The most important issue to be debated in the Dáil for decades, the NAMA legislation, is being overshadowed by the current political instability.

Fianna Fáil and Green TDs and Ministers have been more concerned this week with the instability within their own parties than with the NAMA legislation passing through the Dáil. NAMA is a high-risk gamble with taxpayers’ money: a bailout for those bankers and developers who were reckless and greedy, with no guarantee that it will provide the credit which the Irish economy needs to begin the long road to recovery.

To put the cost in perspective:
The €54 billion cost of NAMA is a €12,273 contribution from every man, woman and child in the country to help banks and developers with their property gambling problems;
€54 billion could pay for 208 Croke Parks, 72 Port Tunnels or 11 Metros.

The vast majority of loans to be taken on by NAMA concern land or development projects whose values may have fallen well in excess of the Minister for Finance’s estimates.

For the scheme to work, NAMA must be more effective at recovering loans from the developers than the banks have been. We will be dependent on a Fianna Fáil-led Government to ensure that a State agency actively pursues people who, just over a year ago, were regulars in Fianna Fáil’s Galway tent. The Green Party’s promise of a fair system of risk sharing to protect taxpayers on a 50/50 basis, turned out to be just 5%. This is nothing more than a fig leaf figure to cover Green blushes.

The NAMA scheme is based on the Government’s belief that the transfer of this vast amount of wealth from taxpayers to the banks will encourage those banks to start lending again. The Government has absolutely no guarantee that this will happen. The €36 billion from NAMA that will be paid to Anglo Irish Bank and Irish Nationwide may not result in even a single new loan being issued.

There is an alternative. Fine Gael would establish a new good bank, the National Recovery Bank, funded by the European Central Bank. This approach has many advantages: it would get credit flowing immediately, inject new lending into the economy without delay, and help to stimulate job creation. It could be open for business in a matter of weeks and is less of a risk for taxpayers. Crucially, the Fine Gael Good Bank would not call on Irish taxpayers to pick up the bill for bankers and developers who gambled on the property market and lost.