Lenihan criticised as plan to pay inflated price for loans retained

THE opposition last night criticised Finance Minister Brian Lenihan for sticking with his plan to buy loans from the banks at inflated prices.

They also criticised the revised bill to establish NAMA, saying the changes made did not go far enough to protect the taxpayer.

Once established, NAMA will purchase €90 billion of loans from the banks at a discount in a bid to cleanse their balance sheets of risky debt and return them to health.

The amended bill includes a new risk-sharing mechanism to ensure banks join the taxpayer in bearing the risk of potential losses on loans.

The bill will also make it a criminal offence to lobby NAMA.

In addition, it requires the State’s spending watchdog, the Comptroller and Auditor General, to conduct a review of NAMA’s progress every three years in addition to an annual review of the agency’s accounts.

However, the Government has not changed its plan for NAMA to buy the loans at prices reflecting the long-term economic value, rather than the current market value, of the properties underpinning them.

Fine Gael finance spokesman Richard Bruton said this decision was a serious mistake. The NAMA plan was a flawed one and had failed in France, where a similar scheme in the 1990s lost €18bn, he said.

Mr Bruton dismissed the changes to the bill as cosmetic, saying it was nothing more than a “patched-up political deal” between Fianna Fáil and the Green Party to help the latter get through the weekend.

The Greens are holding a special conference on Saturday at which a number of members are expected to voice concerns about NAMA.

“Patching together a political deal to help the Greens get through a difficult weekend meeting is not the right approach to getting our banking solution right. Despite the attempts by the Green Party to talk up the changes, fundamental problems remain,” he said.

Christening the revised bill “NAMA Nua”, Labour finance spokeswoman Joan Burton said it did not contain a single material change in the crucial area of valuation.

“Fianna Fáil remains determined to empower NAMA to overpay for toxic bank loans. If they continue on this course, with the hapless Greens in tow, the burden on this generation of citizens and the next could be enormous,” Ms Burton said.

Sinn Féin finance spokesman Arthur Morgan said the revised bill was simply “window-dressing” to help the Green leadership save face.

But Taoiseach Brian Cowen denied the changes were a “sop” to the Greens. “They are very much a part of a continuing improvement we are seeing in the legislation,” he said.


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