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Lenihan prepares to tackle NAMA critics with new safeguards

FINANCE Minister Brian Lenihan will today confront his NAMA critics and outline how he plans to minimise a €90bn risk to the taxpayer.

The minister is expected to outline how his 'bad bank' will value toxic loans amid claims by former Taoiseach Garret FitzGerald that rejection of the plan in a Dail vote could "throw our state into the hands of the IMF (International Monetary Fund)".

Ahead of today's meeting of the Oireachtas Finance Committee -- where Mr Lenihan will go head-to-head with his opponents -- many Fianna Fail backbenchers claimed last night they were reassured about the 'bad bank' plans.

Fianna Fail backbencher Chris Andrews said Mr Lenihan had shown he was willing to take on board "constructive proposals", adding that he was fully supportive of the plan.

In a bid to minimise taxpayers' exposure, sources said Mr Lenihan was examining a proposal to pay for 80pc of the banks' impaired loans up front. The remaining 20pc of the agreed price would be paid when the property portfolios involved reached their forecast value.

Fianna Fail's Michael McGrath, who is a member of the finance committee, said that the minister needed to look at injecting further equity into the main banks in advance of NAMA becoming operational, without fully nationalising them.

"I intend to ask . . . whether the Government should seek to increase its equity shareholding in the main banks prior to NAMA being up and running. It does appear increasingly inevitable that the State will have to inject further equity into the principal banks," he said.

Mr Lenihan has strongly indicated that he is prepared to take a majority stake in one or two of the country's main banks, but he has ruled out "wholesale" nationalisation.


Fianna Fail TD Timmy Dooley said it was necessary to get NAMA, spending cutbacks and the broadening of the tax base correct, adding, "If the Government doesn't do what's necessary, there could be no alternative but for the IMF to come in."

The Government's defence of NAMA was bolstered yesterday when former Finance Minister Ray MacSharry claimed it would not save "fat cat" builders and developers. Some would even end up in social housing, he said.

But writing into today's Irish Independent, Labour finance spokeswoman Joan Burton says NAMA will not be truly "independent" as it will act under the minister's direction.

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"Ctizens fear [that] a minister of a party with heavily compromised links to property interests will have reserve powers to control its operations and decisions while asserting at the same time that the body is independent," she said.

"It is a hopeless contradiction and a recipe for cronyism and political interference. Only a Government with a hidden agenda would insist on such reserve powers over a supposedly independent body."

Meanwhile, the Irish Council for Social Housing yesterday claimed that social housing could help NAMA take thousands of unsold homes off the property market.

Joan Burton

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