TAOISEACH BRIAN Cowen has rejected Fine Gael claims that the taxpayer could be exposed to an extra national debt of €70 billion if the Government proceeds with the establishment of the National Asset Management Agency (Nama).

Party leader Enda Kenny called on the Taoiseach to “stop and think” before going down the “very dangerous road” of establishing Nama, to buy banks’ bad or ‘toxic’ loans.

He urged the Taoiseach to invest in “clean banks with no toxic assets, which would be looked at by international markets and other financial agencies with a degree of trust and integrity without exposing the Irish taxpayer to a potential catastrophic and devastating economic future”.

But rejecting the Fine Gael proposal, Mr Cowen said “the whole purpose of transferring the banks’ impaired assets to Nama is to allow the banks to strengthen their balance sheets and to reduce the uncertainty regarding the level of bad debts held by the banks.”

He also said Mr Kenny “seemed to suggest that there was some way of dealing with the question of impaired assets without actually identifying them”.

He said the “recapitalisation has been given EU approval and the setting up of Nama is a similar model that has been undertaken in other parts of the world where there have been other banking crises in the past”.

The Fine Gael leader said that France did this in the mid 1990s when a “similar agency was set up to acquire €28 billion of toxic assets and (there was) €18 billion in lost capital as a consequence. On the basis of that in similar terms here, you’re talking about €33 billion of a loss in following the Nama project you seem to be intent on.”

He said that of the €90 billion estimate of all the bad bank loans, the cost to the taxpayer could be €70 billion “with very little to recover”.

But Mr Cowen said Mr Kenny “seemed to suggest that there was some way of dealing with the question of impaired assets without actually identifying them and putting them somewhere away from the present position”.

The Government was following the European Commission’s guidelines and “the valuation of the assets transferred to Nama will be certified by an independent expert and validated by the supervisory authority”.

The commission “will have an expert valuation panel involving the ECB to assess all member states’ valuation methods”, he said.