Brian Lenihan Jnr (Dublin West, Fianna Fail)

Senator Ross asked a question about the publication by NAMA this afternoon of a number of documents, including its business plan. The original draft business plan was prepared by the interim NAMA executive, at the request of the Opposition parties in the course of a Dáil debate. That plan clearly rested on assumptions and information provided by the financial institutions at that stage. As Senator Ross pointed out, it is clear that many of the assumptions that were relied on by the banks were inaccurate and wrong. The Chairman of NAMA, Mr. Daly, made the same point this afternoon. I am glad to say the legislation provides that it is a criminal offence for a financial institution to provide wrong information, in the context of the institution itself. Of course the information in this case was provided before the NAMA legislation came into force. Having said that, I maintain that what has happened since last autumn has entirely vindicated the Government's decision to establish an asset relief agency. It is clear that we needed an independent statutory valuation of these assets. The argument that was made by many people at the time, including some Members, although not all of them, on the Opposition side, was that the banks should be left to their own devices in arriving at valuations. I suggest it was a very fallacious argument. Given the scale of the problems that existed at the banks, it was clear this country needed an independent statutory valuation of these loans. If we are to draw any happy conclusion from this most unhappy episode, it should be that NAMA at least ensures we have first mover advantage in recognising the reality of how great the losses were in the banking system. It is clear that not all European countries have been in a position to do that yet. The first mover advantage we obtained when we forced the banks to recognise the losses they had on their books will assist our banking system in time.

The next question that was raised by Senator Ross was the close proximity between regulators and the banking system. This cultural problem, which was also mentioned by other Senators, was at the core of many of the regulatory difficulties we experienced. I am not suggesting there was actual corruption, or anything like it. I am suggesting the regulatory system displayed an unhealthy subservience to the banking system. That cannot be repeated. Senator Alex White asked why the architecture should be changed. One of the features of the architecture designed in 2003 was a great lack of clarity, for a small country.