Paudie Coffey (Fine Gael)

I welcome the Minister and the opportunity to contribute to the debate. It is very important that views are expressed here and opinions heard. This is probably the most important legislation that most of us will have an opportunity to discuss, particularly with regard to the future solvency of the economy and the country.

I am one of those who tries to be optimistic, despite all of the depressing news we hear in these recessionary times. However, I also believe we must learn from the mistakes of the past. Like many others, I repeat that our bankers are responsible for the most despicable actions of wanton and reckless lending and that the interbank transactions taking place were highly dubious and questionable. Is it any wonder that ordinary people are very angry at this behaviour of the banks? I must also mention the soft touch regulation of the banking sector and banking chiefs who acted without regard to the principles of proper or reasonable lending. The Government is ultimately accountable, and where there is soft regulation and where agencies of the State are not doing their job, the Government must act in those instances. Unfortunately, we failed to do so in this instance.

I mentioned this the night we debated the bank guarantee last year, but for a few hundred thousand euro, Waterford Crystal could have been saved. Ordinary people cannot understand why the Government can step in and save the banking system, but cannot step in and save traditional manufacturing businesses that have contributed enormously to our economy. That is what ordinary people are thinking and we need to explain to them what we are doing so they can understand.

Anglo Irish Bank was the ringleader in the banking sector collapse, and that is now acknowledged. It was the new kid on the block and was seen to be energetic, ambitious and always available to the developer who could not get the loan in the more reputable banks. It was also the risk taker and it has contributed enormously to the property bubble. Unfortunately, Allied Irish Bank and Bank of Ireland - long established banks with great reputations - were pressurised into following these looser mechanisms and bad practice in banking. The whole banking system was set up on incentivising loans, and chief executives were receiving huge amounts of money at the end of every year in bonuses for encouraging risk taking and loans that could not be paid. That is very shocking and it was shocking to see that Anglo Irish Bank cooked the books with the co-operation of other banks such as Irish Life & Permanent.

All of this needs to come out in the wash. Some of it is being investigated, but it is shocking for ordinary business people who are trying to balance their books on a daily basis when they see chief executives cooking the books and illegal transactions between banks. The journalist David Murphy described them as "banksters", but I would describe them as gangsters. People in here said they should hang their head in shame, but I would say that some of those bankers should hang their head in jail, and I look forward to the day when they do so. Then we will have real credibility in the actions of the Government. It is not before time that this should happen.

I also want to mention Mr. Patrick "Do not rock the boat" Neary and his staff at the Financial Regulator's office, who have completely failed the Irish people. They failed to regulate a banking sector that was running amok. They turned a blind eye and did not take these disgraceful bankers to task. These failures should never happen again. They represent a very costly lesson for future generations and for our people. The Central Bank did signal the alarm, but unfortunately it did not respond. It did not stop what was going on.

I acknowledge the huge commitment and time the Minister has given to his job since the banking collapse. I also want to acknowledge the efforts of the Fine Gael Party and especially Deputy Richard Bruton, who has provided an alternative. We are being consistently told that NAMA is the only show in town. We did not have the numbers to put our show on the road, which was the good bank and bad bank recovery model. That was a realistic proposal and an alternative for the Government to consider. We did that in the best possible light and with the best possible intentions. Deputy Bruton and the Fine Gael Party should be applauded for that.

Unfortunately, the Minister is doing his utmost to correct a system because his current leader failed to keep the banking system in check when he was Minister for Finance. Along with the former Taoiseach, Deputy Ahern, he supported the splurge and spend policies of over ten years. I acknowledge the Minister's efforts to fix this massive failure, but I am not sure that the mechanism of NAMA is the correct response.

The fundamental framework for NAMA is based on two rosy assumptions, namely, the current market value and the long-term economic value. The current market value seems to be set by sticking a pin in the valuation graph that has been declining rapidly. How on Earth can the Minister expect the valuations to be credible? Nobody knows what property will be worth in ten years' time. These assumptions are essentially being made to justify the NAMA solution. If the Minister is adamant in developing NAMA, why can he not be upfront with the people and admit that valuations may or may not realise their full potential?

Fine Gael agreed with the Government's bank guarantee scheme, not out of any love for the banks, but because we understand the essential role that banks play in keeping a financial economy going and that they are the lifeblood of our economy. The banks should note that this support from the taxpayer is not all one way and unconditional. Small and medium enterprises are being choked at the moment. Their overdraft facilities are being cut back and they are not receiving loans from the banks, even though these are viable businesses. It is essential that we have proper support for homeowners that are indebted and that they are treated fairly by the banks, in the same way the taxpayer has treated those same banks.

We are all being told that the NAMA model exists to allow credit to flow in this country, and that it will fix the banking sector. However, it is quite obvious the first thing the banks will do is to fix their balance sheets. The only way they can do that is by hoarding capital. They will hoard capital and they will not lend as easily as some Senators on the opposite side of the House would like to imagine. Bankers are ultimately business people, and they would rather hoard the capital and repay investors than give out loans into the Irish economy. It is a genuine concern on this side of the House that credit will not flow as easily as it might under the Fine Gael model for the banks.

I do not wish to go into all the figures such as the €77 billion book value loans and the purchase price of €54 billion. The long-term economic value is being put at a cost of €7 billion. That needs explanation. The Minister needs to justify the basis of that figure to the Irish people. The Minister claims that NAMA will deliver a 10% uplift over ten years. That is an aspiration to which nobody in the current climate can aspire. This is a big gamble and there is no doubt about that. It may come off, but if it does not come off, the next two or three generations will be paying for this gamble. That is a very sad thought.

Who in NAMA will value the toxic debts and the lands associated with them? Will the very same auctioneers who artificially inflated prices when the property bubble was booming be responsible for valuing these assets? I understand that the Government has advertised for a valuation team and they are probably being shortlisted as we speak. However, it needs confirmation. Even if people are appointed, will they talk to auctioneers and valuers on the ground? These people have a vested interest in keeping property prices inflated. This is the wrong thing to do in the current climate. It is essential that properties are valued properly, and that those people who value them have no vested interest in artificially inflating the value. Full transparency is essential if NAMA is going to work.

The Minister needs to reassure us on how NAMA is protected against political or local interference. We all know that Ireland is a very small country, and national politicians will know councillors and councillors will know auctioneers who will know land owners and so on. For the credibility of this economy, it is important that there is a proper oversight mechanism that will work for NAMA. Given that the NAMA legislation will progress because the Government has the numbers, Fine Gael has proposed that an Oireachtas committee should approve appointments to the NAMA board. We have also said that a staff member of the Comptroller and Auditor General's office should be empowered to attend and monitor all meetings of NAMA. That is a reasonable request. That person should also have the power to see any necessary documents at his or her request and to refer them to an Oireachtas committee if necessary. That would give NAMA full credibility and public confidence in what it is trying to do. There is a suspicion that behind the scenes NAMA is open to political interference. The Minister needs to put that suspicion to bed for the future of our economy.