, the State is more powerful than the banks. With NAMA, however, we see the banks calling the shots, apparently keeping the upper hand over the State, with the latter bearing the entirety of the risk, which the Minister in his speech said the private sector was not keen to take. Resolution of the banks' difficulties, he said, involved risk. It is a risk the private sector is not willing to take, but it is one the Irish taxpayer is being asked to bear to the tune of €12,000 for every man, woman and child, and for generations to come. We owe to the tens of thousands who marched last week and to the many thousands of people for whom this will remain a burden into the future to ensure the option we choose is the best one for all of us.