Minister: Only time will tell if NAMA can succeed

By Mary Regan Political Reporter

Friday, November 13, 2009

ONLY time will tell if the NAMA gamble pays off a Government minister admitted yesterday as the Bill setting up the agency – described by the opposition as "the biggest corporate cheque in history" – passed the final stages in the Dáil.

The agency is expected to start taking over property loans from banks before Christmas, after the Bill is signed into law by President Mary McAleese next week.

The state will pay €54 billion for the takeover of loans and it’s hoped that banks will begin to free up lending to business and mortgage customers in return for the gamble.

But this might not pay off, according to Minister of State at the Department of Finance, Peter Power.

"The test of the legislation will be whether credit begins to flow in the economy once again. And only time will really answer that question ultimately," he told the Dáil yesterday.

The opposition said the legislation was "steam rolled" through the Dáil, after it was decided to guillotine the debate to ensure it did not go on after half past three yesterday afternoon.

Before the debate got under way, Labour Party leader, Eamon Gilmore, said: "This is the biggest corporate welfare cheque that has ever been written and the Government want to get it done and dusted by this afternoon.

"And yet will turn around to people who are in bad circumstances and tell them there is no money."

Sinn Féin’s Caoighmhín O Caoláin said: "This is indicative of this Government’s whole attitude to this. It’s rail road and steam roll and have your way no matter what."

The project is still awaiting formal approval from the European Commission and Fine Gael has claimed this could take up to two months.

But Finance Minister Brian Lenihan, insisted there are "no red lights" coming from Brussels.

"Clearly there are important issues in relation to competition and state aid which have to be worked out with the relevant sections of the of the commission," he said.

"But we have been in dialogue with them prior to the drafting of the legislation and during the drafting of the legislation. Some of the sections of the legislation reflect their thinking.

"We will continue to do that work but they are not in a position to consent until they actually see the transfer. That’s an ongoing relationship but there is certainly no red lights there," he said.

Mr Lenihan said informal work is already underway with some of the financial institutions and "the objective is to transfer the loans in the largest value in a matter of weeks".

Following figures predicting the number of houses built next year will be just a tenth of the level at the height of the boom Mr Lenihan said he hopes NAMA will help the construction industry "return to a sustainable pattern of growth".

He said the current model of lending to the building and development sectors is "a broken model".

He said: "It’s essential that NAMA will introduce new financial models and funding models to ensure that whatever emerges on the construction side is sustainable for the future and never repeats the bubble type scenario we have seen."

This story appeared in the printed version of the Irish Examiner Friday, November 13, 2009