NAMA will not see inflationary ‘credit splurge’

THE National Assets Management Agency (NAMA) will not lead to a “credit splurge” that will re-inflate the property market back to boom levels, the Taoiseach insisted.

Taoiseach Brian Cowen said concerns that too much credit could be made available by banks when NAMA was set up were raised by Government officials in a meeting with the International Monetary Fund (IMF) last April.

It emerged this week that a senior IMF official, Steven Seelig, who will also sit on the board of NAMA, told Finance Minister Brian Lenihan at a meeting on April 29 that NAMA will not lead to increased lending.

Fine Gael leader Enda Kenny demanded to know why a “very fundamental and relevant fact was withheld from the House”.

During Leaders’ Questions in the Dáil yesterday, Mr Kenny asked: “Why was this fact concealed from this House during the NAMA debate when it was made known to the Taoiseach and the Government?”

He said the claims made by the Government that NAMA would see credit flow to Irish businesses were in “complete contrast” to what the IMF stated.

But Mr Cowen denied information was hidden from the Dáil: “The suggestion that the IMF was not in favour of the establishment of NAMA or indeed that we could proceed without NAMA is not correct.

“The remarks made on bank lending in Ireland were made in the context of Minister Lenihan assuring the IMF that the Government did not want to see a surge in lending designed to re-inflate the property market to near boom levels.”

Mr Cowen said the Finance Minister can issue guidelines to banks on lending practices, under the NAMA legislation.

“The inclusion of that provision in the legislation arose directly from the concern expressed on all sides of the House that credit be available to the economy,” he said.

“Let us be clear, the intention of the guidelines is not to return to a credit splurge but to ensure that viable businesses and households can access funding.”