Shares in AIB and Bank of Ireland rose strongly in Dublin today as investors reacted to the NAMA plan, released yesterday.
More analysis and comment on NAMA here
More on today's Bank of Ireland's reaction
Speaking on RTÉ radio this morning, Finance Minister Brian Lenihan said the return on property in Dublin was now at an all time high because values had fallen so much. He said this was clear evidence that we were at the bottom of the cycle.
He admitted that the market was distressed, but defended paying €7 billion more than the loans are worth, saying NAMA would not be selling these loans at market value.
Yesterday, the Finance Minister said most of the loans will have been valued and transferred to NAMA by the middle of next year. He said that €54 billion is to be paid for loans with a book value of €77 billion, a discount of almost 30%.
Opposition parties have described NAMA as an enormous gamble that will mortgage the future of taxpayers for decades.
Meanwhile, the Taoiseach has been speaking in the Dáíl on the second day of the debate on the National Asset Management Agency Bill.
Brian Cowen said three things need to happen between now and Christmas: the passing of the Lisbon Treaty, the setting up of NAMA and the implementation of the Budget.
He said that if these three things were not achieved the country would suffer stagnation, isolation and a deterioration in the economic situation. The Taoiseach reiterated that 40% of the loans to be taken over by NAMA will be making money, and this cash would cover the day-to-day running of NAMA.
He also said that anyone with a bank loan purchased by NAMA would have to pay it back, just like any other loan.
But Fine Gael leader Enda Kenny told the Dáil that NAMA 'embraces the economics of the madhouse'. He asked why share prices in banks had risen significantly, suggesting NAMA was a great deal for the banks but not for the taxpayer.
Deputy Kenny told the Green Party TDs that if they voted with the Government in favour of NAMA, they will have become members of the privileged elite and lost touch with the people of Ireland.
He said NAMA was the highest-cost, highest-risk solution and was unfair to the taxpayer.
Labour leader Eamon Gilmore, told the House NAMA was the wrong vehicle. He said it would involve unnecessary costs and risks and would undermine competitiveness for years to come.
Deputy Gilmore also questioned the Government's assumption that the value of properties would increase by 10% over the next ten years. He said that figure was based on analysis of the rental sector, a sector which is not normal, because he said, commercial rents cannot be revised downward, so they present a warped picture.
He referred to a 'toxic triangle' of bankers, developers and government:and said the Government was reluctant to shake up the boards of banks.
Green Party leader John Gormley said his party had never been a friend of bankers and builders and had never taken a red cent from them. He said NAMA was the 'least worst' option for dealing with the crisis. Deputy Gormley said if the banks were allowed to collapse, it would hurt the ordinary citizen most. He also said he believed a 10% increase in property prices over the next ten years was possible.
Sinn Fein's Caoimhghin O'Caolain told the House that the banks should be nationalised. He said NAMA was flawed legislation.
See how the bank shares performed here
