Ciarán Cannon (Fine Gael)

-----is the best route to restoring Ireland's economic reputation and creditworthiness. Why would anyone want to lend to or invest in a country that caves in so easily to powerful financial interests?

We were also promised that there would be a genuine sharing of the risk associated with NAMA but, despite the assurances given to the Green Party, the risk-sharing commitments now contained in the legislation are an embarrassment. They are in particular an embarrassment to senior Ministers who supported 50% risk sharing. The amendment on subordinated debt also seems to suggest that the Government will make the 5% risk-sharing commitment a maximum rather than a minimum. This is further humiliation for those same Ministers who initially supported a risk-sharing agreement of more than 50%.

I firmly believe the legislation fails the morality test. Perhaps one might argue that, despite its immorality, NAMA could provide a sound economic basis for our national recovery. Sadly once again, there seems to be almost no evidence of such sound economic thinking behind this legislation. The decision to pay over and above market value for the impaired loans was a misguided one. If the Government had any hope for a public buy-in to the NAMA process it surely vanished into thin air with the announcement that a special premium would be paid to the banks. While such a proposal would be good for the banks' investors, it could have devastating consequences for the public finances over the next decade, and result in greater tax hikes and service cuts. Senator O'Malley said earlier that there are major faults with this Bill, one of which is the predication and measure of the growth of the economy on the growth of property prices. I share her concerns that the success of NAMA is somehow predicated on the creation of yet another property bubble. The property crashes in Japan and Finland are a cautionary tale for those who believe that prices will inevitably rebound from current prices in the short-to-medium term.

Many proponents of NAMA have described it as being similar to the successful Swedish model, but there are fundamental differences between the two. In the Swedish model there was much more temporary nationalisation, or pre-privatisation, as Professor Stiglitz describes it. The legislation there contained many more punitive measures. There was a wholesale clear-out of its banking executives, but most importantly of all, there was no payment of a long-term economic value to the banks. In this country one eminent economist warned last year that buying the toxic loans at inflated prices would amount to a back-door recapitalisation of the banks. He went on to say that best practice is for the banks to recognise the losses on those loans up front and to sell the assets at fair market value. That economist was Dr. Alan Ahearne, the Minister's chief financial adviser.

Now that we have seen the business plan for NAMA, our worst fears about its economic basis have been confirmed. It is a plan based on what Senator Ross described earlier as fantasy figures, ones conjured up to produce a positive bottom line that have no basis in reality. There is the completely mistaken notion that NAMA will make a profit. Senator Fitzgerald mentioned earlier that we have had some credible commentary in recent days from Peter Mathews which suggests quite the opposite. NAMA's assumption that there will be 100% recovery on the €30 billion performing loans is wishful, bordering on fanciful, thinking. NAMA's assumption that there will be 50% recovery on the €46.2 billion of non-performing loans is completely fanciful. To assume that both those things will happen is doubly fanciful.

If every Member of the Oireachtas who voted for NAMA was also asked to give a personal financial guarantee to off-set any potential losses, how long would it take for this confidence in NAMA to dissipate?