August 13, 2009 / 9:29 AM / 11 years ago

Green Party wants debate on Irish "bad bank"

DUBLIN (Reuters) - Members of the Green Party, Ireland’s junior coalition partner, are calling for an internal debate on plans to create a “bad bank” in a potential hurdle for government efforts to clean up the country’s financial system.

Finance Minister Brian Lenihan will recall parliament on September 16 to debate legislation creating the National Asset Management Agency (NAMA) but some Green Party members want to thrash out the law’s implications before it gives its support to the bill.

Ireland is planning to take property loans with a nominal value of 90 billion euros off its banks to cleanse their balance sheets and restore the flow of credit to a recession-wracked economy.

“We need to explicitly understand what the party is committing to in committing to NAMA,” Tony McDermott, a party member and former Green councillor, told state broadcaster RTE on Thursday.

“What the Green Party grassroots are looking for is a debate before the legislation is supported or not supported by our parliamentary party.”

The Greens’ six members of parliament hold the balance of power in Ireland’s lower chamber after defections from the main government party, Fianna Fail, over harsh spending cuts in the face of recession.

But some grassroots members are unhappy about the party’s continued role in government after it suffered near annihilation in local and European elections in June amid widespread voter anger about the state of the former “Celtic Tiger” economy.

The Greens’ executive committee will call a special convention on NAMA if it receives requests from five constituency groups.

A spokeswoman for the party said it had received three valid requests so far. There were queries about a fourth.

If a party convention is held and two thirds of members vote against NAMA, parliamentary members would be blocked from supporting the legislation, throwing Lenihan’s plans and the future of the government into disarray.

The government, whose technical majority was wiped out following the defection of two parliamentary members earlier this month, faces a rocky autumn.

The public, already forced to swallow tax hikes and spending cuts, is unhappy about having to fork out tens of billions of euros to pay for the “bad bank” scheme.

Lenihan will reveal on September 16 what sort of writedown he will demand off the banks for taking on their loans. A view that the lenders and property developers are getting off lightly will make it more difficult for the government to push through another austerity budget in December.

The Greens, who have already warned that another round of fiscal pain could make their government partnership difficult, will hold a party convention later this year on their programme for government.

Reporting by Carmel Crimmins; Editing by Jon Loades-Carter

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