Dublin - Irish Minister for Finance Brian Lenihan told parliament Wednesday that the government would pay 54 billion euros (79 billion dollars) to take toxic loans off the hands of Irish banks. Defended the government's proposal to set up a bad bank, the National Assets Management Agency (NAMA), the minister said it was the "radical surgery" required to fix the country's banking system.
In a heated debate the minister said the government's sole motive in setting up the agency was in the "best interests of the wider economy."
Amid attempts to disrupt and angry exchanges, Lenihan said that the loans to be bought by the proposed National Assets Management Agency (NAMA) had a book value of 77 billion and would be bought at a 30 per cent discount.
The minister also revealed that the market value of the properties underpinned by the loans was approximately 47 billion euros.
The government's sole objective was the common good, he said, which depended on restoring economic activity to the country. That, he said, depended on a healthy banking system.
He said that there were risk-sharing elements of the plan and that the interests of the taxpayer were being protected.
There was no "assumption in our work that peak property values would again be reached."
Lenihan said that, of the 77 billion, 24 billion came from Allied Irish Bank (AIB), 28 billion from Anglo Irish, 16 billon from Bank of Ireland, 1 billion from Educational Building Society and 8 billion from the Irish Nationwide.
The Fianna Fail/Green coalition government's plans to set up NAMA, aimed at managing mainly property-related bad debt, have been met with widespread public anger.
Protests continued all afternoon as members of trade unions, political parties and other groups organizing demonstrations gathered outside Leinster House, where the Irish parliament meets, to voice their opposition to the bill.
Activists from the United Alliance Against Cuts (UAAC) dressed as bankers in gold suits stood at the gates of Leinster House, bearing wads of fake cash and tricolour flags which read "Ireland for Sale."
UAAC spokesman Richard Boyd Barrett said the protests would continue until the NAMA scheme was abandoned.
"There's daylight robbery going on in the building behind us - the government takes billions of public money and pour it into these banks and developers," he said.
"We are going to be escalating our protests until this crazy NAMA plan is off the agenda and the responsibility is laid at the door of the people who put us in this crisis in the first place."
Eamon Gilmore, leader of the opposition Labour Party said people were opposed to the NAMA plan and were angry about what he called a "Fianna Fail legacy" of debt and unemployment.
The government was "making up the NAMA legislation as it goes along," he charged.
The markdown was a "big generalised estimate" and a gamble for which the taxpayer would end up paying the price.
Across the political spectrum, there is huge scepticism about the prices the government is paying for the property loans with many viewing the bailout of the bankers as the ultimate in cronyism.
Many feel that the taxpayer will pay the price as the bankers and property developers walk away unscathed.
Defending the plan, Lenihan said NAMA would need a rise in property prices of less than 10 per cent from current levels over 10 years to break even.
According to opposition Fine Gael's Enterprise Spokesman, Leo Varadkar, the minister "in his calculations was gambling on the fact that property prices had bottomed out."
Members of parliament came back early to start debating the NAMA legislation. The bill is expected to take at least a month to pass.
