Paschal Donohoe (Fine Gael)

If Senator O'Toole is correct that the NAMA model is wrong, we must take account of where we stand. We are having this debate in the context of a €54 billion investment in the banks' balance sheets and a State guarantee potentially worth €410 billion. We are beginning to accept there is no ability to direct the banks to put credit into the economy, which is after all the main objective of this legislation. This must give us pause for thought about the design and role of NAMA.

There are two different aspects to this debate. First, as the Minister said we are looking at cleaning up the banks' balance sheets and ensuring that credit flows again. The second aspect is how we achieve this. Section 210 states the Minister may issue guidelines to the banks but we are not sure how they will respond to this. The question again arises as to whether the NAMA vehicle is the solution. This is somewhat like last night's debate about long-term economic value.

The flow of credit is one of the two foundations upon which the whole NAMA model rests. After all the investment made by the taxpayer, the Minister may issue guidelines to the banks on lending but we are not sure they will be implemented. The Minister is correct that next year if credit is not flowing, then NAMA will have to be revisited and alternative models examined. That is not acceptable. Up to €54 billion is involved in NAMA and €410 billion in the State guarantee but the Minister may issue guidelines for credit.

My ideological journey to all this was probably much shorter than it was for those who started off with Marxism and socialism. Like all young men, I was once attracted to and dabbled in socialism, as well as young women, for quite a while. After all the investment made, the legislation's objective is not to clean up the banks' balance sheets but to get credit flowing again. The use of word "may" in this section means that we have to have a relentless dissatisfaction with how credit flow is working and be open at all times to considering new ways of doing it.