MINISTER FOR Finance Brian Lenihan has told the Dáil he will consider Fine Gael proposals to ensure credit flow for businesses and individual borrowers through the impaired banks legislation, but he rejected the party’s amendment on the issue.

Fine Gael finance spokesman Richard Bruton dismissed the Minister’s comments. He said Mr Lenihan should be taking their proposals “with open arms as giving backbone to your negotiations” with the banks. But he believed the Government approach was like signing a contract first and then negotiating the terms later.

The Minister said he would bring the proposals to the negotiations he was having with the banks and would report back to the Dáil, but he was unable to disclose the state of those negotiations. He agreed there would have to be a mechanism to ensure credit restarted and whatever vehicle was used had to be “binding”.

On the first day of the five days of debate in the Dáil chamber on 250 amendments to the National Asset Management Agency (Nama) Bill, Mr Bruton had criticised the legislation for failing to contain any provision to ensure the banks started a flow of credit to borrowers. He said the Government’s draft business plan “has not addressed anything about the market. It’s all about assumptions that we can get our money back. That’s an extraordinary flaw.” Mr Bruton said he failed to see how the Minister “sees the central purpose of the Bill, namely to get credit going, being delivered”.

Mr Lenihan “is very much reliant on the hope that banks” who were constrained in their capital were seeking to slim down their loan book simply to survive and to keep independent of the State.

Mr Bruton questioned how the banks, “even with the provision of this money will start lending”.

He said: “A profound question that really needs to be addressed is will this successfully get credit flowing? Will it be a strategy that is fair, that is effective and at minimum cost to the taxpayer? I believe that the framing of the legislation that we have here fails to meet those fundamental requirements.”

Mr Bruton did not believe that “we have yet broken the cosy relationships that are established” and “you wonder the penny has dropped that now with the taxpayer supporting these institutions, as if on life support, that there is a recognition that everything must change”.

Labour finance spokeswoman Joan Burton said the legislation “will be very expensive”. The Minister has “proposed providing at least €7 billion extra above the cost of the distressed loans to the banks to improve their capital positions. As his business plan shows, he probably plans to spend a lot extra. I reckon he plans on spending from €10 billion to €12 billion.”

She also understood the Minister “is putting at least €1 billion into Irish Nationwide and possibly half that amount into the EBS as part of the late amendment he produced the day before yesterday to give him powers in the Bill to take a share in building societies”.

Mr Lenihan retorted that “that is nationalisation”, which the Labour Party was advocating.

Ms Burton also derided the “cowardice” of the Department of Finance, which “trembles” in the face of the bankers and developers, whom she described as “Irish oligarchs”. Ms Burton said that because of the department’s “cowering approach in the face of the big beasts of Irish finance, the regulatory role was lost sight of”.

Sinn Féin finance spokesman Arthur Morgan said the legislation would do nothing for low to middle-income families or those on welfare. “Really, those people feel as if they are being thrown overboard from the lifeboat to make room for the golden circle people the speculators the bankers and their cronies.” But Mr Lenihan rejected his comments as “completely wide of the mark” and said “the banking crisis is clearly entirely distinct from the crisis in the public finances”.