Marc MacSharry (Fianna Fail)

I have not seen that to the extent I would like. I found it worrying to hear the British Prime Minister suggest at a recent G8 meeting that a fund should be put together to cover losses of this nature when they occur again in the future. We should be providing to ensure these things cannot happen in the future. I know international cross-border regulations are difficult and I do not know under what auspices one could regulate matters. Perhaps it could be done by the United Nations or the World Bank. However, we should focus on that in a major way.

Since the crisis has occurred the Minister, Deputy Brian Lenihan, has acted decisively but has taken the necessary time to ensure the steps taken were the correct ones. The bank guarantee scheme was introduced initially, followed by the establishment of NAMA and yesterday the initial transfer of bad loans to NAMA was made following a long period of due diligence, which I, as a valuer in my previous career, believe was extremely prudent. I am pleased about the extent of the write-down at the level of around 40% on average.

I am confident that NAMA will be profitable in the long term. However, in the context of the support of Anglo Irish Bank, it was not possible to effect the kind of wind-down immediately that some people would have wanted or in the way that Fine Gael would have liked in the short term. One cannot contemplate what would amount to sovereign default, not on the subordinated debt which amounts to €2 billion in Anglo Irish Bank and which the Minister said post-September they will examine under advice, but in terms of senior debt. One can negotiate and speak with bondholders but one cannot default. That would have cataclysmic implications for our integrity as a sovereign nation. Deputy Bruton in the other House often refers to the Washington Mutual situation where senior debtholders were allowed to go to the wall but that was a completely different situation because its umbrella company issued the bonds. In Ireland it is the banks who issued the bonds and therefore they have to be protected.

Lehman Brothers which was allowed to go to the wall, to which the Minister of State, Deputy Mansergh, made reference, constituted 4% of the US economy and we saw the effects that had throughout the world. The balance sheet of Anglo Irish Bank, on the other hand, constitutes half of our economy. Therefore, to let it go at a cost of €70 billion in terms of the liabilities to the State would have been catastrophic for our nation and for our integrity as a sovereign State as we move forward.

People such as Senator Norris, Professor Brian Lucey and other lecturers in economics in Trinity and elsewhere have issues with NAMA and do not believe it is the way forward. That is fine and the expression of such different views is important, as otherwise we would merely have public administration, but there is a critical mass of support nationally and internationally for the steps the Government has taken. For example, today's edition of the Financial Times states:

Ireland is no Greece.

After almost two years of unrelieved misery during which Ireland had sometimes appeared, in local parlance, to have lost the run of itself, a battered and moth-eaten Celtic tiger may be picking itself up.

...Ireland looks not only to be managing it but doing so with informed public debate.

That commentary is welcome.

Business groups such as IBEC and Chambers Ireland have welcomed NAMA. The commentary in today's edition of the The Irish Times is worth mentioning. It states:

...it is worth remembering that when NAMA was first proposed over 12 months ago, Ireland faced a predicament not unlike the one Greece finds itself in today. The State of national finances was such that serious doubts existed about our ability to manage our way out of our problems and there was a real possibility that debt markets would be closed to us.

Things have improved dramatically since then, due...to the Government's efforts to resolve our banking crisis.

While many difficult decisions have been made by the Government, the Minister, Deputy Brian Lenihan, in particular, has taken the required time to be considered and thoughtful in the approach that has been taken to ensure our taxpayers and citizens are protected to the fullest extent possible. There will be a cost for that protection but we hope to minimise that by ensuring Anglo Irish Bank operates under new management and with a new business plan to provide that some of the investment that is being put into it can be recouped by the taxpayer. On the other hand, in terms of the performance of NAMA, the other banks and the substantial holdings that the National Pensions Reserve Fund now has in those banks, I believe a profit will be made for the country. That has been borne out already in terms of the €1 billion that has been provided as a result of the guarantee that was given to the banks.

While I appreciate there is a need for opposition, informed debate and different opinions as we seek to ensure we find the correct solutions to our problems, as we look to the future it is our responsibility to be confident with the template that now exists. We have stabilised our financial position and banking system and the bonds that will be given to the banks, through the operations of NAMA, will provide liquidity - which was missing for the past 18 months - which will allow banks to lend to viable businesses and families who are much in need of credit. I used the word "viable" because under no circumstances should the kind of reckless irresponsible lending that took place here ever be tolerated again.

I welcome the moves by the regulator to shore up the capital positions of the banks - to insist on an 8% core tier 1 capital position. In terms of credit availability, I also welcome the directions from the Minister , Deputy Brian Lenihan, on the amounts of money to be lent to SMEs to support industry.

As we look to the future, we must be vigilant and ensure the correct oversight of NAMA and our banking and regulatory position, but we must be confident, having taken so many difficult decisions during the past 18 months, that we are on the right road to recovery. That has been borne out by national and international commentators. It is time in these Houses that we looked to the future with similar confidence.