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It's So Toxic...

Government to publish Nama legislation today...

The Government will today publish legislation setting up the controversial National Asset Management Agency (Nama), the State’s new toxic assets agency.

The €90 billion “bad bank” scheme will use Government bonds to buy property loans at a discount from banks, which will then be able to cash the bonds with the European Central Bank.

The draft legislation will be published at 5pm today on the Department of Finance website, but the Government intends to amend it next month when it is debated by the Oireachtas.

The complex draft laws run to 150 pages and contains more than 200 sections.

Nama will operate under the aegis of the National Treasury Management Agency.

Banks will have one chance to appeal the price put on their loans by Nama to “a valuations panel”, which will advise the Minister of Finance Brian Lenihan, but the final decision will be his, the Department of Finance has said.

Officials expect that loans to the 50 largest property developers, worth some €30 billion, will be moved into the new agency by December.

Meanwhile, the department again made it clear that the State would buy controlling stakes in Irish banks if property asset losses wipe out their capital after the bad, or distressed loans have been taken off their books.

The decision to establish Nama was announced by the Minister in his budget statement of April 7th, “with a view to addressing in a comprehensive way the problem of impaired or potential impaired assets in the banking system”.

Speaking ahead of the publication of the legislation today, economic consultant Dr Peter Bacon, who is the architect of the bad bank plan, said he was confident about the contribution NAMA would make to the economy.

"We cannot go back to exchanging beans. A banking system, an efficient one that meets the needs of a growing economy is needed," said Dr Bacon on RTÉ's Morning Ireland .

"(Ireland) cant afford not to have an efficient, functioning banking system. If we went that course the result would be a stagnant economy into the long term future," he added.

The Irish Banking Federation (IBF), which represents all the major Irish banks, said NAMA was critical important in safeguarding financial institutions.

"All of the banks will co-operate with NAMA to whatever degree is necessary in order to make the project a success," said Pat Farrell, chief executive of IBF.


Report - Irish Times

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