Taxpayer will pay extra €7bn on loans, says Bruton

FINE GAEL:THE PAYMENT of €54 billion for impaired loans would impose a mortgage of €34,000 on every family in the State, Fine Gael finance spokesman Richard Bruton told the Dáil.

“The crisis we are now facing has not happened because some tsunami has swept on to our shore from international waters and engulfed us,’’ he said.

“This has happened because of catastrophic policy failures.’’ Mr Bruton said the Government’s public finance policy had led to reckless overspending and exposure to the taxpayer.

“With its system of cosy relationships, it refused to confront problems and, instead, sought to buy them out and cosy its way around them,’’ he said.

“Those problems led to the easy money and the runaway property bubble that have now brought our people to their knees.’’

The taxpayer, Mr Bruton said, was now being asked not only to buy the impaired loans, but also pay €7 billion extra for them over their market value.

“That is an extraordinary amount of money,’’ he said.

“Remarkably, this extraordinary decision is being done without any forensic analysis of the costs and benefits of this approach or of the risks and threats that are clearly involved.’’

This was happening, Mr Bruton added, at a time when funding was being slashed for many important needs in the community, including investment in vital infrastructure, care for the extremely sick people and support for disabled children.

He added: “Let us be under no illusions about the decisions we are about to take.

“If we get this wrong – I believe we are getting it wrong – we will undoubtedly prolong the recession that our people will face.

“We will increase the number of job losses in businesses around the country if we get this banking solution wrong.’’

Mr Bruton said the House was told that the €7 billion step-up would be allocated 50-50 between senior and subordinated bonds.

“However, it is not being shared 50-50. Only one-third of the extra will be shared through subordinated debt. Already, what seemed to be pillars of the new approach are being hacked away at.’’

Remarkably, Mr Bruton noted, they were told that the taxpayer must pay a 15 per cent mark-up on the value of the loans.

He added: “What is the underpinning for that? What evidence has the Minister offered to support his contention that we must pay that? He suggests there will be a bounce-back in prices of at least 10 per cent. Where is his evidence?

“A reputable commentator – indeed, one of the few who forecast the crash – has told us a further 20 per cent fall in property prices is likely.’’

Mr Bruton said that Irish people had learned over the past seven years not to accept glib assurances from Ministers that everything would turn out all right on the night.

“Many of the people who are telling us today there is no alternative to Nama, are the same people who told us the property price rises were based on sound economic fundamentals,’’ he said.

Rejecting the call to “don the green shirt’’, Mr Bruton said that the Dáil’s history was strewn with cases in which Irish people had paid dearly because important questions were not asked, and if asked, were not answered.