PRESS CONFERENCE:THE FINAL decision on the 30 per cent figure as the discount on loans transferred to the National Asset Management Agency (Nama) was made by the Government only yesterday morning, Minister for Finance Brian Lenihan told a news conference last night.
Although he met a delegation from the banks “very briefly” the previous evening, he was not in a position to give them the figure for the “haircut” to be imposed under Nama’s proposals.
Commenting on the suggestion by Fianna Fáil TD Seán Fleming that a High Court judge should rule in any dispute over valuations, Mr Lenihan said: “I think it’s a very interesting suggestion but, can I say this, under the present legislation I have no power to interfere in the valuations.
“There seems to be suggestion lingering in the parliamentary debate that I do.
“The only power I have is the power to have a valuation done again. The reason I have that power is to protect the taxpayer.
“Now if there is a better way of protecting the taxpayer in this context, well and good. I’m certainly not anxious to have this power. It’s the only way when I was drafting the legislation [that] I could see it could be done.
“I’m certainly prepared to examine Seán Fleming’s suggestion. Indeed, we discussed it informally in recent days.
But the Opposition may also come forward with constructive suggestions in that regard,” he added.
“I have to say that, with banking issues, it’s very important that we have a constructive debate,” he said, welcoming the fact that some committee stage amendments to the Bill had been put down by the Opposition already.
“Some of the ideas that they mention in connection with the committee stage can be examined,” he said.
Asked why an extra €7 billion in long-term economic value was being paid under Nama, the Minister replied: “We’re talking about distressed loans, we’re talking about a distressed market, and you are entitled to make some allowance for long-term value.
“After all, if you look at it from the point of view of the bank – which is not a popular way to look at it, I accept that – why wouldn’t they just hold onto the loans and work them out themselves, if there was absolutely no premium involved?
“Now that might do the economy a lot of damage, because they could simply hoard their capital and play a long-term game with it. But there would be absolutely no reason why they should be compelled to go into Nama if they weren’t getting something for the loan book.
“And I think 10 per cent over 10 years is a very, very modest allowance.
You will find very, very few economists or valuers who could dispute that, it really is a very low uplift.
“I mean, it’s in consumer price index land: you’re talking about the price of milk and the price of beef.
“We don’t want another property boom and there are balances to be drawn on this.”
Pointing out that “there are choices to be made”, the Minister added: “Whatever choice you exercise there is going to be a cost attached.”
Noting that the Labour Party kept saying that, under its proposals, nationalisation of the banks would be temporary, Mr Lenihan said that the best way to ensure that that would, in fact, be the case was to maintain “some presence” on the stock market.
Otherwise, he continued, you would end up with a permanent nationalisation and the banks would remain in the public sector for good, like, for example, the Health Service Executive.
He said the Green Party Ministers had “worked very loyally” with their colleagues in Government on the Nama plan.