Scale of NAMA bailout revealed

The 26-County Minister for Finance Brian Lenihan has revealed the extent of the highly controversial bailout to be provided to the main Irish banks following heavy losses by Irish developers in the property markets.

The National Assets Management Agency (NAMA) will purchase some 77bn Euro worth of loans at a price of 54bn Euro, a discount of at about 30%.

The rate is far above what the assets were considered to be worth by financial experts, although may areas in the Irish property market are essentially frozen at the moment.

However, Mr Lenihan claimed the assets were worth 47bn Euro at current market values. He insisited it was a bad idea to use current values for the assets.

The agency will take over the property and development assets -- most of which are located across Ireland, but many in Britain, the US and elsewhere -- and attempt to recoup the cost in time.

The high cost of the bailout has been strongly criticised as the product of Fianna Fail’s close relationship with Irish developers and banks over the years.

in a defiant statement by Mr Lenihan today, there appeared to be little concession to the criticisms voiced by the opposition and Irish economists over the past number of weeks

“Paying too little has its own consequences for the economy,” he declared.

He also insisted that the benefit of the transaction to bank shareholders -- at the direct expense of taxpayers -- was ameliorated by the fact that the state now holds a large interest in the banks.

The Dail was suspended earlier today as Sinn Fein and others made a desperate attempt to prevent the legislation being passed.

Sinn Fein’s Arthur Morgan tried to ask a question which were ruled out of order by the Ceann Comhairle [speaker], leading to angry scenes and causing the sitting to be suspend for some time.

Sinn Fein Dail leader Caoimhghin O Caolain had said earlier that his party would “do all in its power to stop the passage of the Nama legislation through the Dail”.

However, the proposals of other parties, such as the temporary nationalisation of the banks, were today ruled to be outside the order of business.

The parliament then moved on to hear the long-awaited announcement by the Minister, which effectively sets the value of the developers’ assets at a notional “long-term value” rather than market rates.

The selection of the actual value, revealed today, sets the scale of the unprecedented cost to the 26-County exchequer and has been the subject of intense speculation in financial and political circles as well as in international stock markets.

Earlier, Labour Party leader said the Government is ‘making up the NAMA legislation as it goes along’.

Eamon Gilmore said the same approach is being taken to the valuation of loans and properties involved.

Speaking at a large protest outside Leinster House, Deputy Gilmore said people are opposed to the NAMA plan and he said people are angry about what he called a ‘Fianna Fail legacy’ of debt and unemployment.

Seaking after he had been ejected from the Dail, Mr Morgan said it had been “his duty” to put on record that the Taoiseach “lied to the Irish people” about the causes of the economic crisis and the property bubble.

“I am elected by the people to represent the people,” he said.

“That is a lesson Fianna Fail and the Greens could do with learning. The people do not want NAMA and I am not going to participate in a farce in the Dail where the opposition spokespeople register their views but the government pushes NAMA through with a slim majority.

“People are demanding that the Taoiseach be honest about the extent to which he was aware when he was Minister for Finance about the impending economic crisis.

“People who are facing home reposession, whose businesses are being forced to shut down and those that are finding themselves thrown onto the dole queue feel betrayed by this government.

“This government has consistently lied about the causes of this crisis and are now lying about the solutions. They were warned about the dangers of the property bubble. We warned them. We raised this issue repeatedly over a long number of years in the Dail.

“I will oppose NAMA and Bord Snip and the government’s plans for budget 2010.

“I am saying what the vast majority of people on this island want said.

“The Government has no mandate implement NAMA.

“Sinn Fein is committed to doing everything in our power to stop this bailout of bankers and developers coming into law. This is exactly what we will do.

“There is an alternative - that is the nationalisation of the banks and the establishment of a state bank.”

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