Call for legislation to be agreed quickly

REACTION:QUICK ACTION on the Nama legislation was urged by both employer and auctioneer groups yesterday.

Employers group Ibec said Nama would only be a success if it increased bank lending to viable businesses. It urged the Government to move quickly to repair the banking system.

Ibec director general Danny McCoy said it was essential that the Government and the banking sector worked together to fully restore credit to businesses.

Unless the flow of credit resumed, “the economy will stagnate and there will be no recovery”, Mr McCoy said.

Addressing bad loans in the banks was an “essential step” in restoring Ireland’s international reputation.

It would enable banks to source funds, the cost and availability of which would improve with the additional certainty Nama provides, he said.

The “transparency and robust oversight of Nama’s activities are vital to ensure that taxpayers’ interests are safeguarded,” he said.

The Irish Auctioneers and Valuers Institute (IAVI) said it hoped the Nama legislation could be agreed quickly to limit market distortion by Nama so that the market could move on.

The organisation also hoped that Nama would not become an “overpopulated quango”.

It expressed concern at the proposed 80 per cent windfall tax on developers which has been designed to prevent land speculation in the future.

This tax was a “headline grabbing, political manoeuvre to make the Nama legislation more palatable” but which would “depress market value” and “undermines the market”, IAVI president Áine Myler said.

If there was no incentive for development due to taxation, it would result in stagnation, she added. “We don’t need tax rates to drive down the cost of land, the market is doing this all by itself.”

The IAVI welcomed a number of the details announced yesterday including the 30 per cent discount on loans and the estimated value of these loans.

It said the 30 per cent writedown would allow the Government to “walk the fine line” that kept it from nationalising some of the banking sector.

It welcomed recognition of the difficulties in making valuations because the figures announced were estimates and each loan was to be considered on its own merit.

“There is a wide range of loans so it is impossible to determine the values without investigating their class and calibre,” Ms Myler said.

The organisation praised the use of “inflation-adjusted prices” rather than boom prices. It said that the Government’s estimate that assets would have to appreciate by 10 per cent over 10 years for Nama to break even was ”not an overstatement.”

By freeing up liquidity, it hoped Nama would allow people the freedom to “make purchases and stimulate the economy”.