Brian Lenihan Jnr (Dublin West, Fianna Fail)

I was about to agree with Senator Norris that the conduct of the rating agencies was reprehensible throughout this crisis. Small countries like Ireland, however, are vulnerable to the activities of these agencies. There is not as big a focus on us as there is on the larger countries. Negative commentary about Ireland can be very dangerous in the hands of rating agencies. For better or worse, we have to engage them. I have had to meet them as the Senator's Minister for Finance and explain the positive, as well as the negative, features of the economy.

There are many positive features of our economy, not least the fact that we are moving to a balance of payments surplus next year. Most of the countries with serious debt or banking problems in Europe in recent times also have serious balance of payments problems as well. They are not paying their way in the world; we are. Part of this surplus will be due to a reduction in consumer demand which inevitably affects imports but part of it is due to the robustness of our exports which have been steady throughout the crisis, unlike those of many other European countries.

Senator Bacik suggested NAMA is too optimistic in its projections and will not be aggressive enough in enforcing security. Senator Alex White also suggested there will be no enforcement against developers for three years. The figures in the business plan relate to when lands will be sold off, not when enforcement action will be taken in respect of debtors. That is an important distinction. There has been a misreading of the NAMA business plan. I am not suggesting Senators are guilty of it because I heard it in the other House where it originated. However, the suggestion has emerged that there is an amnesty for developers and builders for two years. That is not the case.

Enforcement action will be taken as soon as it is required. If no viable business plan is forthcoming from a developer or a plan by the borrower to extract the company from its liabilities, NAMA can clearly take enforcement action. One difficulty with the banking system is that the banks were reluctant to take these actions because of the effects it had on their capital and balance sheets. NAMA has no incentive to do that. Instead it has every incentive to look after the taxpayer and take whatever enforcement action is required.

Some Senators inquired why NAMA will not administer all the loans of borrowers. It is intended to introduce a minimum threshold of €5 million for some of the loans being transferred to the agency. The limit will not apply to the smaller building societies because of the relatively small number of loans involved and for administrative reasons they could not be left with them. In the three larger institutions there will be a minimum in which the banks will be left to deal with matters themselves.

Senator Donohoe referred to the property cycle where prices return to peak after seven years. He wants to avoid bubble economics; so do I. The assumptions in regard to the long-term economic value envisage a modest growth in property prices in the next ten years. That is what we want in this country. We want a sustainable construction industry based on a sustainable level of growth. If Opposition speakers are right and the valuation should be far lower and the crisis is far more serious, we are like Japan in that we will not have a construction industry for a very long time to come.

However, that is not the case because I can tell Members that here in this city demand has already resumed for houses of a detached variety for first-time buyers. That demand is evident. I represent a Dublin constituency. I see it and I am being advised about it. That is the case already. It is not something we want to ramp up or stimulate in the way that happened in the past but we need to put the construction industry back on a sustainable footing, and everyone can recognise that the number of house completions and units being completed this year and next year are not sustainable to meet our long-term needs. In the course of the debate everyone recognised that the scale of house building that took place in recent years was unsustainable and was far in excess of our needs.

Senator Twomey suggested, and it was an attractive suggestion, that private investors who are individuals should be allowed invest in the special purpose vehicle so that there could be popular participation. I know that popular participation for some Senators involved all of us investing in it. I am not sure that would not put us in a conflict of interest position very quickly but it is a good suggestion. The one difficulty with it is that we want to get the agency up and running as quickly as possible and the formality surrounding a public participation would take months to execute. However, perhaps within the overall framework of a pension fund investing in the vehicle some sub-investment could be arranged for within that framework because I thought it was a worthwhile suggestion and one that was worth exploring.

Individual Senators made a great number of contributions and I will try to deal with them in so far as I can. I do not agree with Senator Twomey that I can refer the Bill to the Supreme Court. It is a matter for the President but I do not believe there is any legal defect in the Bill. The Attorney General and his team worked very hard on it throughout last summer. I believe I have addressed the points raised by Senator Alex White.

Senator Bacik rightly raised the question of the ethical framework for banks. In France, a credit mediator is appointed and banks which deny credit should be named and shamed. We intend to institute an independent appeals mechanism on the question of credit. That is very important. On the ethical framework for banks, I have established and concluded a relationship framework with Anglo Irish Bank, which the taxpayer now owns, which ensures that any settlement or compromise with directors or former directors must be approved by the Minister.

The question of corporate governance arose in the debate. The Minister is given major powers of direction, and that is clear in the legislation. We will have an opportunity of discussing that in committee but it is important that the Minister is accountable for this particular entity. We all know what happens when some entities are established Sputnik like and disappear into outer space. The fact that the Minister is given power to direct is an important power because it allows the Minister----