TAOISEACH BRIAN Cowen has defended the Government’s decision to set up the National Asset Management Agency (Nama) to resolve the problems in the Irish banking sector despite mounting criticism from some financial and political quarters.
Some 20 leading academic economists argued in an opinion piece in yesterday’s Irish Times that the Government had got in wrong in establishing Nama.
However, Mr Cowen insisted the programme of recapitalisaton of the banks proposed by the Government was the correct way to proceed. “They [the economists] have their view. We have always said that whatever is required to maintain financial stability is what we will do and I think it is important to suggest that there is not only one option available to Government,” he said.
If any further capitalisation of financial institutions is required, the Government can decide whether to take a further equity stake, said Mr Cowen, adding that Nama was important in terms of providing market certainty and transparency to the financial sector.
“I think it’s important to point out the scale of the job that’s ahead of us in terms of establishing the National Assets Management Agency – there’s a lot of work to be done in the coming months – it won’t be a question of establishing it within a week or two.
“There’s basically an implementation plan that has to be drawn up by the National Treasury Management Agency in respect of how we proceed and the whole purpose here is to provide better market stability and transparency in relation to the level of debts that are in the banks.
“We made the policy announcement in the Budget last week . . . we are asking the NTMA as a priority to work with the Department of Finance to prepare a legislative framework which we hope would be forthcoming before the summer recess is over.”
Questioned about Citigroup’s assertion that AIB and Bank of Ireland may need up to €3.3 billion in further capitalisation, Mr Cowen struck a cautious note when the question of nationalising the banks was again raised.
“It’s very important that there is a choice available to the Government in relation to this issue and it isn’t a simple issue – nationalisation isn’t the only option – it’s very important that market disciplines would be involved as well.
“It’s important that the banking situation be improved in the long term.
“We will do our utmost to ensure that financial stability is maintained and that money/credit is available around the country to companies that are trying to maintain and create employment.”