Joe O'Toole (Independent)

I welcome the Minister of State, Deputy Pat Carey. I hope he is enjoying the debate which is slightly more informative than what he might have heard in the other House.

It is interesting to hear the point made by previous speakers who asked whether there were alternatives or whether this was the only game in town. It is not true to say that this is the only game in town. A number of other proposals have been put forward which I have gone through. When I examined the good bank concept and drilled down through two levels, I still concluded that a huge amount of bad debt would remain in the end and it was not clear to me how it would be dealt with or its impact on society. I examined the Labour Party proposal for temporary nationalisation but it did not actually address the problem. I am not saying NAMA is the only game in town but, as I see it, it is the proposal that has the best chance of operating, although I am no better at this than anyone else.

I completely disagree with the point made by Senator Eugene Regan that this in some way conflicts with European policy or European regulation, because it does not. That is a question we have put many times to the Minister. We have teased it out more than once with him and I am absolutely clear in my mind that what we are doing, whether we like it, is well within what has been agreed, discussed and negotiated with the European Central Bank and the European groups. It is important to put that on the record because to say anything else gives the wrong impression.

In terms of the issue of bankers' pay, which was touched on by a number of speakers, it would be very helpful if the Government came out clearly on this issue. President Sarkozy has been banging this drum for months now but getting very little public support from the other G8 and G20 countries. Last week, his Finance Minister, Ms Christine Lagarde, put forward a series of proposals exactly along the lines that have just been put to the House, namely, that controlling the pay of top bankers can only be achieved if there is not just national legislation but also international co-operation. What the French Government is now introducing is legislation which will control, or at least put constraints on, the pay of the top bankers in all French banks and in all French-owned banks operating offshore, which is superb. My understanding is that this issue is being raised with the Heads of State at the fringe meetings that are taking place in Berlin tonight and tomorrow. It would be very helpful if the Taoiseach and the Minister for Finance said they would support this. It is one of those issues where people will say: "Yes, they are listening to us. They are speaking our language."

I am taking the Minister's advice and, rather than dealing with the generality of the Bill, I am picking up on various issues that have come through in my reading of it since it was passed in the other House. Several issues arise. For example, there is an entitlement to employ consultants for dealing with the business of NAMA or its related bodies. One point is worth making, although some might say I would say that and that I am wearing another hat here. We will probably pay those consultants €600 per hour, and even if the 8% reduction is knocked off that, in many cases we will pay in excess of €500 per hour for top quality people. At the same time, those who would claim that this is a terrible amount of money are also the ones who will ask why we have not got such economists working in the Department of Finance. Members will recall the debate last year regarding the number of economists. The point is that the economists are gone to work for €600 per hour for the people we will now be paying to send them into NAMA. There is a case on some occasions for hiring paid specialists in the public sector, and we need to understand that. This is not to make the case for or against anything else that has been said but, sometimes, it might actually be cheaper to pay them €200,000 per year than to pay them €600 per hour, which is what is happening. I am merely suggesting we need to find a balance.

The outline of the Long Title of the Bill is a role model. It is very attractive in terms of the way it is set out in that having the Long Title in sections makes it easy to understand. However, I must raise one question. Section 2(b) of the Bill states that one of the purposes of the Bill is "to address the compelling need ... to facilitate the availability of credit in the economy of the State". I know why that paragraph is included in the Bill. It is a sop to those who have called for a loosening up of credit, on which we have heard several speeches today. Let us be clear about this point. In 2007, the Basle regulations on tier 1 assets for banks required that they be raised to 7%. At that stage, the Irish regulator, who has taken very little credit over the period, insisted that Irish banks go slightly above that 7% limit, for which he was abused by Seánie Fitzpatrick and others at the time, although the world has changed a lot since then. Now what has happened is that the markets are demanding of banks that they have tier 1 assets, that is, loan to value assets, to a much higher level than is required by regulations. In other words, the market has outpaced the regulator.

What this means is that when banks get money at present, they will only do one thing with it, namely, put it into the black hole of assets. It is a black hole in the sense of loosening up credit. They will not loosen up credit until they have an asset value of close to 10% of what they want to let out. Until they reach that point, there will not be loosening up of credit. There is nothing in the Long Title of the NAMA legislation which will facilitate making credit more available. I make this point because if this is one to be one of the yardsticks it is judged against, it will fail before it starts. The subsection should not be in the Bill. However, I have no doubt the Minister will not remove it because there would be a hoohah if he did.

Similarly, a further purpose of the Bill as stated in section 2 is "to resolve the problems created by the financial crisis in an expeditious and efficient manner". Would that it were so. The problems created by the financial crisis go far beyond what is covered by NAMA. NAMA is very much within the finance area and will facilitate that area. That aspect of the Bill needs to be softened. It should be to facilitate the resolution of some of the problems created. I am sure the Minister of State would agree that the Bill can only address some and not all of the problems which arise.

Let us be absolutely clear on the question of the tier 1 finances. We hear people ask all the time on the radio, in this House, in the other House and elsewhere why the Government cannot insist that the banks release credit. They cannot do so because they would be breaking company law if they were to do it. The banks have to work for the good of their shareholders. Shareholder value is now dependent on the tier 1 value being at a certain level. We should be very clear to people that in order to make NAMA work, we need to face up to these issues, which we are not doing.

Other issues also arise. The Bill at page 25 states that to achieve its purposes NAMA shall perform certain functions, one of which is securitisation. A year ago, when we discussed the whole banking crisis, we talked about securitisation, which is effectively selling on at somewhat of a discount a commitment to pay, for example, so much per month in the next 20 years. The banking crisis began with the selling of securitised instruments where the element of risk was not retained by the first creditor. That is the problem and it should be controlled. While I am not suggesting for one moment that NAMA would deliberately set out down this road, we must remember that we are dealing with pieces of securitised assets throughout the country which in many cases do not have a value attaching to them in terms of rent or other payments coming from them. I would like to know that there is a method of dealing with this which conforms to what we would now require from the highest possible levels of regulation.

There is a further issue with which I would ask the Minister to deal. Section 12(2)(h) states NAMA is entitled to distribute assets in specie to the Minister. I do not fully understand the language, but I think in specie means "as it is". In other words, the land rather than its value will be handed over to the Minister. When the Bill was first published in July, I wrote to the Minister about the possibility of creating a support to provide land that might be useful for the provision of medical centres, hospitals and schools in order to provide some community value. Is this what the Minister has in mind in section 12(2)(h)? The only reason NAMA would transfer something in specie to the Minister is if the Minister had some use for it. I presume that it would be in the public good. In other words, he would not be getting the land in order to sell it again. That would be NAMA's business, but I would like the Minister explain the matter to me.

There are elements of the Bill that need to be tightened by the Parliamentary Counsel. Under section 12, NAMA is entitled to make an application to develop minerals on land, which obviously means land that would come into NAMA's possession through the transfer of assets. That should not just deal with minerals; it should also deal with geothermal resources. We have not passed the appropriate legislation to deal with the matter, but we should not be caught afterwards. It is exactly the same as the mineral rights issue and is important when dealing with development.

There needs to be more openness in our explanation of development to the ordinary punter and ourselves. The section refers to carrying on any business that NAMA considers to be convenient in connection with its functions to enhance the value, to facilitate the realisation or to render profitable any of its properties or rights. There is a new section that was not in the original Bill which effectively allows NAMA to become a developer. I do not have any objection to this, but there is a finite number of bankers, builders, developers and financiers in the country. It is certain that NAMA will have to do business with some of these. It is crucial that we make it clear that we will be doing business with them on our terms.

Section 176 will frighten many, as it states "NAMA may enter into an agreement (including an agreement with the person who was the debtor in relation to the bank asset concerned)". Let us say somebody who owns half of Ballsbridge goes bust. NAMA will move in to develop Ballsbridge and go back to do business with the person who took on the debt in the first place. Everybody gulps at this stage and wonders can this be happening but it is written in section 176 that it can. We might as well just face up to it.

Section 177 is one of those bits of gobbledegook for which normal legislators would need an interpreter, but I want to be sure the section is telling me that in the event that we go into partnership with one of these debtors, the first thing that will be done is that he or she will have to pay back all that is owed in respect of any impairment, fines and so on before he or she will be able to get any value out of it.

In one section the Minister tells us he cannot break the law. I am completely opposed to Bills which state one must act within the terms of the Constitution or that the law must not be broken. That is a given; when it is included in a Bill, it raises doubts rather than provide reassurances.

Section 32 provides for the establishment of three committees, namely, an audit committee, a credit committee and a risk management committee. It is very clear what an audit committee does and it is reasonably clear what a credit committee does. It deals with the portfolio or management of credit. A risk management committee is associated with the other two committees. However, there is no provision for a finance committee. That is an appalling gap in the Bill. I can see the official sitting behind the Minister of State writing it down that the board can set up any committee it deems desirable, but that is not the answer I want to hear. There is a big section stating there must be quarterly reports on the financing of NAMA. There must be a finance committee to deal with income, the rental income being brought in, the budget for next year, the cash flow comparison with last year's budget, this year's income and so on. There will be a quarterly report which the board will approve. That is the proper way to deal with the matter if there is to be governance. This is a crucial issue and I do not want the Minister to be defensive on it. It would cost him nothing to add a finance committee to the three committees mentioned. If we have a board which sits down to put together a financial quarterly report, it will not be compiled by the board but by the executive. There is a whole section in the Bill on the devolution of power from the board to the chief executive which I completely support. However, this is something that needs to be done by the board. If we have learned anything from FÁS and elsewhere, the board must take responsibility for governance issues. We need two or three people from the board looking at the finance stream, income and the budget on a quarterly basis and coming back to the whole board with their recommendations. We cannot have governance without a finance committee. There is probably a case to be made for a remuneration committee as also, but we certainly need a finance committee.