Building societies ‘could be part-nationalised’

BUILDING societies could be part-nationalised under new laws announced by Finance Minister Brian Lenihan last night.

Mr Lenihan signalled the move as part of a number of amendments to the National Asset Management Agency Bill agreed by the Cabinet.

Government investments in Irish Nationwide and the Educational Building Society would see the state receive a “golden share” which would give the Minister for Finance special privileges on appointments and direction intended to protect the taxpayers’ interests.

The issue of such a share would have to be approved by a society’s members.

“The Government now proposes to improve the text of the bill to ensure that NAMA can achieve its objectives of stabilising the banking system and supporting economic recovery,” Mr Lenihan said. Other amendments include a ceiling of €54 billion on the issuance of securities in respect of acquisition by NAMA of bank assets, though this could be amended by the Dáil.

A new provision will require borrowers “to cooperate and act in good faith with participating institutions during the preparation for the transfer of loans”, Mr Lenihan said, stating this would improve the accuracy of information provided and the efficiency of the transfer process.

The Government move came after Labour published 56 proposed amendments of its own. The party’s finance spokeswoman Joan Burton said the changes were needed to restrict the “limitless powers” given to the Minister for Finance. Ms Burton said the changes would also ensure greater transparency, provide additional protection for the taxpayer and reopen the flow of credit to small businesses.

Labour also wants urgent help for homeowners struggling to pay their mortgages by bringing in a two-year moratorium on applications for repossession orders on family homes by participating financial institutions.

The amendments will be debated in a full session of the Dáil, rather than just in committee as is usual.