Lenihan to appear before Committee

Minister for Finance Brian Lenihan is to appear before the Oireachtas Joint Committee on Finance next week to discuss proposed legislation to establish the National Asset Management Agency (Nama) as the row over the agency continues.

Mr Lenihan will appear before the committee on Monday where he is expected to give more details on the establishment and role of Nama.

The agency is being set up to acquire banks "bad debts" and take loans off the balance sheets of Irish banks as part of a plan to cleanse and repair banks balance sheets. Initial indications are that Nama may take control of €90 billion of bank property assets.

The planned Oireachtas appearance takes place as the debate over the agency’s proposed role goes on.

Earlier this week 46 leading economists signed a letter in the Irish Timesurging the Government to rethink its plans.

On RTÉ's Morning Irelandearlier today, Fine Gael's George Lee once again voiced his opposition to Nama.

The former RTÉ economics editor said the Government should consider revoking State guarantees from banks which fail to get their books in order after 12 months.

“What we're saying is that they [the banks] can sort out facing up to their losses themselves. They can take on their books all of the impact of that and can negotiate with the people who have invested in the banks with regard to how much of a writedown they'll take on that investment,” said Mr Lee.

“After selling their assets, if they are still in trouble, and they will not all be in trouble, if we do have to take control we will and will hive off the elements of the banks that are working and are considered at times to be clean. This is a far less painful solution for the taxpayer,” he added.

However, Fianna Fáil TD Frank Fahey, a member of the Joint Oireachtas Committee on Finance, rejected Fine Gael’s alternative plan for fixing the banking system, saying it would be “catastrophic for the economy, for taxpayers and for the senior debt holders and depositors in the banks.”

On the same programme, Mr Fahey suggested that it would be the ECB rather than the taxpayer who will pay for Nama.

“The reality is this. Nama will pay for the individual loans which will be individually valued and adjusted to the long-term economic value. The property market will rebound in this country, and Nama will unlock the catch-22 situation which exists in which banks cannot lend money at the moment and therefore the economy is in stagnation,” he said.

“What will happen is that around €30 billion of ECB bonds will be put back into the banks and further capitalisation will be needed,” he added.

Mr Fahey also claimed that the country was beginning to reap the rewards from its €7 billion cash injection into AIB and Bank of Ireland as shares in the two banks have risen in value over the past few months.

The Dáil is due to begin debating the Nama legislation on September 16th.