Inaction would have brought greater risk than Nama - Cowen

Taoiseach Brian Cowen has defended the decision to establish the National Asset Management Agency (Nama), saying that doing nothing would have exposed the taxpayer to greater risk.

“It was necessary to take this action in order to enable the banks to attract the funds that are necessary to get credit going again in the economy,” said Mr Cowen.

He added that the arrangements put in place through Nama were designed to minimise the risks to the taxpayer and, in any event, if there was a shortfall it would be met through a levy on the banking system.

Mr Cowen said that, while Nama would acquire loans from the banks at a discount, the developers who had borrowed from the banks would still be required to pay back to Nama the full value of the loans they had taken out.

He said that the Government decision to establish Nama was guided by three basic objectives. The first was to get the banks back to a position where they could supply credit; the second was to protect the deposits of Irish savers; and the third was to get the best possible value for Irish taxpayers from the distressed assets.

“Doing nothing was not an option for the Government. That would not have protected the taxpayers, it would have exposed them to greater risk,” said Mr Cowen. He said that the transfer of assets from the banks to Nama meant that the banks would take a hit.

Green Party Minister for Energy and Natural Resources Eamon Ryan has said that under section 59 of the draft Nama Bill the assessment of the future value of assets will be influenced by matters such as zoning requirements, special plans and transport needs.

Under the terms of the Bill, Minister for the Environment John Gormley will be able to present an analysis on the extent to which existing land zoning and planning permissions meet or exceed projected growth requirements.

The Dublin Transport Office and the National Transport Authority will also be asked to present analyses of existing and future transport planning and the associated supply and demand projections for land use.

Mr Ryan said the Government had for the past six months been looking at all the available options for dealing with the banking crisis, including the option of nationalisation favoured by the Labour Party, and the Fine Gael route of making the bond holders take a hit.

“We came to the conclusion that Nama is the best available option. While no one can guarantee how it will go, it is the best approach available to us,” he said.