Developers will not be protected, says Cowen

 

TAOISEACH BRIAN Cowen has insisted that Irish banks and property developers will be forced to take significant losses as a result of the Government’s plan to deal with the banking crisis.

Mr Cowen said that the decision to establish the National Asset Management Agency (Nama) had been taken to isolate this banking problem and stop it from contaminating the entire economy.

“This approach is in the best interest of the economy and our financial system. It is necessary to protect jobs but in no way will it protect developers,” according to the Taoiseach in an article published in today’s Irish Times.

“The Government will pay an economic price for the loans, which ensures that the developers and the banks take a significant loss where the land and property were originally purchased at very inflated prices.

“The assets will be realised over time in a way that protects the taxpayer. Should losses be incurred by the State, a levy should be applied to banks to recoup any shortfall,” said Mr Cowen.

He added that Ireland had suffered a blow to her reputation abroad as a result of the banking crisis. “This must be fixed and it will be fixed. With a solid plan for our public finances and a comprehensive plan to restore our banking system, we will be sending teams abroad. . . to demonstrate to international markets that we are taking the right measures. This will restore confidence and get investment and credit flowing again.”

In the Dáil yesterday Tánaiste Mary Coughlan also insisted that the agency for dealing with bad loans was not a bailout.

She said the legislation to establish the new agency would be drawn up in the next few weeks and should be passed by the end of the Dáil’s summer session.

Alan Shatter of Fine Gael said the new agency should be accountable to an Oireachtas committee to ensure it was not under pressure to do favours for friends of Fianna Fáil.

Mr Shatter also said Fianna Fáil should apologise for what it had inflicted on the country. “As a Member of this House since the early 1980s, I have watched on two occasions how Fianna Fáil-led governments have destroyed the economy of this country,” he said.

Labour Party finance spokeswoman Joan Burton said many people were now calling the Nama proposal the “banana” proposal.

“It seems to involve such a grave hit to the taxpayer. Stockbrokers around Dublin currently use a very quaint phrase, which, as a woman Deputy, I find appealing.

“When there is a writedown by a developer or a bank on a loan they describe this as taking a haircut. The Tánaiste and I know all about the cost of this because it is a really important issue for many women,” she said.