Independent Senator Fiona O'Malley has criticised the provision in the NAMA legislation to allocate €2.5bn towards professional fees.

Senator O'Malley said the decision to 'fork out' this amount of money at a time when the government was looking to save €4bn was 'crazy'.

She said it was little wonder professionals were rushing to give support to NAMA.

Earlier, a Fianna Fáil Senator has called on the Minister for Finance to introduce legislation to deal with a potential upsurge in mortgage defaulters.

Contributing to the Seanad NAMA debate, Senator Larry Butler said there were many ways to ensure the banks adopt a 'social conscience' and prevent a second NAMA made up of the properties of over 35,000 homeowners, which he said would be catastrophic.

Senator Butler suggested a further moratorium on payments or a situation where troubled mortgage holders could rent their houses from the banks.

Minister for Finance Brian Lenihan has repeated on several occasions that he will not legislate to protect potential mortgage defaulters.

Contributing to the debate on a Labour Party Private Members Motion on the issue last week, Mr Lenihan said the problem had been blown out of proportion and rejected assertions that there would be an upsurge of repossessions by the banks once NAMA was up and running.

Fine Gael Senator Eugene Reagan today has raised questions about the surtax which the government is substituting for a levy on the banks to ensure burden sharing.

Senator Reagan asked if the Government had got approval from the European Commission for that tax. He said he believed it was inconsistent with our single corporation rate.

Senator Reagan also raised questions about whether support for Anglo Irish Bank constituted a breach of EU state aid rules. He said enterprises which were not viable were not granted state aid.