Minister for Finance Brian Lenihan has rejected arguments from a group of 46 economists and lecturers about the risks posed by the planned National Asset Management Agency.
He has also insisted that the Government collectively wanted to ensure the maximum protection for taxpayers when NAMA begins its work of buying up toxic loans from the banks.
Mr Lenihan was speaking at a news briefing after today's Cabinet meeting at which NAMA was the main item for discussion.
Today's open letter in The Irish Times from the group criticises three aspects of the NAMA plan: a perceived lack of transparency over the running of NAMA by the Oireachtas; questions over the duration and scope of NAMA described as 'opaque'; and the price NAMA will pay for the bad property loans held by the banks.
The group urged the Government to reconsider its approach to the planned agency, saying not to do so would be 'economic folly'.
They argue that alternatives to NAMA are possible and there are a number of other ways to lay the ground for a healthy banking system.
They say that in its current form, the agency commits the State to overpay for troubled bank assets.
The group says only the current market value for assets should be paid and not 'optimistic' higher values envisaged under NAMA.
This would leave the banks in need of more capital and they say that more of this should come from bondholders and shareholders of the banks.
Government advisor Dr Alan Ahearne disputes a number of the group's claims and criticised its argument that the banks troubled assets are now worth only €30bn.
He said the group's newspaper article is 'poorly drafted'.
'State will not overpay for toxic assets'
Meanwhile, Green Party Minister Eamon Ryan insisted that the State will not overpay for toxic assets when the National Asset Management Agency is established.
The Minister for Communications, Energy & Natural Resources said the Green Party is insisting on changes to the draft proposals.
'When the final proposals are published the first people to pay will be the speculators, developers and bankers that made the wrong calls on the property market,' he said.
Mr Ryan said land banks that were rezoned and bought for speculative purposes would be subject to massive discounts by NAMA.
'NAMA will not amount to a bailout for speculators, builders and bankers,' he stressed.
The minister said draft proposals for NAMA will be improved before a final Bill is published and this will provide greater protection for taxpayers.
The Green Party, he said, never believed in the speculative property bubble and was now listening to the public debate and the views of others about how NAMA can be improved.
Mr Ryan said he believed with changes to the draft proposals NAMA would be seen as the least risky and least costly approach for taxpayers.
