Boyle: Party lacks confidence in NAMA solution

By Paul O’Brien, Political Correspondent

Tuesday, August 25, 2009

GREEN senator Dan Boyle has admitted his party lacks total confidence in the Government’s proposal to resolve the banking crisis.

Confidence would have to be "earned", he said, and a crucial part of that process would be improving the legislation to establish the National Asset Management Agency (NAMA).

The legislation will go before the Dáil next month, with amendments expected to be made in October. The Greens will convene twice before the legislation is finalised to see whether members support it and, if so, what improvements they want to see.

Mr Boyle reiterated some of the concerns which he and other party members have about the legislation yesterday. When suggested to him that he lacked confidence that NAMA was the right answer, Mr Boyle said: "Given the situation that we find ourselves in, and the fact that how it’s come about in such a whirlwind-like fashion over the last 18 months, confidence is something that has to be earned.

"We are in very uncertain territory. We have to make sure that the process is right so we get the results right," he told RTÉ.

NAMA will take €90bn of property loans from the banks. A key issue is how much the agency pays for the loans. A discount is certain, but the Government has said the price will be based on the long-term economic value of the property underpinning the loans rather than the current market value, which has sparked fears that the taxpayer will be hit with massive losses.

Asked if this was, in effect, a Government punt with taxpayers’ money, Mr Boyle responded: "It’s an expectation that markets go up as well as go down. The variable is we don’t know over what time period that would happen."

Apart from Anglo Irish Bank, which has already been nationalised, the other banks will remain private institutions under the NAMA plan.

Labour leader Eamon Gilmore claimed the Government should immediately re-examine the case for temporary nationalisation of the banks rather than proceed with NAMA. Such a move would minimise taxpayers’ exposure, he argued. "The banks would be taken into public ownership for a limited period, during which time their balance sheets would be cleaned up, before being re-privatised at the earliest possible date. This would involve substantial state investment, but the amount would be far less than the NAMA approach," Mr Gilmore said.

"The return to the State from the resale of the banks would significantly offset the cost of bad loans that the State is required to pick up."

This story appeared in the printed version of the Irish Examiner Tuesday, August 25, 2009