Cowen denies bailing out developers

The Taoiseach has today rejected Opposition allegations that the asset-management agency announced in the Budget yesterday will be used to bail out developers.

Minister for Finance Brian Lenihan announced yesterday a National Asset Management Agency would be set up to buy between €80 billion and €90 billion of property and development loans from the banks.

This morning, Brian Cowen came under sustained attack in the Dáil over the Government plan to buy the highest risk loans in the banking system.

Fine Gael leader Enda Kenny challenged Mr Cowen to tell the House how much was to be taken from taxpayers to bail out banks from "dodgy developer debts".

"We are being asked to give another blank cheque to Fianna Fáil to bail out the banks. The only people who are happy this morning are the banks,” Mr Kenny said.

Labour leader Eamon Gilmore said the National Asset Management Agency would end up buying "half-finished apartment blocks, empty hotels, lands bought at exorbitant prices" both in Ireland and abroad.

“This is the property bought by property speculators with borrowed money that the Government is now going to buy back at taxpayers' expense . . . and businesses going under must wonder what developers have that they don’t have, that the Government will come and relieve them of their bad debt.”

Mr Gilmore said working people “are being screwed” to pay for the mistakes that Fianna Fáil have made over 12 years in Government and accused the party of "protecting and cosseting friends who brought down the Irish economy".

"They are now going to use the Irish taxpayer to bail out their foreign investments.”

The Taoiseach said he rejected Mr Gilmore's assertion “with contempt,” adding: “I will not accept from any deputy any suggestion that we are doing anything but seeking to protect the interests of the country. . . I hold no brief for any individual inside or outside this House.”

He said such innuendo did nothing for the debate on the issue and represented a charge against the National Treasury Management Agency and everyone else who advised the Government.

Mr Gilmore challenged the Taoiseach to state how much of the estimated €80 million to €90 million of property and development loans to be bought would be based overseas.

Amid raucous scenes in the Dáil, Mr Cowen responded the National Asset Management Agency would undertake work to see what assets should be bought and that yesterday’s Budget speech was only a policy announcement on the issue.

Earlier, Mr Kenny said the Taoiseach could not be trusted in dealing with banks . . . "You are lumping this on the back of Irish taxpayers who were screwed down to the wall yesterday," the Fine Gael leader said.

He called on the Taoiseach to say how much taxpayers would have to pay for the Government’s mistakes and challenged Mr Cowen over when the banks were going to pay for these mistakes.

Mr Kenny said the Budget contained “no reform on the HSE, no reform on Fás, there is no jobs plan . . . there is no strategy to get people back to work . . . you’ve taken the easy targets and soft options"

Mr Cowen said he rejected the contention that he was taking the soft options and said there was a recognition in the country that the Budget’s measures were necessary steps. He said Mr Kenny’s interpretation of the Budget was "at total variance to the facts".

The Taoiseach said it was the Government’s aim to isolate problems in banking sector through the work of the National Asset Management Agency to ensure banks can access sufficient funds.

The Dáil has now resumed debating the Government’s emergency Budget.

Fine Gael has also called for loopholes in company and bankruptcy law to be close to prevent developers from filing for bankruptcy abroad.

In a statement today Fine Gael housing spokesman Terence Flanagan TD said: “The Taoiseach stated yesterday in the Dáil that developers who owe loans to banks will be pursued, yet loopholes in company and bankruptcy laws deem this statement farcical.

“Under existing company law developers can wind down existing companies, write off their debts and set up new companies and their debts transfer to the Irish taxpayer. In addition, there is nothing preventing them from filing for bankruptcy abroad if their holding company is foreign based or if they have assets abroad and avoid repaying their debts in Ireland in the process," he said.

Mr Flanagan said legislation was needed to ensure Irish developers who owe money to Irish banks were held accountable to the Irish courts and to the taxpayer.