The taxpayer "will be protected" when the arrangements for the National Asset Management Agency (Nama) are finalised and the Government will not be paying more than necessary for property loans, Minister for Finance Brian Lenihan has said.
Mr Lenihan said today the Cabinet, at its meeting today, had discussed the issues surrounding the establishment of Nama.
"The taxpayer has to be protected and will be protected," Mr Lenihan said.
Speaking on TodayFM's The Last Wordprogramme, he said the issue "is not something that can be left to a prolonged academic debate. It's something that requires decisions".
He rejected arguments put forward by 46 economists in The Irish Timestoday that the Government make changes to the Nama proposals and said they were based on false assumptions.
In that article, the economists said Nama is expected to transfer about €90 billion (in book value) of loans from the banks. In exchange, the banks will receive a percentage of this value in the form of Nama bonds which can then be exchanged for cash at the European Central Bank.
They said it was "clear that the Government will pay significantly above market value for these loans". Current estimates are that the State may issue agency bonds worth upwards of €60 billion in total for the €90 billion book value, the economists claimed.
However, Mr Lenihan said the value of the relevant real estate, when the loans were advanced by the banks, was about €120 million.
He said today's article was "based on an assumption that the Irish property values have fallen by 75 per cent", which was incorrect.
The Minister said there was a "proper, professional job being done" on the valuation of the assets, prior to their transfer to Nama.
This was being carried out by Hong Kong and Shanghai Bank and John Mulcahy.
He said the valuations had not been finalised yet, "but when they are finalised, I will outline an estimate of them for Dáil Éireann on September 16th".
Mr Lenihan rejected the suggestion that the Government was, in effect, giving the banks a subsidy for the 'mess' they had made.
He said the outcome may well involve increased State ownership of some of the banks which had been heavily exposed to bad loans, but that judgment would be made on this issue when he had the valuations.
Mr Lenihan rejected the suggestion that the banks be 100 per cent nationalised and said this had not been attempted in any other country.
"Nationalisation isn't a free lunch either," Mr Lenihan said.
He claimed international funders would "run a mile" if the three main banks in the State were fully nationalised.
But he said the Government "have to be open to increasing the public stake in these institutions".
Continuing an argument about Nama for several months would delay a recovery in the economy, Mr Lenihan said.