Brian Lenihan Jnr (Dublin West, Fianna Fail)

-----amount to something and not amount to something with great ease. I have always followed the maxim in regard to banks that cash is king. If one can find out where the cash is, one will generally find the answers.

Senator Butler made a point on the entity. It is the case that NAMA has a commercial mandate. That must be the case, as that is how we protect the taxpayer.

Senator Fitzgerald inquired about Peter Matthews. I had an opportunity of meeting him recently and he submitted to me the papers I am sure he submitted to Senators. I wish to make a number of points on them. I could be here a very long time if I were to do a detailed analysis. An assumption he makes in his papers is that he is not restricting himself to the assets to which NAMA is restricted. He is looking right across all the banks' assets. He is looking at mortgages, consumer debt and other miscellaneous borrowings. He is giving a picture of an entire bank rather than part of a bank. I do not mean to criticise him but he is doing it without the benefit of having looked at the loan quality in the banks. Since the guarantee was introduced we have had that benefit in the past year of going into the banks and looking at the quality of the loan books and doing the due diligence on the different institutions.

I salute the fact that he has done all of that work off his own bat and put it into the public domain. It is still under examination in my Department. We do not always agree with him but it is valuable that a public spirited citizen would take that interest. He also makes certain assumptions about the loan books, which again are not in accordance with the assumptions we are making on the evidence we have available to us.

The other point, which I mentioned to him when I met him, is an interesting one. Essentially, he is arguing that what we need to do for the banks is give them massive capital injections. In other words he wants us to build up their capital base and not concentrate so much on liquidity and exchanging assets for bonds that will give the banks cash. There is a balance to be struck. There is no doubt that when the NAMA exercise is complete it will accelerate capital requirements in the banking system and there will have to be an increase in capital. However, one of the difficulties about putting in capital without doing the kind of detailed examination of the loan books we are doing is that I do not think one would create the same international confidence in the institutions if one did not come up front and look at the weakest loan books, carry out an individual evaluation of them and then see what is the exact capital requirement.

I dealt with Japan the other night. What they did was to make repeated capital injections, but I do not think that approach on its own will solve the problem. There is a balance to be struck between liquidity and capital. If Peter Matthews falls on one side of that equation, Dermot Desmond falls decisively on the other. The latter essentially argued we should not buy any assets; we should just put the €54 billion straight into the banking system as a float and come back in ten years and see what happens. We need to strike a balance between capital, liquidity and funding.

Senator Leyden was engaged in canvassing his nominator for his panel. I have dealt with that already. He did it, as he always does in these matters, in a very admirable way-----