THE LABOUR Party has said the Government should seek a 50 per cent discount at the very least when buying property loans from Irish banks falling within the remit of the Nama legislation.
Party leader Eamon Gilmore and finance spokeswoman Joan Burton yesterday characterised Nama as one of the most significant pieces of legislation that the Dáil would ever debate as it involved €80 billion to €90 billion in property-based loans.
Both said the risks to the exchequer were “enormous and irreversible” and the discount should reflect that.
While saying she did not want to put an exact figure on what the discount should be because the Government has not made sufficient information available, Ms Burton also said it should be a benchmark valuation that would minimise risk for taxpayers.
“If the discount is less than 50 per cent we will need chapter and verse as to the reasons why.”
She added that a discount of 15 to 25 per cent as suggested by the stockbroking community would transfer a huge burden of risk to taxpayers.
Mr Gilmore said the consequences of the agency were huge and would saddle not only this generation but future generations of taxpayers with the cost of the huge burden of debt that the State would have to buy.
“For decades to come every TD who enters Leinster House will be asked to account for this. It is a huge decision and irreversible, the biggest decision that we as politicians will be asked to make.”
The party also called for a clear consolidated statement giving details of the loans involved so that Opposition parties can assess the nature of the loans and if taxpayers are getting good value.
Ms Burton denied that this demand was political prurience on the part of the party.
“I don’t care if developers are identified only as Mr A or Mr B. From our perspective we need a clear statement about the [nature of] these €80 to €90 billion in loans.”
Both were speaking at the launch of a Labour Party analysis of the Nama Bill. Mr Gilmore, who repeated his argument in favour of temporary nationalisation, warned against the adoption of Nama without proper scrutiny and debate by the Dáil and Seanad.
However, he would not be drawn on what period the main banks would remain as nationalised institutions before returning to private ownership.
Ms Burton did say that the Labour Party would require nationalised banks to continue their current reporting obligations to the markets and to regulatory agencies as they would be run as commercial entities.
The analysis argues that the risks of Nama are enormous. It argues that “overpayment by Nama for loans of some €80-€90 billion will impose a huge financial burden on the State”.
The document highlights a number of what Labour has said are weaknesses.
It argues that far too much power is vested in Minister for Finance Brian Lenihan, and contends that under Section 171 of the Bill he may be able to withhold any piece of relevant information as he thinks fit if he defines it as confidential.
It also says that it is the Minister, not the Oireachtas, who will have the power after five years to evaluate “whether a continuation of Nama is necessary”.
The critique also criticises what it says are the wide powers of the Minister in relation to valuation.
“We are worried about the interfering powers that Brian Lenihan has in a Fianna Fáil Government with all its links with developers. We propose a commission that is free of political interference.”