THE Government has bowed to public pressure and changed key parts of its €90bn plan to tackle the banking crisis.
The proposed National Asset Management Agency [NAMA] will now include a “risk-sharing” mechanism to split potential losses between taxpayer and banks.
After weeks of heated public debate, the Cabinet has signed off on the final draft of the legislation to establish NAMA. The bill will be published today.
Once established, NAMA will purchase €90bn of property loans from the banks at a discount, the goal being to clear their balance sheets of risky debt and return them to health.
Under the Government’s original plan, NAMA would have paid the agreed price in full to the banks at the outset. This meant all the risk would have been on the taxpayer, if NAMA overvalued the loans and losses occurred.
Now, however, the Government has agreed on a two-part payment system for a portion of the loans. Under this mechanism, the banks will get part of the payment upfront, and then have to wait until NAMA recovers the value of the loan before getting the rest.
The Cabinet also agreed a number of other key changes:
* Making it a criminal offence to lobby NAMA.
* Introducing a windfall tax of 80% on profits gained from increases in land value due to rezoning decisions to ensure that speculation is not rewarded in the future.
* Giving NAMA the power to make land banks available in a “controlled manner” in future to avoid a repeat of the property bubble.
* Obliging NAMA to report to Finance Minister Brian Lenihan every three months instead of the original proposal of once a year.
The Green Party last night claimed credit for the changes. Communications Minister Eamon Ryan said the measures would “increase protection afforded to the taxpayer” and further safeguards were on the way.
However, the actual price NAMA will pay for the loans – a major source of controversy up to now – will not be revealed by the Government until the Dáil resumes next week.
Fine Gael claimed the changes announced last night did not go far enough, as “secrecy in the use of taxpayers’ money” remained at the heart of the plan.
The party called on the Government to publish the names of the 1,500 people whose loans NAMA will assume from the banks.
Separately, the Irish Examiner has learned that nine senior members of the State agency which will oversee NAMA were paid more than €200,000 last year.
It’s understood the nine high-earners include Brendan McDonagh, the finance expert who has been appointed interim managing director of NAMA.
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