Furious Cowen denies FF bailing out its friends

THE new “bad bank” was the subject of a heated row between Taoiseach Brian Cowen and opposition leaders in the Dáil.

Speaking before Finance Minister Brian Lenihan formally launched the National Asset Management Agency (NAMA), both Fine Gael leader Enda Kenny and his Labour counterpart Eamon Gilmore claimed the Government was bailing out banks and developers.

“What we are being asked to do is to give another blank cheque to Fianna Fáil to bail out the banks,” Mr Kenny said. He claimed the Government was lumping the “dodgy developers’ debts… on the backs of Irish taxpayers who were screwed down to the wall” in Tuesday’s budget.

Mr Kenny queried how much toxic debt the taxpayer would be exposed to.

“For six months now, in dealing with the banks and developers, this Government has been protecting and cosseting friends who brought down the Irish economy,” Mr Gilmore said.

“Not only will the Government buy back the property these people speculated on in this country, but it also intends to buy back the property on which they speculated abroad, including the shopping centres in Birmingham, the apartment blocks in Bulgaria, the hotels in Dubai and the retirement villages in Florida,” he said. “I cannot see what will be the contribution to the Irish economy if the property is abroad.”

But Mr Cowen angrily rejected suggestions the Government was bailing out friends.

“I reject with contempt any suggestion that we are doing anything other than seeking to protect the public interest of this country,” he said. If the Government didn’t move to address the overhang of toxic debt in the banks, the institutions would be unwilling to lend further and the credit flow problems for businesses would persist.

“I want to make it clear that the purpose of this initiative is to try to get back to a situation whereby credit is provided to Irish business.

“The amount paid by the agency will be significantly less than the book value to take account of the agency’s estimation of the worth of the loans and to compensate the State for taking on these risks. The banks will have to take the associated losses.”

He added: “In the longer term, if the agency were to fall short of recouping all of the costs, the Government intends that a levy should be applied to recoup any shortfall. All borrowers will be required to meet their full legal obligations for repayment.”