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Dáil Éireann debate -
Thursday, 1 Apr 2010

Vol. 706 No. 2

Banking System: Statements.

I am pleased to have the opportunity to address the House this morning on the final phase measures that the Government is taking to restore stability and certainty to Ireland's banking system. The banking measures announced by the Minister for Finance on Tuesday are the last in a series of successful measures taken to stabilise the banks, to protect the interests of the taxpayer and depositors and to put the economy in a position to benefit from the global economic recovery that is getting under way.

The decisive measures taken by the Government over the past 18 months mean that our international reputation is credible. Our efforts to restore stability have been positively received throughout Europe and around the world and we are now in a position to return to sustainable economic growth. With these latest initiatives, the Government has tackled the problems presented by the banking crisis head on. These measures will ensure that our banking system plays an important role in Ireland's recovery. There is no doubt that many of the decisions taken have been unpleasant, and are unpopular, but they will put us in a position to enjoy long-term stability.

In the Dáil on Tuesday night, the Minister for Finance, Deputy Brian Lenihan, stated that the initiatives he had announced provided a solid basis for fostering confidence in the future of our financial system. Despite the predictable negative response from the usual quarters, the wider international reaction has shown that the Minister was correct. In the international media, even the Financial Times, an organ that is never slow to criticise the policies of governments, has been most positive and commented that Ireland is managing the downturn well and beginning to claw back competitiveness. It went on to comment:

Taken together, and with the right policy tweaks, this could offer Ireland a route back to the authentically tigerish 1990s rather than the long recession of the 1980s.

Reports from our embassies also indicate positive international reactions. For example, in Germany there is praise that the Government is tackling the problems head on, and media articles note that the financial markets have responded positively and point to the reduced costs of Irish Government bonds compared to equivalent Greek bonds.

In the Seanad yesterday, Senator Fiona O'Malley correctly referred to the problems that negative domestic publicity can create with regard to attracting — and, indeed, retaining — foreign direct investment. Therefore, positive, independent, international reactions to our banking and economic policies are particularly welcome in this context. With regard to sovereign borrowing, the fact is that our spreads have been falling in response to positive views concerning our progress in grappling with our wide ranging problems. The international reaction to our policy mix is, therefore, positive but that is a message not a target. The key target is to deal with our domestic problems in such a way as to provide the most secure future for or people. We are all rightly concerned about the burden of the banks' recapitalisation on our citizens, but pretending that there are easier solutions does not ease the burden. The Minister's statement on banking represents a clear recognition of the problems that exist and it shows that this Government is determined to tackle the problems head on in order to ensure we get out of this crisis as quickly as possible.

I now want to deal specifically with NAMA. The House is aware that the first loans have transferred to the agency. NAMA must ensure the best possible return for the taxpayer and this is why it has taken such a careful approach to the valuation of the loans. The first tranche represents approximately 20% of the total amount to be transferred and comes from the ten largest borrowers. The banks will incur heavy losses on the loans which NAMA will acquire from them. This is as it should be and it is clear that NAMA is no bail out for the banks, nor indeed for the developers, who are still required to pay back their loans in full. The crystallisation of the loans has made the future of each of the institutions clearer and has forced them to deal with the resultant losses now.

The recapitalisation implications of these losses for each institution have been dealt with in detail over the past few days and I do not wish to restate them now. There is no doubt that recapitalisation requires substantial investment by the State in the banks, although payments will be structured in a way that eases the burden on taxpayers. These actions are being taken for a good reason, so that the banking system may return to its rightful role as provider of credit to the real economy. No other course of action would result in a swift return by the banking sector to its function as a provider of finance. By forcing the banks to recognise their losses upfront, we can rid the system of these speculative loans and end the mismanagement of the banking system.

The suggestion remains that the nationalisation option would have been less costly. The argument seems to be that if only we nationalised AIB and Bank of Ireland it would have eliminated the valuation risk around NAMA, and as a result there would have been no need for the concept of long-term economic value. As the Minister announced on Tuesday, if the Government had opted to do this, the losses crystallised at the two main banks would still have had to be fully recognised, and real capital would still have been required. As the full owner of these institutions, the State would have had to cover the totality of this enlarged capital requirement, with no prospect of new private sector funds contributing. All in all, I firmly believe that the option chosen by the Government is the most beneficial to the taxpayer.

The subject of benefits leads me to the proposals for credit and lending. Recapitalisation of the banks is not for the benefit of the banks but rather for the benefit of the Irish economy. The primary function of the banking system must be providing credit to the real economy. Well-capitalised banks are in a much better position to lend. In this regard, the lending targets outlined by the Minister for lending to small and medium enterprises this year and next will play their part. Furthermore, the banks will be required to realign their business practices with the needs of the modern Irish economy. Properly targeted lending to SMEs provides growth and employment. The Minister stressed on Tuesday that working capital for businesses is essential. Entrepreneurs must be facilitated and given the scope to expand and develop. The target set, of €3 billion each in new lending in 2010 and 2011 from Bank of Ireland and AIB will see this objective met. To ensure the proper management of these funds the two banks will be required to submit SME lending plans both by geography and sector for 2010 and 2011.

In addition to this and in recognition of the essential role played by small and medium enterprises in our economy, today marks the launch of the credit review office, which will provide a simple, effective review process for SMEs, including sole traders and agricultural enterprises, who have had requests for credit refused or reduced, or indeed who have had credit withdrawn. The outcome for the review process for the borrower will be an independent and impartial opinion on the credit decision. Banks will be required to comply with recommendations from the credit review office or to explain why they will not do so. Mr. John Trethowan will head the office, with administrative assistance from Enterprise Ireland. Mr. Trethowan will also be reviewing bank lending policies and the banks' SME lending plans as part of his remit. If the Minister deems that further action is required on the part of the banks, he and the Government will not be slow to act.

There is no question but that there are large costs to resolving Ireland's banking crisis. However, Ireland enjoys the confidence of the international markets because of the determined and successful steps the Government has taken to place our public finances and our banking sector on a more sustainable footing. It is clear that facing up to the problems presented by the severe downturn in our fiscal position has paid off. The actions announced on Tuesday will have the same affect on our financial sector by compelling the banks to face up to their difficulties too. The banks have been forced to recognise their losses and this Government, on behalf of the taxpayer, has committed the capital that will ensure we have a banking system to serve this economy as it recovers.

The closely co-ordinated approach to the policy initiatives on banking is a clear indication of the determination of the Government and of all the State agencies concerned to work in a co-ordinated manner to secure the future of the financial system and to build for the future. It has drawn a line under the inadequate oversight of the past and is a clear indication that only the highest standards will be tolerated in our financial services sector into the future. At the risk of repeating what the Taoiseach and the Minister have already said, the certainty provided by these latest announcements will further boost international confidence in this country and they will smooth Ireland's path to economic recovery.

The first words of the Minister's statement, 1 April, are perhaps the most telling because it is something of an April fool's trick to give a speech on the banking crisis and never make a reference to Anglo Irish Bank, particularly the day after the EU said an in-depth study will have to be conducted into the Government's strategy on Anglo Irish Bank and the day after Anglo Irish Bank revealed the biggest losses ever sustained by a company in Ireland. That the Minister could present what is supposed to be an update on the banking situation and make no reference to Anglo Irish Bank is mind blowing.

There are very severe consequences of what we are learning each day about Anglo Irish Bank and they must be addressed in an honest way instead of being ignored in this fashion. The truth is that when the Government adopted the policy of treating Anglo Irish Bank as a going concern, the estimated cost was to be €4 billion in recapitalisation. The Government said this strategy was justified. Last week we were told another €6 billion to €9 billion might have to go into the bank. Then we discovered that amount has increased to €18 billion and yesterday we discovered that even the cumulative figure of €22 billion that will have gone into the bank might not be the bottom. There might still be a bigger hole. At what point does the penny drop that perhaps the Minister might have to consider other options than regarding Anglo Irish Bank as a going concern? That is the important question everybody is asking. Where is the scrutiny of the evidence about the different alternatives? The Minister quoted the directors of Anglo Irish Bank as the source of evidence about this, but overnight they have rewritten their estimates of the costs of all the options. Every day these options are becoming more expensive. The Government must get a handle on that and deliver some real evidence.

I welcome the comments about SME lending plans for AIB and Bank of Ireland. However, let us not forget that 70% of the recapitalisation money, which was supposed to be the silver bullet to get bank lending going again, is going into Anglo Irish Bank for which there is no SME lending plan. It will not lend a red cent other than to those it is already supporting and to whom it has recklessly lent money. What are the implications for the Minister's strategy of the EU deciding it will not accept the Anglo Irish Bank restructuring plan? It is now demanding that a fresh plan be resubmitted. It has effectively turned down the Minister's plan and is considering the closure option, but the Minister was not willing even to mention that.

We must get to grips with the scale of the challenges. The Minister made selective reference to what is happening and picked out some matters that appear to be good. Yes, the spreads have not increased overnight. They are still at 1.44% over the German rate. However, that is double the Spanish spreads, another country that is going through a property difficulty and having to unwind. We have double the spreads of Spain, so we are not in a robust position on spreads. The question that must be asked has been posed by Professor Lucey in today's newspapers. As he describes it, what NAMA is undertaking is the virus of funding short to buy long. The very tactic that brought down Lehmans is still rampant in NAMA. The Minister is proposing to borrow six month money on a rolling basis to fund NAMA. Where is the calculation of what the long-term funding cost of NAMA will be? That is something we must confront. There was a draft business plan from NAMA but it was a shambles. It was founded on assumptions into which nobody could buy. It was not just the Opposition that did not buy into it, nobody outside the House bought into the notion that 80% of these loans would be fully repaid or the projected cost of funds. If we are to advance this debate and get to grips with what is involved, we must address those issues.

It is interesting that the Minister quoted the Financial Times as if it had endorsed the strategy the Government has adopted. I have a copy of the Financial Times editorial yesterday which discussed the bank strategy. It said that such a risk is only worth taking if the cost to taxpayers has been minimised and the assistance provided genuinely draws a line under the banks’ losses. Unfortunately, it stated, in this case neither of these conditions has been clearly met, and the Government might have done more. It goes on to state that the resulting losses will not be shared beyond the equity holders. The Financial Times is saying precisely what Members on this side of the House and many others are saying, that the Government has fallen short. It expects the taxpayer to bear the entire load of this adjustment. It is pretending the taxpayer has a responsibility to people who drove the lending in Anglo Irish Bank. The debts run up by Seán FitzPatrick are not taxpayers’ debts and we do not have an obligation to pretend that they are.

We must look cold-heartedly at the options. More and more people need to question this. What we have heard from Government is predominantly about fear of what might happen, such as the sky might fall in to bondholders who might never lend to us again. That is not analysis and it is not enough. As the cost of propping up Anglo Irish Bank has gone from €4 billion to €22 billion, surely there is a point where the balance of cost to benefit begins to tip over. Let us see the Government's analysis of where it begins to tip over.

We are continually seeing special spinning of the Government's view on this, not honest appraisal of where we are. I am disappointed the Minister has not added anything to the debate because we are in a very difficult time.

An issue also arises regarding the approach to Allied Irish Banks, which, as I understand it, is being given substantial time to ascertain whether it can come up with solutions to this. I see this as a prescription for Allied Irish Banks freezing lending for the remaining part of the year because it will be struggling to find how it can preserve its independence from the Government. Has the Government considered the option of taking a more direct approach and moving in, converting its preference shares and managing that process of generating capital so we would protect the taxpayer in that situation? If the Government has considered this option, what determination has it made on it? Allied Irish Banks has been viewing its problems through rose-tinted glasses for too long and the risk is that it will be Irish business and the prospects of Irish recovery that will suffer as it takes this rose-tinted view of its future.

On every front, the Minister has not addressed this issue. We need to see much more honest answers as to what are the options that face us. This is what I hope we will see as the debate moves to a questions and answers session.

In budget 2010, the Government announced it had approved a capital spending envelope of €39 billion for the seven-year period from 2010 to 2016. With some justification ever since, Ministers have taken shelter behind that commitment when criticised for not coming forward with stimulus measures to arrest unemployment and get new jobs going. That €39 billion is the same figure the Minister for Finance committed to Anglo Irish Bank on Tuesday, which gives some idea of the enormity of the decision taken — State support for a failed private bank is the equivalent of the capital programme for seven years.

The Minister for Finance told the Dáil on Tuesday:

The detailed information that has emerged from the banks in the course of the NAMA process is truly shocking. At every hand's turn our worst fears have been surpassed. Some institutions were worse than others but our banking system, to a greater or lesser extent, engaged in reckless property development lending. In far too many cases there were also shoddy banking practices. The banks played fast and loose with the economic interests of this country.

In that, the Minister spoke for everyone in this House. Imagine the shock and demoralisation outside of the House, where taxpayers and citizens are struggling to understand how the position in our banks could be even worse than they had imagined.

Let us not fool ourselves. What has been forced through this House by the Government on Tuesday ultimately rebounds to the Exchequer and dramatically increases the sovereign debt being imposed on this and future generations. Let us not fool ourselves about promissory notes, European Central Banks IOUs, special purpose vehicles and off-balance sheet accounting. I understand why the Government does not want this disaster reflected in the national accounts. However, there is no escaping the reality — the bank rescue will impose a huge debt burden on the shoulders of every taxpayer in the land and will virtually double the national debt.

Already, we are seeing how this bailout is feeding through into the industrial relations arena. The Government's rescue package for the banks has pledged more than three times the annual tax revenues of the country. Of this amount, ordinary people cannot understand why the Government would want to commit almost €40 billion to the Casino Royale on St. Stephen's Green. The Government is not only constraining its own capacity to govern this country in anything approaching a fair way, but is constraining the capacity of future Governments to do so.

The figures for Anglo Irish Bank are so enormous and debilitating for our economy and for the morale of our people that we can no long rely on assertion in this House as the basis for decision-making. Neither the Government nor the banks have told us the truth to date. The bankers lied to the Joint Committee on Finance and the Public Service. They told us that the Irish banks were sound, adequately capitalised, professionally managed and did not have a sub-prime mortgage problem. Since then, they have refused to admit the truth, even to themselves. The chief executive of the country's largest bank, in a memorable phrase, said that he would rather die than accept State equity. The State is now the financier of last resort for the country's largest bank, which behaved with a recklessness that is breathtaking.

The Government took a similar drip-drip approach to revealing the truth. Although I am surprised it has not been adduced in this House, we should remember what the Taoiseach, Deputy Brian Cowen, said to Deputy Gilmore on the morning after the fateful decision of September 29:

The Irish banking sector has very well secured loans... It is important to make the point that in the event of any further call, it is my intention to ensure the Irish taxpayer will not be held liable in any way for any deficit that might occur in the event of there being a problem in the future. I intend that the sector will have to discharge any liability that may arise.

That was the Taoiseach on 30 September 2008. How far we have come since then.

Ever since that statement, the Government has been mending its hand. It never admitted the scale of the disaster until Tuesday of this week, 18 months after the guarantee, and has, time after time, made claims that simply do not stand up. Where now are the cross-collateralised loans we were reassured about? It would appear that, in the case of the Irish banks, cross-collateralisation means that the loans were secured on both a wing and a prayer.

The most serious of those claims has been the assertion that Government measures would get credit flowing again. That has not happened, with worsening consequences for jobs and the real economy. It is for this reason the Labour Party published its proposals for the establishment of a strategic investment bank. Instead, it appears we are now irrevocably committed to investing unimaginable amounts of State funds that we do not have in the Casino Royale on St. Stephen's Green.

My point is that we cannot rely on mere assertions to justify the enormity of the decision forced through by the Government. The alternative Minister for finance, Deputy Eamon Ryan, has even gone so far as to make a fool of himself, and try to make a fool of the rest of us, by suggesting that to take any alternative view on Anglo Irish Bank was, in effect, to take a decision to leave the euro. That kind of assertion is no longer adequate to justify the decision that this House made at the behest of Government.

These assertions have proved baseless in the past. To assert now that it will cost more to wind down Anglo Irish Bank than to keep it on a life support machine is no longer acceptable. We need to see the evidence. It is not enough to roll out Mr. Alan Dukes who, unsurprisingly, sounds more like a politician than a banker. For all the praise heaped on him in recent days by Fianna Fáil spokespersons, he sounds less than convincing. His figures keep changing and the role envisaged for Anglo Irish Bank in the future configuration of Irish banking, seems fanciful in the extreme. We need to see the evidence on which the Government and the chairman-designate of Anglo Irish Bank are basing their assertions. We need to see the reports prepared by independent consultants. We need to see the assumptions made in these reports. We need to know the identities of the bond holders and the implications of having to negotiate with them. We need to know who is behind the outstanding €2 billion in subordinated debt.

It is not acceptable for the Government to come into this House and say that any alternative to the road the Government has taken is unacceptable. The only evidence produced is the assertion by the speaker at the time or by the chairman-designate of Anglo Irish Bank. I accept entirely that to talk about the orderly wind-down of a bank is not the same as talking about closing a restaurant. I accept entirely there are serious risks in funding, and serious risks to do with outstanding derivative contracts, and question marks about realising the assets. All these questions arise. However, we need to see the detail of the argument that is being advanced by the Government to suggest that we should make a commitment to this failed, non-trading bank that is the equivalent of seven years of the capital programme. This is seven years of the capital programme committed to a failed bank. Does anybody on the Government side seriously believe that this bank is going to be resurrected in some form so that it will have some niche market in the new world of Irish banking?

The onus of proof is on the Government. I know we cannot do it in a hurry but the figures revealed on Tuesday are so enormous that it is no longer unthinkable that we have to examine that possibility. What argument is there that every bank, whatever the circumstances, must be kept alive? That is what the Government is doing in the case of the Irish Nationwide Building Society, a building society that was supposed to pledging mortgages and which in fact has 80% of its loan book devoted to commercial property. The Government's plan is to close it down and that is a correct plan. Therefore, why is it unthinkable that we should have a serious examination in this House about whether Anglo Irish Bank should be allowed continue? How can we continue to throw money into it like one would into a furnace? How can one expect trade unionists, whose low-paid members have been taking serious wage cuts, to merely accept, on the assertion of the Minister for Finance, that we have to continue to throw money into this bank?

We have to see the reports. The chairman-designate of Anglo Irish Bank has to accept that it is now a semi-state company and that we are entitled to see what is the corporate strategy. We are entitled to see what these reports contain and on what assumptions they were compiled. This is the biggest decision that this House has ever made and it is not good enough to expect us to rubber-stamp it on the basis of assertion and without production of the detailed evidence.

The Irish people are sick of the myths and mistruths about the economy and especially about the banks, being peddled by this Fianna Fáil-Green Government to suit its own political agenda. This morning, I was speaking to a customer who had just received a letter from Bank of Ireland. Her home insurance premium is about to increase by more than 50%. Despite never making any claim on the policy, her premium is going up from €375 to €577 per annum. On top of that, the excess on the policy is being increased from €152 to €350 and even €600 for many circumstances covered. This must be an April fool joke. Bank of Ireland has been instructed to raise some of its own capital but gouging and screwing ordinary customers who are already bailing out this bank via their pay cheques, is not the way to do it. This is happening in a situation where property values have dropped significantly and therefore, the cost of replacement or repair in the event of claims, has also decreased. Is it any wonder that the Minister in his speech on Tuesday singled out Bank of Ireland as the most profitable of the banks. He stated it has "a strong future" and that recapitalising Bank of Ireland will, "support our economic recovery". I suggest the Government tells that to the customers who are trying to recover this morning from the shock of the arbitrary increases placed on their home insurance premia.

The consumer price index notes an increase in insurance premia of 13% over the year. Why is Bank of Ireland, in which the taxpayer has been forced to take a growing share, hiking its premia by over 50%? In return for their massive subsidies, what control have the taxpayers been given over the banks to stop this kind of robbery? The answer is, nothing, thanks again to the incredible incompetence of this Government. We have been told repeatedly that it would be more expensive to wind down the zombie Anglo Irish Bank than to pursue this current course. Leaving aside the fact we are, in all likelihood, witnessing a protracted wind-down, where is the cost-benefit analysis that shows this is indeed the more cost-effective option? So far, €4 billion has gone into the bank, another €8.3 billion is needed immediately and then another €10 billion. What happens then? Where does the splurge on Anglo Irish Bank end? It is clearly insolvent, owing approximately €2 billion in subordinated debt. AIB is being described as a dead bank walking by several economists. Rather than declaring both of these banks insolvent, the Government is doing everything possible to protect bond holders who provided equity at their own risk. That is the nature of their business. Allowing them to take a hit on their risk would not entail the end of Ireland as we know it. Throwing €80 billion into a black hole while inflicting it as debt on the Irish people, will devastate this State's economy. The Minister argues that he has moved as fast as he could on this issue and needed to put relevant pieces in place. However, as financial newspapers have pointed out, our banking system is one of the last to be recapitalised and we are recapitalising zombie banks. As the Central Bank report showed yesterday, the rate of lending fell again in February. These banks have paralysed the economy for more than 18 months while the Government has stood by and watched.

The figures being discussed by the Department of Finance regarding the amount the State will spend on recapping are misleading. For example, of the €7.4 billion need by AIB that we know of — at least for now — the Government hopes money can be raised from the sale of AIB's foreign subsidiaries. This is nonsense. Sale of a subsidiary considered an asset turns the asset into cash; it does not increase the bank's assets, particularly if that subsidiary goes for less than its value. The bank might shrink, making its relative capital requirement smaller as a percentage. It is not a magic solution, nothing of the kind.

There is also the myth that the Government is hard-balling the banks and their management. Hard-balling baloney. The annual accounts of Anglo Irish Bank released yesterday show that last year the bank made the largest corporate loss in Irish history. Most of this loss was incurred from the writing-down of loans. Most of this loss was incurred from the writing down of loans, among which were loans worth €85 million to its former chairman Seán Fitzpatrick. The bank expects it will never see €68 million of Mr. Fitzpatrick's loans. The figure for former chief executive David Drumm was just over €8.3 million, with the bank setting aside €6.7 million for possible non-repayment. Most of this is linked to a loan given to Mr. Drumm to buy shares in the bank. William McAteer, former finance director, owes the bank €8.5 million, of which more than €7.6 million is not expected to be repaid. This money also relates to a loan given to buy shares in the bank. The figures show that almost €13.9 million was jointly lent to Mr. FitzPatrick and former director Lar Bradshaw to facilitate an investment in oil exploration. The bank has set aside €11 million to account for possible non-repayment of this money. Some €3.1 million was also lent to Mr. FitzPatrick to fund a hotel investment. Provision has been made for the possible non-repayment of almost €22 million of the €27.3 million in loans to Mr. Bradshaw.

The Government is writing down these loans via NAMA and recapitalising the bank. Where are these men who benefited from the loans? Seán Fitzpatrick spent 24 hours in a police station in Bray. Is that the going time for someone who has effectively stolen €65 million from the State?

The Minister has a lot of questions to answer. For example, how much money in hard cash will be added to the budget sheet this December as a result of draw-downs on the recapitalisation promissory notes in 2010? I ask this because the Minister will start preparing us for this budget in September with his usual salvos of tough times and belt tightening. When he is making his sounds about further cuts to social welfare and nurses' and teachers' wages or hospital wards being closed because he has promised the EU to take another few billion euro off the deficit this year, how much will be added to the deficit for the banks? Will it be €1 billion or €3 billion? The public deserve to know how much pain they will be asked to take while this Government, supported by the EU, spends Irish taxpayers' money on the likes of Anglo Irish Bank.

The Minister also needs to answer the question being asked by several economists regarding the discount on NAMA loans. We know the first tranche is being discounted at 47% but that only applies to €16 billion of the €81 billion to be transferred. What discount will be applied across the board? It will hardly be 47% on average across the rest of the loans because surely that would require higher recapitalisation in certain banks. How certain can we be that the sums being done on AIB's sheets completely and adequately reflect the write down of their bad loans?

The Minister will know that people are holding their breath to see if the shocking figure of €80 billion announced yesterday is the final amount to be put into the banks. I fear that will not be the case, however, because it does not allow for further falls in property prices or defaults. AIB's interest rate hike represents the beginning of the squeeze on residential and business loan holders. The sad reality is that the Government's refusal to nationalise in order to put everything on the table for once and for all is dragging out the problem and potentially hurting this economy beyond repair. This Government is riding headless into the morass.

I welcome the opportunity to speak on this issue. We have heard a lot of comments on Anglo Irish Bank and the actions of its bankers are regretted by everybody on this side of the House, despite the accusations that were thrown around the Chamber yesterday. The Minister for Finance spoke on behalf of everyone on the Fianna Fáil benches when he alluded to reckless banking practices. Nobody condones in any way the actions of those reckless bankers.

The investigations to which Deputy Ó Caoláin referred are being conducted by the Garda rather the Government, which is as it should be. I welcome the recent arrests and, like everyone else in this House and the general public, look forward to court actions.

Repayment will be sought on 100% of the value of the loans that NAMA takes over. Those who suggest otherwise are indulging in idle talk. Every developer and builder who owes money to the banks will be chased down for the full value of their debts.

The independent inquiry into the Central Bank, financial regulation and other issues in the banking sector is important because we need to know how and why the failings occurred. It is untrue to suggest that Members on this side of the House have no regard for the investigation.

The biggest issue we face is finding money to resolve the cash crisis that confronts businesses. I welcome the Government's provision of €6 billion to the two main banks over the next two years. It is important that we get cash flowing once again. Criticisms of past decisions will do nothing to achieve that end, however. The independent credit review process, which was launched this morning, is also important because people need the opportunity of having their cases reconsidered where their credit applications are not successful.

All the main institutions, including the EU, the ECB, the IMF and the OECD, have stated that the Government's plans are the correct ones. Recently, the French Prime Minister stated that the Irish Government was showing the way forward for Europe. Those who criticise us are not offering alternative solutions. What solutions do Fine Gael and the Labour Party propose? Once again, they say we should renege on our debt and thereby damage our international reputation. They would sell down the Swanee the people who have €80 billion on deposit in Anglo Irish Bank. Have they any regard for the small people who have money in credit unions and pension funds or the small business person and private citizen who invested their money in that bank? Are they suggesting we should throw them to the wolves and say "sorry lads, you made a bad decision by banking with the wrong corporation". I do not think so.

Greek politicians initially proposed reneging on their country's debt but recent experience has caused them to change their minds and go to Europe, as we did, for help in finding solutions to their problems. No country in Europe has reneged on its debt. I would draw a comparison to our nearest neighbours in the UK, which has pumped £850 billion into its banking system to stop banks failing and take over majority shareholding. The Labour Party Government in the UK has not gone down the road of nationalisation which would be the natural inclination of Deputies Burton, Rabbitte and Ó Caoláin. The Deputies should ask themselves why the British Government, a Labour Party Government, has not gone down the road of nationalisation. Instead, it has pumped in £850 billion sterling. Has anyone in the House of Commons from the Conservative or Liberal Democrat parties or the backbenches of the Labour Party questioned it? The answer is "No" because they realise it is necessary and vital for the UK economy and a functioning banking system.

That is a complete fantasy.

Deputy Burton should have manners, please.

If Deputy Burton wishes, I have chapter and verse in terms of the amounts of money the institutions received and it adds up to £850 billion sterling.

The Deputy should audition for comedy hour.

The Deputy should have some respect for the House.

I remind those in Fine Gael and the Labour Party of the banking crisis in 1984. An insurance corporation got itself into trouble and AIB was the major shareholder. The Labour Government came in overnight and bailed out the company, which was the correct thing to do. People on this side of the House agreed with the strategy because one could not have a bank failure even though there were reckless decisions made by insurance underwriters that involved underwriting risks on bush fires in Australia and so on. That is a fact. I remind Deputy Rabbitte that the current Labour Party MEP, Mr. De Rossa, asked numerous Dáil questions and the figure amounted to £450 million which is of the order of €600 million or in today's money probably €1 billion. That was the cost of the bailout for the AIB insurance corporation fiasco in the 1980s. The Labour Party Government took the correct decision in terms of not allowing a bank failure because our reputational interests were at stake.

We borrowed €24 billion last year from foreign bankers. Anyone with an iota of business acumen or a business brain is aware one does not allow one's reputation to be tarnished with a failure of non-payment of debt. If one reneges on a car mortgage, it is a black mark on one's record forever. Deputies can ask any small business person who has ever had the misfortune to have not paid a debt——

The Deputy should ask Seán FitzPatrick. He has reneged on €150 million.

The Deputy should allow Deputy Kennedy to continue.

It is on one's record forever.

On a point of information, has Seán FitzPatrick informed the Deputy how he received a write-down of €100 million? He must have talked to Fianna Fáil about that.

Deputy Burton had her chance to speak yesterday.

This is typical of the Labour Party. They shout one down because they do not wish to listen to the truth or the facts. Let the Labour Party put forward its alternative and explain what it would do because all it is good for is simply throwing out innuendo.

We would cut out the corruption. That is what we would do.

Deputy Burton, please.

No one on this side of the House stands over anything. We all wish to see corruption rooted out.

We would cut out the Deputy's corruption.

We all wish to see the investigation.

That would be a start.

Deputy Burton, please.

I was trying to make the point that no one in Fianna Fáil agrees with corruption. Every one in Fianna Fáil wants to see the report into how regulation failed and how our banks failed us. I welcome that report and look forward to seeing it at the earliest opportunity.

The new Governor of the Central Bank, Professor Honohan, and the new Financial Regulator, Mr. Elderfield, are independent and came in after all these problems. They have effectively stated that what the Government is doing is correct because they realise there is no other option.

They have said nothing of the kind.

Professor Honohan raised queries about NAMA in the initial stages. Now people on the other side of the House maintain NAMA is not correct because it has taken 50% deductions. When NAMA was introduced, the big problem what that it would do a fudge job. The reality is that NAMA has examined every individual loan and every bank and has brought forward the percentage deductions as it deems appropriate. The Government has taken action to give us functioning banks and enough money. I refer to the €6 billion that has been offered to AIB and Bank of Ireland to allow small, medium and large businesses and private citizens to access credit to carry out their business functions and the normal functions of buying a car or whatever they wish to purchase. I believe the Government has the correct strategy for the future.

Deputy Rabbitte remarked that this is one of the most defining days for the public in terms of the level of funding the ordinary taxpayer is being asked to put into various institutions, in particular, Anglo Irish Bank and Irish Nationwide Building Society, which are effectively defunct institutions. People are entitled to ask questions. The public has a great degree of common sense. A person running a household or who is in business and who is watching the debate may ask how has it arisen that the Government, on behalf of the taxpayer, is putting €22 billion into Anglo Irish Bank and €2.7 billion into Irish Nationwide Building Society, which will result in no return to the taxpayer.

Furthermore, other options have not been considered. Deputy Kennedy made reference to the fact that Fianna Fáil wishes to stamp out corruption and to deal effectively with the banking system. If this is his belief, then let the Government publish the advice and calculations done by Anglo Irish Bank and the advice received by the Government on the recapitalisation of Anglo Irish Bank to the tune of a further €18 billion. The Government should publish the advice and evidence given to the Taoiseach and the Minister for Finance on 29 September 2008 when the guarantee scheme was put in place.

I would have expected the Green Party, which put itself forward as the guardian of moral hazard for many years, to seek such publication. However, all we have seen in recent days is one Green Party representative after another coming out to defend the indefensible. I suggest the Green Party has paid a very high price for a second Minister of State position. It has come out and defended placing money into Anglo Irish Bank and Irish Nationwide and has been scare-mongering about leaving the eurozone. It has done exactly what Fianna Fáil has been doing but, at times, it has done so better. Shame on the Green Party. We need a proper debate because the people are entitled to know that all the options were viewed, in particular in respect of Anglo Irish Bank and Irish Nationwide. One could go through the institutions involved because we are here to make statements on banking. I refer to the recapitalisation of the banks and NAMA. Anglo Irish Bank has received €22 billion in total, made up of €18 billion by way of promissory notes.

The European Commission stated as late as yesterday that it is conducting an in-depth investigation into the funds put in by the Government on behalf of the taxpayer to date. It has concerns in terms of the distortion of the competition represented by Anglo Irish Bank. Since the Government nationalised Anglo Irish Bank, the bank is paying interest at rates higher than other banks and it is putting other banks under pressure apart from the banks getting into this mess in the first place. They must increase deposit rates which follows an increase in mortgage rates to already hard-pressed mortgage holders. Anglo Irish Bank is a zombie bank, it is defunct and will never lend a red cent. As the Minister of State, Deputy White, is well aware €22 billion represents the combination of the health and education budgets combined each year. The Green Party extolled the virtues of the education budget, in particular. Now it is putting that at risk by supporting the Government in borrowing between €6 billion and €8 billion a year, being the requirement for the recapitalisation of the banks and for NAMA.

Irish Nationwide Building Society was set up to provide residential mortgages. In recent years it effectively ended up entering the commercial market. The Government is taking the bulk — €2.7 billion is being recapitalised — of its loan book to NAMA with no sign of a return.

AIB must raise €7.4 billion. For how much in further funds will the Government be going back to the taxpayer to cover the amount that it must put into AIB? We received many reports from the Minister for Finance that he would play hard ball with AIB, yet he has given it time to come up with a plan and to sell assets. Ultimately, for how much will the taxpayer be caught on the hoof for AIB?

Bank of Ireland falls into a different category, needing to raise €2.7 billion. Already, €3.5 billion has gone into the bank.

Then we come to NAMA. The Minister spoke of the haircut of 47%. Only 20% of the assets of the banks are gone into NAMA in the first tranche. How much will be the haircut for further recapitalisation? The question that must be asked here is, does the Government know what it is doing and is it in the best interests of the taxpayer? We have had no proper debate.

On the issue of the flow of credit, Mr. John Trethowan has been set up as the credit receiver. Once again, there are limits on this scheme. There is no time limit in terms of the review. People must go through an internal review process within the bank and there is no time limit as to when the credit reviewer will carry out their review. By that time, their business could be gone.

This scheme is limited to facilities of €250,000. Many businesses would have a facility far in excess of that figure. We want to look after the smaller business but we also must look after the medium-sized ones, which provide a great deal of employment like the smaller employers.

The scheme also has no statutory footing. It is founded on moral persuasion. We are being told by the Government that it will look at it based on how AIB and Bank of Ireland, the two main banks, react. I am not including Anglo Irish Bank in that category. Anglo Irish Bank is a developers' bank. It does not facilitate normal business such as personal accounts with ATM facilities, and it does not have a network.

Yesterday's report from Anglo Irish Bank was not an annual report in that it covered 15 months. The previous set of accounts were for the period up to 30 September 2008. It speaks of €15 billion of losses. It is horrific.

The report shows €2 million of payments to three directors. Mr. David Drumm got €654,000 in normal salary and a sum in excess of that amount in a bonus for a previous year, €659,000, amounting to €1.3 million in total. Mr. William McAteer got in total €240,000 in normal salary and pension, and not quite double that figure, €439,000, in a bonus payment for a previous year, amounting to €679,000 in total. Mr. Seán FitzPatrick got €131,000. One of these three individuals has a house in America worth $4 million and he has taken out insurance on a claim against it. What about the ordinary taxpayer who, effectively, cannot take out insurance?

The Deputy has one minute remaining.

The Government is scaremongering about the professional investors. Many of the professional investors in Anglo Irish Bank will have insurance, unlike the taxpayer who must foot the bill.

To put into context exactly how the Government thinks, and its priorities, it is prepared to put €22 billion into a black hole in Anglo Irish Bank. It is like putting petrol into a car where the engine has seized — no matter how much petrol one puts in, it will never go. Then last night, when the Government lobby was full with Members seeking special needs assistants, they voted against a measure that would cost a small amount of money.

I hope that when the Minister comes in here he will shed light on a number of questions. I hope he will publish the evidence on putting money into Anglo Irish Bank and that he will tell us of his discussions with the European Commission because when he came in here on Tuesday last we were under the misapprehension that €8.3 billion had yet to go into Anglo Irish Bank. That money had already gone into the banks since 21 January. The European Commission states that of the €10 billion be put in, the most it will look at is €2 billion. It has serious concerns and I want to know exactly what discussions the Minister had with it prior to coming before the Dáil on Tuesday.

I want to see the advice and evidence given on the guarantee scheme to the Minister and the Taoiseach on the night of 29 September 2008. Was it in the main from the bankers? Did everyone rely on the bankers? What exactly was the basis of the discussions?

I also want to know about the routine flow of credit. Will the Minister put the credit reviewer on a statutory footing with immediate effect?

What discounts will apply in respect of the further tranches to come into NAMA and how much does the Minister envisage the taxpayer being required to put in, additional to the €3.5 billion, to AIB? What percentage shareholding does he expect to take in AIB?

The flow of funds appear to be going one way, from the taxpayer directly into the banks. Many in Anglo Irish Bank and Irish Nationwide Building Society will never lend, yet we appear to have no flow of credit to the SME and the personal credit sectors. The Central Bank stated yesterday that private sector credit fell by €1.3 billion in February and it had fallen by €3.7 billion the previous month. It appears to be going one way.

This is a black day for the taxpayer — I do not know which is worse——

The Deputy is way over time.

——whether the Government knows what it is doing or it is pressing ahead with something that would bankrupt future taxpayers and future Governments in this country.

I welcome the opportunity to speak on this issue. There has been much debate on the banking crisis that this country faced over the past number of years, and this is a continuation of that. At the outset, it is important that we reflect on how we arrived at this position. Much commentary, both inside and outside of this House, seems to forget the position in which Ireland found itself, particularly in September 2008. Much commentary is now suggesting that we should have acted differently.

On a point of information, I seek clarification. We understood that there was to be a question and answer session with the Minister for Finance.

Yes, at five past one.

I am taking an ordinary Government slot.

Is the Minister of State taking the slot, not replying to the debate?

I am not replying to the debate.

The Minister will be in the Chamber at 1 o'clock to reply to the debate and then there will be a question and answer session.

I thank the Acting Chairman.

I could not fill the Minister's shoes, I can assure Deputy Burton.

The Minister of State got stuck with the slot.

The Government guarantee to the banking institutions in September 2008 was of significant importance in ensuring that there was not a collapse of the financial institutions across this country. Now there is a bit of revisionism going on in the debate in the House to the effect that we should not have guaranteed Anglo Irish Bank or that we should not have guaranteed other institutions.

The fact of the matter is that in September 2008 there was international panic on markets. Banks, such as Lehman Brothers, had collapsed in July 2008. For the Government to allow the meltdown of our financial institutions would have put the whole economy in peril.

Some now claim the Government acted in an irresponsible way with the bank guarantee. Any fair minded person will accept that at the time the Government made a crucial decision which has stood well the test of the time. It now allows the Government to deal with the impaired balance sheets of the various financial institutions covered by the guarantee and, more important, to get credit flowing into the small and medium-sized business sector.

This is not about protecting the banks. The purpose of this exercise, painful and all as it is for the taxpayer and the Government, is to provide a functioning banking system. The Government would much prefer to be investing money in developing infrastructure and the broader economy. However, without a working banking system, it would not be possible to deal with the ongoing problems of rising unemployment and the investment requirements for infrastructure and other public services.

We must also consider the Government's subsequent decisions since the bank guarantee was introduced in September 2008. We had the first tranche of capitalisation to keep the banks afloat and functioning. With NAMA up and running now, we will see the transfer of impaired assets from those banks to allow them to function and credit flow to the small and medium-sized business sector.

Ensuring the two major banks will provide credit to small and medium-sized businesses was an important element in the Minister's statement to the Dáil on Tuesday. The provision of €3 billion to AIB and Bank of Ireland in 2010 and 2011 is welcome in this regard. It is important structures are in place to ensure continuing credit flow. The appointment of Mr. John Threthowan as an independent reviewer of credit supply is welcome.

The purpose of the exercise is not about bailing out the banks, as is loudly claimed in the House, but about ensuring a functioning banking system that can loan to small and medium-sized businesses, stem rising unemployment and ensure investment in the broader economy.

The Government's decision on the bank guarantee in 2008 and its subsequent decision to establish NAMA have been applauded internationally. People ask what difference international applause makes. It means Ireland's integrity as a sovereign state is accepted internationally and that it is seen to be willing to deal with the difficult decisions required. More important, it shows Ireland is not defaulting on payments, an action suggested by Members opposite which I find astonishing.

We have not said that.

Deputy O'Donnell, please allow the Minister to continue without interruption.

I find it astonishing that any responsible political party would suggest a sovereign state should legitimately default on its payments. Such an action would send an appalling signal internationally, damage our credibility and mean the Government would have huge difficulty in borrowing for the day-to-day running of the State because of the current budget deficit. Such commentary is irresponsible and does not stand up to scrutiny.

It has already been pointed out that Fine Gael published a policy document with a stimulus package of an €18 billion investment to be funded by bondholders, the very same people it proposes we should default on now. Encouraging a default while asking the same investors to invest in the economy simply does not stack up.

It is important the tranche of transfers of impaired assets from the banks to NAMA is done on a case-by-case basis. When this was announced last April, it was asked whether due diligence and proper examination would apply to each individual loan. This is being done with absolute forensic analysis. The haircut in some cases may have been higher than anticipated, in others lower. The bottom line, however, is that we have a clear understanding of the bank's impaired balance sheets. We know what must be done to address these difficulties.

With the recapitalisation and transfer of assets, it is important the €3 billion to be loaned to the two major banks in 2010 and 2011 flows to the small and medium-sized business sector. Every Member knows the difficulties businesses are facing. The Mazars report adjudicated on the amount of lending from the major institutions under the guarantee scheme.

More must be done, however. The banks must step up to the plate to ensure they play their part in repaying the Irish people who stood by them with the guarantee and recapitalisation. We will be monitoring them closely and insisting they co-operate and are fully obligated in ensuring credit flows to the small and medium-sized business sector. We cannot have taxpayers funding the recapitalisation and transfer of impaired assets while the banks would not be playing their part in providing credit. Mr. John Threthowan will be used unsparingly to make sure any business refused credit will be able to go through an independent review.

There are difficulties in trying to retain economic activity. This is not just a problem for the Irish economy but felt globally. There has been a dishonest debate in the House and elsewhere claiming that Ireland is the only country finding it difficult to deal with the international recession. As Minister of State with responsibility for trade, I have visited and studied many economies abroad and it is evident many of them are struggling to retain employment and keep their trade balances intact.

Ireland has done well in this regard with competitiveness coming back into the economy. I accept the adjustments which had to take place were painful for people. Public sector workers with pension levies and salary reductions have borne a very heavy burden in the readjustment and reconfiguration of our economy to get back its efficiencies and competitiveness.

The Minister of State should try to explain the Anglo Irish Bank bailout to them.

The fundamentals that brought us economic growth such as productivity, innovation and entrepreneurship are still ingrained in the people. I am confident that with the policies being pursued and the investment of the €5.5 billion stimulus package this year, the economy will turn the corner in the latter half of 2010 and growth will return in 2011.

These are the key parameters by which any Government policy should be judged. It has managed to stabilise the banking system, brought competitiveness back into the economy and adjusted and achieved more efficiencies in the public sector. The broader competitiveness of the economy will stand to us in time. With the considerable size of our exports, it is important competitiveness is at the core of all the Government's policies. This coupled with the flow of credit that will come from the banks will have a major impact on the economy.

It is important there is honest debate in the Chamber and that history is not revised. We cannot look back on the 2008 guarantee scheme in a different light. It must be recalled that there was panic internationally because of the collapse of banks in the United States and the part nationalisation of some in Britain. The Irish bank guarantee was the first and crucial step to ensure we did not have a financial meltdown which would have had a devastating impact on the broader economy.

I congratulate the Minister for Finance on his steadfast approach to this issue. He has not always had the support of and assistance from the other side of the House with party politics played out for the sake of it. It is accepted both at home and abroad that the Minister has acted responsibly in bringing about the stabilisation of the banking system and the economy.

I wish to share time with Deputy Reilly.

Is that agreed? Agreed.

It never ceases to amaze me how easy it is to astonish Fianna Fáil Ministers. When I hear the Minister for Finance talking about a haircut, it reminds me of a story. In a business, work had stopped because a particular gentleman was of great importance to the business and if he was not there, no work was done. The boss arrived and wondered where the man was. It turned out he had gone for a haircut. The boss was furious and when the man returned an hour later the boss challenged him and asked where he had gone. The reply was that he had gone for a haircut. The boss asked why he had gone for a haircut on the company's time and the smart response was that the hair had grown on the company's time. The boss replied that it had not all grown on the company's time and the man replied that he did not get it all cut. In my analogy, the business is the State, the boss is the Executive or the Government and the smart guy is the banks. The banks have run rings around the State and the Government. On a number of occasions they came to the Houses and told everyone it was fine and the fundamentals were sound. Does the Minister of State remember that? The Minister of State was not quite so astonished when it turned out the fundamentals were not sound.

AIB was the biggest company in the State, making billions in profits not so long ago. Now, it is effectively insolvent. In September 2008, Deputy Noonan asked if this was a recapitalisation issue. The Minister for Finance replied that it was not recapitalisation but purely a liquidity crisis and nothing else. I refer to the €3 billion that will be lent by Bank of Ireland and AIB to small and medium-sized enterprises. Mr. Richie Boucher stated bluntly that Bank of Ireland made €3 billion available to small and medium-sized enterprises in 2009. I do not know the figures for AIB but if a big play is being made of the fact that AIB and Bank of Ireland will make available €3 billion each there is nothing extra from Bank of Ireland because it made the same amount available in the previous calendar year. Anyone contacting the local branch manager of Bank of Ireland may as well be telephoning his secretary because the manager must contact the underwriters in Dublin to agree every matter.

An item on the news last night, where Charlie Bird was in Cape Cod, was distasteful. It is distasteful for the public to have to swallow the bitter pill of €80 billion between NAMA and recapitalisation but there is nothing more annoying or distasteful to citizens of this country than seeing the people who caused this crisis living in multi-million euro mansions. The Garda Síochána and the Office of the Director of Corporate Enforcement are using untested legislation and we do not know how well it will work until we come out the other end of this process. We know that it is slow. In other jurisdictions, these people would have been found guilty or innocent of wrongdoing. Within a matter of weeks or months, the case of Mr. Bernie Madoff was concluded.

The previous regulator was incompetent, as was his office. However, I do not blame it all on him because this is a single party State in which Fianna Fáil has been in Government for 21 of the past 23 years. How can the regulator, who was appointed by the Government, go against what the Government is saying? Every Minister and all the colleagues of the Minister of State, Deputy Kelleher, said that it was sound and that we should keep it going. The previous Taoiseach said to keep things going and that it was sound. How can anyone challenge us and how good and great we were? The Taoiseach, who was Minister for Finance at the time, said it was sound but it was not. The foundations were built on quicksand and the quicksand will swallow every penny of the nation's wealth for the next ten, 15 or 20 years. Children not yet born will be paying these taxes. That is nearly as distasteful as watching the likes of Mr. Drumm in a multi-million euro house in Cape Cod.

I welcome the opportunity to contribute to this debate because this issue is determining the future of this country for generations to come. The decisions taken in the past 24 hours will have consequences for ourselves, our children and our children's children. That is the harsh reality. Dr. Peter Bacon, the author of the concept of NAMA, said "Anglo Irish Bank is the Celtic Chernobyl". The figures we received so far are incomplete and may become much worse, to paraphrase Dr. Bacon. Anglo Irish Bank and the Government say it will be more expensive to close down the bank in an orderly fashion. On what basis is this assumption made and where are the figures to back this up? No one has had the opportunity to examine the figures and where they come from. We are asked to go on blind trust again with the Government whose subliminal message was, as pointed out by Deputy D'Arcy, that the fundamentals were sound. To go forward on this basis is deeply disconcerting for the people and Members on this side of the House.

Anglo Irish Bank is a dead bank that will never lend again. We previously injected €4 billion, then €8 billion and the Minister for Finance has indicated there will be a further €10 billion required. That is not the end of it. The ink was hardly dry on the paper before Mr. Dukes came out indicating the figure may be higher. We are supposed to trust this. With every passing week new figures are put forward and they are unexplained, as were the figures before. We are basing our assumptions on information given from Anglo Irish Bank to the Government, which takes it on face value and expects us to swallow it. Every figure from Anglo Irish Bank to date has been grossly incorrect, out of date and underestimated. The Department of Finance got it wrong all the way up through the boom and is still getting it wrong all the way down. This is hardly something that leads us to have confidence in it.

The €18 billion, comprising €8 billion referred to yesterday and the €10 billion the Minister believes will have to be injected, is the same as the cost to create 105,000 new jobs according to the Fine Gael plans in NewEra. This plan would set up jobs and infrastructure to make the country competitive on broadband, communications and independent energy production. That is the stark choice the Government has made. A sum of €18 billion has been allocated to the banks with nothing to the 450,000 people unemployed.

The Fine Gael plan was to have a good bank and a bad bank. It was not going to default on the bondholders or sovereign debt. It was a matter of telling the people who invested in the bank that they did so expecting to make a profit and believing it was a good thing to do. We are prepared to take some of the pain but they must take some of the pain too. In our plan the good bank remains responsible for depositors and the moneys owed to various central banks. The bad bank would be left with the bad loans and could sort this out with bondholders. Nobody would take all the pain but in the Government's deal the taxpayer takes all the pain and the bondholders walk away free. I do not know any investment that is 100% guaranteed. For the previous generation and the generations before they were the sayings "as safe as money in the bank" and "as safe as houses". Neither accounts for much any more.

The Government says the market will buck if the Fine Gael plan is adopted and our debt will be more difficult to pay. The market will see that we are taking a responsible approach. Our liabilities are less and, therefore, the markets will not take flight. The markets are the markets and will do what they do, namely, re-invest and turn around. We have seen on many occasions people going in and out of business.

The Government has engaged in the politics of fear in terms of our national debt. It has been confusing people with the moving target, trying to distract them from the realities of how we got here and who is responsible. I heard last night on radio a young woman say during "The Late Debate" that she wanted to see the culprits in this regard brought to book. Another person stated that while that might make us feel better, it would not cure the situation, which is akin to saying to the family of a murder victim that bringing the culprit to book would not bring back their loved one. This is about justice for the people and putting in place serious disincentives that will discourage people doing the same again.

The manner in which the Government is approaching this issue ensures there is nothing for bankers to fear. They can carry on regardless. Many of them remain in pole position. The boards of many of the banks have not been completely changed. Many of the same people remain involved. Mr. Maurice Keane, now a member of the board of Anglo Irish Bank is also involved in the selection of senior management for NAMA. What greater conflict of interest could there be than having a man who is a member of the board of a bank, who will be responsible for transferring billions of euro to NAMA, choosing the very people who will run NAMA? This is outrageous. The Government has learned nothing.

We must have a full inquiry of the events leading up to this, including the political decisions made and the relationships between politicians and Anglo Irish Bank, one that goes beyond the point when the guarantee was put in place. One can reach only one logical conclusion in terms of the Government's persistence in this regard, namely, this Government does not want to admit its mistake; it has too much political capital invested in this approach and will not acknowledge or accept it is wrong. It is not that we have not seen this before. The Minister for Finance, Deputy Lenihan, previously increased VAT, admitted subsequently it was costing €700 million but waited until the following budget to correct his mistake. What is the point of admitting one has made a mistake if one does not correct it? In this case, the Government will not even admit it has made a mistake.

There are other precedents in this regard such as in the area of health. The HSE has been a fiasco but the Minister for Health and Children, Deputy Harney, will not acknowledge this. Her collocated hospital plan, which was to be a fast track mechanism of another 1,100 beds into our system, has not alone not yielded a single bed but not one sod has been turned and not one brick for one of those hospitals has been put in place. I put it to the House that the Government's persistence with its hair-brained idea of NAMA, which is not, as has been outlined, receiving international support but is being questioned in several quarters, will cost the Irish taxpayer for generations to come, is grossly wrong and needs to be redressed. This concept whereby the taxpayer takes all the pain and everybody else gets off scot free is totally wrong.

I call Deputy Burton.

If time permits, I would like to make a couple of comments. Are we waiting for the Minister?

Has the Deputy made her contribution yet?

I have not yet made a contribution but if there is time available I would like to speak now.

There are a couple of issues I would like to put on the record and will raise again with the Minister. In the context of the praise from international quarters, I remind Deputy Kelleher of the comment by Mr. George Soros in respect of zombie banks and the fall of the banks in the context of the events of two years ago. He said in relation to zombies, "Instead of stimulating the economy they [the zombie banks] will draw the life blood so to speak of profits away from the economy in order to keep themselves alive." I believe that comment, which is frequently repeated, captures the essence of zombies. We have two zombies in Anglo Irish Bank and Irish Nationwide Building Society.

I want to make clear to Deputy Kelleher and to his compatriot in Cork, the Minister for Foreign Affairs, Deputy Martin, that of concern to the Labour Party in the period after the St. Patrick's Day 2008 fall in the share value of Anglo Irish Bank and what we knew about the reputational damage to Irish Nationwide Building Society coming particularly then from London was that at the heart of our system we were developing two zombies. This catastrophic error by Fianna Fáil was a result of its close political links with the banks, something which Fianna Fáil has never stepped forward to disprove. We do not want Allied Irish Bank and Bank of Ireland to become zombies. We do not want ordinary businesses in every town and village in the country which rely on mainstream, ordinary and, what the American's call, plain vanilla banking to be brought down by the George Soros description — which is well known in international banking — of zombie rotten institutions which bring down everything with them because they suck everything towards themselves. This is the reason Irish taxpayers are caught in a type of nightmare on Merrion Street.

The Taoiseach, when Minister for Finance, attended that famous dinner at Anglo Irish Bank headquarters on 24 April, which may have been the night former Taoiseach, Deputy Bertie Ahern, acknowledged he would step down as Leader of Fianna Fáil. He then went to Vietnam, which was followed by a week's holiday in Malaysia. The Carruth evidence had been given and former Taoiseach, Deputy Bertie Ahern, was in his final period as Taoiseach and Leader of Fianna Fáil. The Taoiseach, Deputy Cowen, obviously had a big decision to make in regard to his future and that of Fianna Fáil but he still found time to attend this important dinner at Anglo Irish Bank headquarters.

I repeat the important question and request from my colleague, Deputy Rabbitte, in regard to what discussions took place between the Taoiseach when Minister for Finance, the Central Bank, in particular its Governor, the regulator, Mr. Neary and the Department of Finance senior officials in the period from mid-2006 and the collapse of shares on St. Patrick's Day? I stated when I spoke on this issue the other night that people in Fianna Fáil are as smart as everybody else. Many of them were Ministers in office at the time and they had to know this was a bank in deep trouble, which is the cause of horror in this country. This is like a Dracula story in that we have woken up to find it is not maidens who are being taken away but the life blood of business. We need more information. My first question to the Minister during the questions and answers session will be about information.

The Minister might perhaps like to make a brief reply.

I understood this was to be a questions and answers rather than a reply session. There is another five minutes available for questions.

I call Deputy Bruton.

I thank the Minister for coming into the House to take questions.

The cost of Anglo Irish Bank continues to escalate. The Minister originally articulated the view that that bank should be kept as a going concern and the expectation was that it was to be given €4 billion by way of recapitalisation. This figure has now increased to €22 billion and is rising. The chairman has stated the bank does not yet know what will be the final figure required. Is there a trip point when the Minister will cease to hold the view that keeping Anglo Irish Bank open is the best option? Will he provide the House with the detailed assessment of all the different options, including options which he has to date found unpalatable because some of the bond holders might suffer losses? Will he put those on the table and let people assess them? What is the implication of the European Union's decision to not accept the Anglo Irish Bank restructuring plan?

There is no such European Union decision, Deputy. He will have to stop misrepresenting these matters all the time. It is fundamental and I will deal with other matters too.

This is a questions and answers session and if the Minister wants me to impart information I will, with the permission of the Ceann Comhairle.

There is no rejection by the European Union of any structural plan for Anglo Irish Bank.

We need to be sensible about the matter——

——and not be imparting too much information but, most importantly, ask questions.

It is hard to give information when it is stated on a premise of total inaccuracy.

We have information from the European Union that it has given temporary approval to put in €8.3 billion and it may allow another €10 billion, but it said it is not accepting the restructuring plan for Anglo Irish Bank, it is demanding a fresh restructuring plan be presented to it in May and it is having an in-depth investigation of the Anglo Irish Bank situation. Within any reasonable interpretation, that is evidence the European Union has not accepted the restructuring proposals of the Government. I am entitled to ask that question. The Minister wants to distort what I am asking.

I will deal with our relations with the European Union by way of reply. I spoke to the Commissioner on Tuesday morning and I am in a position to deal with the situation. Deputy Bruton is not in a position to draw inferences which are unwarranted.

I am not drawing any unwarranted inferences. I am simply saying the Anglo Irish Bank proposal has not been accepted, there is now an in-depth inquiry and the Government plan to support the Anglo Irish Bank approach has not been accepted. There is no inference and nothing is distorted in saying that. Perhaps the Minister would be better occupied by allowing me to ask the questions and using his time to provide answers because our time is limited.

There are several Deputies offering.

Exactly. I wish to ask the Minister about his strategy regarding AIB. Why does he believe it is advantageous to wait for the submission of a plan and the recapitalisation proposals until the end of the year? Why does he feel that will support getting credit flowing from AIB? Would it not be better for him to assume control of the process at this stage in order to get a better outcome for taxpayers and those who are looking for credit? Does the Minister accept that the guarantee, as originally drawn, was drawn too widely, as Professor Patrick Honohan has said? He said it should have been confined to liquidity which could leave and should only have applied to new injections and not existing funds which were committed and were in the banks. Does he accept that was a mistake?

On AIB, the Deputy is wrong again because the Minister——

I am asking the Minister a question; I am not asserting anything.

I replied to this already in the House, on the record, and the Deputy has not taken note of the reply. I do not set AIB's period for determining when it submits its plan, rather, the regulator does. That is the whole point about Tuesday's announcement. We now have an independent regulator who lays down capital ratios. I do not interfere politically with that; that is not my function as Minister for Finance. I thought everyone in this House could agree that is a desirable change for this country and the way we should operate as a country in regard to these bank matters.

A great deal of the burden of the Deputy's criticism regarding AIB has been that in some way, the Government has given it until the end of the year to sort out its problems. That is not the case and if one examines what the regulator has stated, one will find he has made it very clear that AIB has to formulate its capital plan by end of April. In fact, his initial determination was June but in the course of the days leading up to the announcement he made clear that it would have formulate its plan by end of April.

There is no question of AIB being given an extended period of time. It has a more extended period of time in order to put the funds in place, as is the case in any capitalisation and, if one studied the history of capitalisation in any other country one would find it would be remarkable to expect the capitalisation to take place in a month. As far as AIB is concerned, the regulator has given it until the end of April to formulate how this capital will be acquired by AIB. On the issue of AIB being given time demonstrating that in some way I am being soft on the bank, the position is that the regulator now decides these matters. That is essential for our national credibility, in terms of regulation and capital raising. It has been given until the end of April to provide a definitive plan, which is not an extended timescale.

On the European Union, I have very good relations with the Commission and at all stages my Department is in consultation with the European Union about the strategic plan for Anglo Irish Bank. Incidentally, the strategic plan is not submitted by the Department of Finance, rather, it is submitted by the bank itself. It does not necessarily have the endorsement of the Government. We are engaged in the closest possible discussions with the EU authorities——

The bank can only submit its plans through the Department of Finance.

——about the appropriate shape of that bank. The only anxiety expressed to me by the European Commission on Tuesday about the announcements regarding Anglo Irish Bank was that we would be saying the same thing and would not create problems regarding the financial stability of Ireland. We are delighted to work with the European Commission regarding the structural plan for Anglo Irish Bank.

How come the Minister did not reveal on Tuesday that there was to be an in-depth inquiry?

Allow the Minister to reply, please.

There is no in-depth inquiry.

I have the Commissioners statement here.

Why are you looking for submissions?

There is detailed consultation taking place——

Deputy Bruton, resume your seat please. I will call on you to ask your question shortly.

The Deputy has asked his question and I am entitled to answer.

Why is he looking for submissions on the issue?

I have the Commissioner's statement here.

We are working very closely with the Commission and when it makes inquiries it asks a question and we answer it. We have very close relations with the Commission.

Allow the Minister to reply.

The Deputy has often outlined that he has a plan——

Yes, close it down.

——which will save us money regarding Anglo Irish Bank. Give us the plan in writing. I would be delighted to have it evaluated——

Let us have your plan on the table and costed.

I would be delighted to have my professional evaluators and advisors, the Department and the NTMA evaluate that plan and see whether it can save us any money.

You told us your plan for Anglo Irish Bank would cost €4 billion, then it was €10 billion and €18 billion. Now it is €22 billion.

It is time——

Deputy Bruton, resume your seat.

I am sorry. Your party——

Deputy, please.

Deputy Kenny announced he could get out of Anglo Irish Bank for €4 billion a few months ago. Give us the plan in writing. I would be delighted to make all my professional advisors available to the Deputy and have the NTMA discuss the implications involved.

The Minister has done nothing but pour scorn on anything else.

We are not pouring scorn, but let us pour scorn on one option.

Let us see the options.

Deputies, the Minister has the floor.

Do not be lecturing us; be polite and answer the questions.

I am trying to answer the questions.

It is very difficult to conduct a debate on this subject——

There is no longer any debate, only lectures.

If inaccuracies become part of the debate. We have to stick to the facts

This is lecturing.

Deputy Barrett, please.

The facts are very serious regarding Anglo Irish Bank. On Anglo Irish Bank, we have new management and a designated chairman to take over as chairman from the current chairman. It will bring forward plans which we will discuss with the European Commission and come to a final view on the structural plan within a short timeframe. We have to do that. We are more than available to answer inquiries from the European Commission. We have made our own inquiries in this matter. This is a serious position. It is clear that, as I indicated on Tuesday, we would all like to see the back of this institution, but it is not possible. The scale of the deposits, the exposures to the euro system and the exposures to senior debt are extensive and are in the order of €70 billion. That is a very serous liability to ask the taxpayer to pick up next week. Nobody in this House——

Are you now willing to consider that some of the professional investors would share the cost?

I am not prepared to countenance default on senior debt for several reasons. First, half of the funding costs in Ireland for enterprise is funded from within Ireland. It is very important that Deputies acknowledge that. Ireland is not an Iceland which has somehow acquired a series of foreign obligations and saddled them on its taxpayers. Half of the funding requirement in our banking system is domestically sourced and 80% of the sovereign funding requirement for Ireland is externally sourced. Therefore, maintaining confidence in financial markets is an important issue for this country.

I will not come in here and talk lightly about defaulting on senior debt because, as a country, we are not doing that. It is not on the agenda. Were it on the agenda and had Fine Gael won the vote the other night, there would be an immediate loss of confidence in the country. It is easy to posture with a policy like that at present.

We are back to a lecture.

That is not a policy and Deputy Bruton will have to face that. Where I believe there may be room for constructive discussion between us is on minimising the cost of Anglo Irish Bank because Fine Gael has always accepted and always maintained that the bank should be worked out over time. The question arises, and the chairman-designate has raised the issue, as to whether a good book can be identified within that institution, which can lessen further the cost to the taxpayer but they are the real options here.

The purpose of giving the figures on Tuesday afternoon was to give a measurement of this problem and to at least outline how the problem can be worked out over time. The promissory note device has been used to average the cost to the taxpayer over a period of time and to ensure there is no jeopardy to our sovereign position in working out this bank. It is clear there has been no jeopardy from the international reaction. There has not been a move in our bond spreads. Moody's marginally upgraded Bank of Ireland and Allied Irish Banks this morning. That is the position on that.

Deputy Bruton also asked about the formulation of the guarantee in September 2008. Let us be clear about this. The banks were running out of money. The approaches to the Government were made by both chairmen and both managing directors of Allied Irish Banks and Bank of Ireland. It was suggested during the debate and repeated in newspaper articles since by Deputy Noonan that approaches were made by other banks or bankers in connection with this guarantee.

He only asked the question.

There were no such approaches. It was asserted as a fact in this House that there were approaches from certain other bankers in regard to this guarantee.

There were not approaches from anyone else about the guarantee. There was a funding crisis throughout the banking system and the experience of Northern Rock, which we could already learn from on the night of the guarantee, was that nationalisation on its own would not guarantee a flow of funds to an institution and that a guarantee was needed as well.

That is not what I asked. I asked whether the Minister accepted that he——

There are two distinct issues.

Professor Honohan has clearly given——

I do not accept the Deputy's suggestion that on the night of the guarantee it would have been possible to say that existing liabilities were guaranteed but if the banks sought fresh funds, they would be unguaranteed and that would have resolved the problems in the banking system.

Deputies

It was the other way around.

On a point of order——

Can the time for this debate be extended?

We need to ask the question. Professor Honohan said we should have a protection for the new money coming in and, therefore, only for deposits and new preference shares and bonds. That was the recommendation.

A number of Members are offering

I am trying to deal with Deputy Bruton's questions. There was never a question of guaranteeing preference shares.

On a point of order, this is supposed to be a question and answer session and that is not what is taking place. Deputies are waiting to put direct questions to which we want direct answers.

I will allow time to get to them.

I assume the Minister is willing to extend the time because I have waited for more than two and a half hours for him and I hope he will do us that courtesy.

Like most things in life, we will be sensible about it.

We entered into these arrangements in good faith and, therefore, the Minister has to honour them.

Has he had an opportunity to read the European Commission statement regarding Anglo Irish Bank? The Commission temporarily cleared support for Anglo Irish Bank and Irish Nationwide Building Society and opened an in-depth investigation into Anglo Irish Bank, stating: "...the Commission opened an in-depth investigation into the total aid received so far by the Anglo Irish Bank and its accompanying restructuring plan." That indicates this started some time ago. What has the Minister not told the House about this?

It is inappropriate to quote from documents.

Second, Commissioner Almunia, stated: " . . . Anglo Irish Bank has to restructure profoundly in a way that effectively tackles the weaknesses of the past business model and ensures a sustainable future without continued State support." Has the Minister implied to the Commission that the bank has a sustainable future without State support? That would be a highly misleading statement to make.

Third, Mr. Almunia further stated: "Earlier this year, Ireland notified a capital injection of €8.3 billion in favour of Anglo Irish Bank, one of Ireland's largest banks, to be paid in successive tranches over 10 years." The Commissioner's statement implies the €8.3 billion was agreed by the Minister with the Commission some months ago. He has dealt with the Dáil and the people of Ireland despicably in that he signed up to this agreement and then he said——

The Deputy should ask a question. This is a question and answer session.

Is it true that former Deputy, Alan Dukes, did a misleading tour of television and radio studios in which the amount going to Anglo Irish Bank went from €3 billion to €6 billion to €9 billion and now stands at €18.3 billion?

We are in question and answer mode. The Deputy should not make a Second Stage contribution.

The Minister's failure to tell the Dáil about a secret agreement he arrived at some time ago with the Commission is an absolute disgrace.

Will the Deputy ask the question she needs answered?

This is typical of Fianna Fáil's play-acting in regard to all these events.

Will the Deputy ask a question?

Why did the Minister not inform the House about this secret agreement some time ago with the Commission to pump €8.3 billion into Anglo Irish Bank? Taxpayers only heard the news when he had to come before the House the other day.

The figures quoted by the Minister, which were given to us in supporting documentation, relate to the sectoral breakdown of tranche 1 in the transfer of loans to NAMA and they are seriously suspicious. Will he make an arrangement to have the Opposition briefed? He promised the other day that NAMA officials would brief the Opposition. Why was nobody from the agency available to us for a briefing? According to the tables in the documentation supplied on Tuesday, 65% of the tranche of loans transferred to NAMA was listed as investment property, including rented residential units. That is completed property because I have checked since in addition to another €770 million in loans relating to completed hotels.

Will the Deputy ask a question?

Will the Minister explain the meaning of this because NAMA was set up to deal with bad assets and loans?

It is not necessary to embellish the question. The Deputy should just ask a question.

I have asked the question. There is something seriously wrong with this documentation. Will the Minister make the figures available and provide for a detailed briefing of the Opposition on the figures and matters covered in the documentation?

He referred to the future of Anglo Irish Bank.

Will the Deputy ask a question?

According to his statements and the supporting documentation for the debate on Tuesday, €8.51 billion in loans has been transferred to NAMA but more than 70% of those loans relate to completed properties, which are earning an income. That means the bad loans remain for the most part in Anglo Irish Bank and in all the other banks. It means that we have a NAMA——

This is a question and answer session. The Deputy should ask a question.

Is the Minister giving us a NAMA bad bank, which will take the best income earning assets? Is he leaving bad banks in each of the other banks in order that we now have five bad banks.?

The Deputy is abusing the opportunity she has.

That is the consequence of what the Minister is doing.

Where has his proposal for a forced merger of INBS and the EBS gone? Has it vanished because of the level of debt in INBS and the fact that it is, to quote George Soros, "a zombie bank"?

The Minister must be allowed to deal with the questions posed by the Deputy so far.

Where is the marriage he referred to as a key element of his banking strategy? It has vanished from view. A total of €675 million is going into the EBS and €2.7 billion is going into Irish Nationwide but the marriage is off.

Please, Deputy Burton.

Will the Minister comment on that? That is another colossal waste of taxpayers money for another dead zombie institution.

I must begin with the suggestion of a secret agreement. There is no secret agreement.

The Minister did not tell the country.

I am sorry——

Deputy Burton, the Minister should be allowed to speak without interruption, please.

I merely grimaced Deputy Burton suggested I was not listening to her. I did not interrupt her. The most serious suggestion made in Deputy Burton's questions is that there is some secret agreement harboured by me or my Department which has come to light and which was not disclosed to Dáil Éireann. Let us be clear about this.

I am sorry. Will Deputy Burton allow me to conclude? To use the correct term, this consent, not agreement, was obtained from the European Commission on Tuesday on the eve of the statement.

Earlier this year.

Deputy Burton should please allow the Minister to speak without interruption.

That is when the Commission agreed that the promissory note could be executed. It was not executed until the Commission gave that agreement and until this House approved the banking statements on Tuesday evening.

No, in due deference to the Minister, that is not what the Commission said.

Deputy Burton, please.

Of course discussions take place with the Commission given the proximity——

Earlier this year Ireland notified a capital injection of €8.3 billion in favour of Anglo——

There is no point——

I will ask Deputy Burton to leave the House if she does not refrain from interrupting.

Will I give the Minister the notice?

No, the Minister should be allowed to reply. The Deputy has had reasonable latitude.

The Deputy can give all the notices she wants.

I will give the Commission statement to the Minister to read. It might help.

The position is that the Commission sanctioned the promissory note last Tuesday. That sanction was for a capital injection of €8.3 billion. Earlier this year Ireland notified the possibility of such an event.

Earlier. There is no possibility. The Minister is now adding——

Deputy Burton.

Notification is for a request for an approval. There is no agreement until there is consent. The Commission consented to those arrangements last Tuesday. The arrangements were not put in place——

Earlier this year.

——until the House sanctioned the arrangements on Tuesday night. There is no secret agreement.

The burden of Deputy Burton's assertion today was that in breach of my duties as a Minister I am misleading this House and I concluded a secret agreement with the European Commission. There is no such secret agreement because an open agreement was arrived at with the European Commission on Tuesday morning. That is when agreement was finalised in this matter. It is important that is understood.

Could the Minister answer any of the other questions?

Minister, they are in the accounts——

Deputy Burton's allegation is a very serious one. Were it correct it would reflect very seriously on the Government and me. I am entitled to reject it and point out——

I am sorry. The Minister indicated that he notified the Commission of the capital injection of €8.3 billion but he did not tell the Dáil.

——its inaccuracy.

If Deputy Burton does not refrain I will have to ask her to leave the House. I do not wish to do it but I will have to do it.

On a point of order. I have the published accounts of Anglo Irish Bank and €8.3 billion is in the accounts up to the end of December.

With Deputy O'Donnell's co-operation I will come back to him and allow him to ask a question. He should allow the Minister to continue.

That money was in the accounts up to the end of December. How could——

Deputy O'Donnell should please resume his seat.

They must have worked very late at night. The €8.3 billion must have been committed to the bank.

I am dealing with the charge that I concluded a secret agreement some time ago, which I concealed from the House.

Deputy O'Donnell, please.

I have dealt with that allegation which was made on the floor of the House. It is inaccurate and untrue.

No, the Minister has not.

Deputy Burton.

No, Minister. A total of €8.3 billion has been put into Anglo Irish Bank. It is in the bank's end of year accounts at the end of December but the Minister has said that did not happen.

Deputy O'Donnell should resume his seat.

We need clarification. It is in the accounts in black and white.

Deputy O'Donnell, please.

I would like the Minister to shed some light in his answers on a couple of important matters specifically pertaining to the role of the auditing and accountancy firms, their role in NAMA and their previous roles in regard to some of those banking institutions. Little light has been shed on their particular roles. It is important that the Minister would use the opportunity to provide clarity to the House as to his understanding.

Could the Minister explain the current role of Ernst & Young in the loan evaluation process for NAMA and how it came to be given that role? Ernst & Young, as the Minister is aware, was the auditing team for Anglo Irish Bank when accounts were published in February 2009. That report effectively gave Anglo Irish Bank a clean bill of health, yet we now know that the 2008 year end figures included cash that had been transferred from Permanent TSB. We know that directors' loans were concealed and loans were given to shareholders to buy more shares. Loans were also given to directors, senior executive members of Anglo Irish Bank, to buy more shares yet none of those matters was exposed in the end of year accounts presented by Ernst & Young.

Let us take the situation in regard to KPMG. What role has KPMG now in the NAMA process and how did it come to be involved in that process? KPMG audited Irish Nationwide. Its 2008 results, announced in April 2009 showed a pre-tax profit of €300 million after having set aside €500 million for bad debts. Yesterday's announcement confirmed that Irish Nationwide requires €2.6 billion in funds from the Exchequer, a mere 11 months after KPMG gave it a clean bill of health.

It is very important that we have full transparency and disclosure of the roles of those particular auditing and accountancy firms and their current role in regard to NAMA. I have specified in regard to both of those that they have functions currently. How did that come about given the questionable role they have clearly played in presenting figures allegedly as facts when we now know they were nothing of the kind? Are those auditing and accountancy firms being investigated for their specific roles in what some would suggest was an orchestrated cover up of the facts pertaining to those financial institutions? If they are not being investigated, why not?

The questions raised by Deputy Ó Caoláin are legitimate. I will ask NAMA, which is an independent body, to examine what he said about the professional advice. In addition, the banking inquiry should provide a context within which the general matters to which the Deputy referred can be dealt with. It is the case, for example, that Anglo Irish Bank no longer retains the original auditors to whom Deputy Ó Caoláin referred. The matters to which he referred are serious and will require investigation both by the accountancy bodies and the banking inquiry which is under way and which will account to this House.

I thank the Minister for his reply. Could I interpret his previous remarks as indicating that they will be investigated and that the matters I have just highlighted will be the subject of full scrutiny in the course of the investigation under way?

I entirely agree that these matters require full scrutiny because of the dramatic character of the change that took place when the public interest of the taxpayer was secured in Anglo Irish Bank and in any other institution where it comes to light.

I welcome the Minister's assertion.

The Minister made reference in his main speech to the change of executives and boards at the top of the banks. I wish to ask the Minister about two positions I understand to be critical. One is chairman of the audit and compliance committee and the other is chairman of the risk management committee. Have those positions changed in the banks? I know for a fact they have not in one covered institution but I wonder if they have changed generally.

With regard to the exploding figures associated with Anglo Irish Bank, namely, €4 billion, €8.3 billion, €10 billion and €18 billion in terms of the purchase of the loans, something will be set off against them in terms of the valuation of the assets. Is the Minister standing by his position that he would find it unconscionable, in any circumstances, to consider alternatives to pouring money into Irish Anglo Bank in the context of an orderly wind-down of that institution?

I agree with what the Minister said about senior debt. Issues such as this are not the only issues involved. The figures have now exploded to such an extent that the difference between an orderly wind-down and maintaining the bank in some form is negligible. Therefore, since we are talking about a corporate strategy for a semi-State institution, is the Minister prepared to make available to us the documents that surround these questions? How else can we make an informed decision? On the matter raised by Deputy Burton, for example, can the Minister explain how the €8.3 billion to which he referred is in the accounts for 2009? I do not understand that; I am not alleging anything but asking the Minister to explain it.

There are a few matters to address. With regard to the audit and risk-management committees, I am not certain which institutions Deputy Rabbitte was referring to but I will endeavour to obtain the information and have it conveyed to him clearly. It is an important issue.

I am just talking about the covered institutions.

Yes.

With regard to Anglo Irish Bank, the fundamental question the Deputy is asking is whether the alternatives to providing capital to the bank have been explored. They have, including the alternatives of immediate liquidation, long-term wind-down and splitting the banking into a new banking entity and an asset management and recovery company. All these options have been examined.

The immediate priority of the board in the past year was to stabilise Anglo Irish Bank when it was nationalised. We are in a position to evaluate the options. I was anxious to point out on Tuesday evening that the option of an immediate wind-down is not viable, although it finds favour with the public for understandable reasons. Clearly, the various alternatives must be evaluated within a relatively short timeframe and in collaboration with the EU authorities in Brussels. I do not want to introduce a note of controversy in saying so. The Commission has a state aid section that supervises state aid provision to financial institutions and it has a view on this. It certainly has not pursued the position that, in some way, the Government is in the dock on this issue. That is far from the case. It, as with the Government, is anxious to find a common resolution to this problem.

This brings me to the issue raised by Deputy Rabbitte on the information that can be made available, subject to the usual commercial requirements, to the different political interests in this House. At various times, political interests in this House have advanced a proposal they believe would in some way make further savings in meeting the cost of the resolution of Anglo Irish Bank's difficulties. I have made it clear I am willing to make my officials available to any of the Opposition parties in that regard.

The Minister did not let us meet NAMA.

I am making that clear today.

Is that for the future? He did not let us meet NAMA.

I did not refuse the Deputy a meeting with NAMA. NAMA is an independent statutory body.

I requested a meeting and did not get one.

That is between the Deputy and NAMA.

No, it is not. I was told by the Minister's senior civil servants that NAMA——

Please, Deputy Burton.

Short of exercising my power to give a statutory direction to NAMA to tell it to meet the Deputy, I do not instruct NAMA in what it does. That is not my function as Minister.

Will he ask for a meeting?

The Minister brought the legislation through the House.

Having sat through the debates on the legislation, the Deputy should be well aware of that.

The function of the Minister is to permit a democratic information flow.

Deputy Burton's issue can be dealt with at another time.

Of course. We are having a highly democratic information flow here this afternoon.

Are they the smokes or the daggers the Taoiseach's predecessor referred to?

I am sure NAMA has been extraordinarily busy in recent weeks. I assume that is why it was not able to find time to meet Deputy Burton whenever she made here request.

Is that the position now? I understood its officials were willing to meet me but that the Minister's officials blocked the meeting.

I assumed that to be the case. I am not saying I have any functions in regard to NAMA.

I made other assumptions on the basis of what I was told.

With regard to Deputy Rabbitte's question on how information can be conveyed to the Labour Party, Fine Gael and Sinn Féin on the options, the outgoing chairman made himself available to the Oireachtas Committee on Finance and the Public Service last year.

I am sure the bank is willing to make itself available to the committee or a sub-committee thereof to explore the options and discuss them in a rational, structured way. It is important that we minimise the cost of this operation to the taxpayer, and we all agree on that. It is subject to commercial considerations of great importance that the maximum amount of information is put in the public domain in that regard.

A number of Members are offering to contribute. I propose to allow them pose a question, after which the Minister will wind up.

Does the Minister agree that the Government is "in the dock", to use his own phrase, as a result of its decision to accept responsibility for the liabilities of Anglo Irish Bank? By the Minister's very actions, he has sent a message that any bank that gets into trouble in this country and is registered here will be bailed out by the Government, which will accept its liabilities.

Does the Minister agree that, as a result of his colleagues and him constantly sending a message to the electorate that we must accept responsibility for the debts of Anglo Irish Bank, it is implied we must accept the debts of any other financial institution in this State that gets into trouble? Does he agree it is time this matter were clarified once and for all?

When will we see a revised business plan for NAMA in light of the decisions made this week on the cashflows to which the Minister has committed the taxpayer for the next ten to 15 years? We want to see a yearly plan. When will the first meeting of the NAMA committee or the Committee on Finance and the Public Service on NAMA be held? How many tranches of loans will be transferred to NAMA?

The Minister referred to householders and the mortgage debt group during the week. Does he have a date in mind as to when an announcement will be made on the decision made by the group in respect of ordinary homeowners who find themselves in difficulty on foot of having purchased homes at the height of the property boom?

With regard to the third banking force, will the Minister update us on whether Irish Nationwide and the EBS will join forces and become one unit?

I asked the Minister about the NAMA business plan before and never really got an answer. He claims the plan will wash its own face and make profit eventually. I am concerned that, in respect of the debtors, including developers, who owe money to banks or NAMA, there is already a roll-up of interest amounting to nearly €10 billion. Why does the Minister or NAMA believe that, after the transfer of loans to NAMA, the debtors will begin to pay their debts? The Minister claimed a number of times he will chase debtors' assets and obtain what is owed. Even the "haircut" of 50% will not be enough because the market value is approximately 20%. How can debtors pay their debts?

I understand many debtors' assets are totally separated from their debts. Like the Minister in respect of NAMA, they also set up special purpose vehicles and companies. The Minister may laugh all he wants but he should note they were ahead of him in respect of NAMA. They used such vehicles when borrowing money to separate their personal assets from their debts. It is unfair of the Minister to tell the taxpayer he will pursue them when he probably cannot do so. If he knows the percentage of loans he cannot pursue, I would like to have it. I have asked for it before but I have not got it.

The last part of my question relates to the banking inquiry. The Minister has an interview with Mr. Brendan Keenan in today's paper, although I have not read it yet. Mr. Keenan made a very good point some months ago to the effect that we have to investigate the relationship between the regulator and the then Taoiseach, Deputy Bertie Ahern and the Government. Was the regulator acting stupidly, on his own behalf, or was there a direction from Government as regards the manner in which he behaved? I just want confirmation that this will be investigated as part of the banking inquiry.

I am looking at the Minister's speech on Tuesday, where he said: "I am providing €8.3 billion this week to support the capital position." Did the Minister give a commitment to Anglo Irish Bank in December that it would get €8.3 billion? In other words, was the commitment given long before he came into the House, because the accounts show €8.3 billion in terms of share capital at the end of December and the chairman's report is basically stating that the Minister committed to providing €8.3 billion. That was not what was conveyed in the Minister's speech, however. At the least, he was economical with the facts and I should like to get clarification in that regard.

How much will Allied Irish Banks cost the taxpayer in extra funding over and above——

Does the Deputy mean Anglo?

No, AIB, but Anglo Irish as well, since we are being told by the chairman that it will cost well above the €22 billion. How much, in addition to the €3.5 billion by way of preference shares, will AIB cost the Irish taxpayer? We do not want a situation whereby the Minister tells the Dáil on a certain date he is committing a certain figure to AIB and we find that this had been done three months before that date.

Is the Minister confident he will collect the €109 million in directors' loans made under a provision in the Anglo accounts? Incidentally, they are not annual accounts, but rather 15 month accounts. The public are outraged by the fact that €2 billion was taken by three Anglo directors, as reflected in the accounts, when families are effectively harnessing their children's future for Anglo.

Finally, the credit reviewer mechanism is extremely limited at €250,000 in terms of facilities. There is no statutory basis, just moral persuasion, effectively, and there is no time limit because, in essence, they will have to avail of the appeals system through the bank. Will the Minister not put this measure on a statutory footing?

It is on a statutory footing.

It is not on a statutory footing, rather guidelines have been issued and if the Minister does not know this, then we have a major problem. It should be on a statutory footing, but it is not. Perhaps the Minister might deal with those questions, please, because what we want here is transparency and accountability.

There is a very large number of questions and I shall try to deal with them as they were posed. Deputy Barrett raised the whole issue of moral hazard, which is a serious question, I accept. However, to take the example of Anglo, as I have already outlined, the €70 billion relates to liabilities to the European Central Bank, to our own Central Bank, to depositors and to those who have loaned money in good faith to this institution, on the same basis as any other creditor and not on a subordinated basis. Ireland cannot afford to default on that scale, it is as simple as that.

Clearly, the protection against moral hazard is the system of regulation which we are all discussing in this House. We shall have ample opportunity to discuss it in the legislation before the House already on the Central Bank reform Bill and further amendments to the Central Bank legislation.

Deputy Terence Flanagan raised the question of the draft business plan, which I am advised by NAMA, will be published by June. I am sorry — was it Deputy English or Deputy Flanagan who asked that?

It was I. I asked about the number of tranches as well.

There are a number of tranches, but the intention is to complete all tranches by the end of this year. That is what I am advised by NAMA.

Will NAMA report then, either to the finance committee or the NAMA committee? When will it come forward?

That is a matter for the finance committee. There seems to an assumption here that I will direct NAMA to do certain things. I presume NAMA will arrange to give a comprehensive briefing to the finance committee.

Is there not quarterly reporting?

A request has already been made to the Minister's officials in this regard. The senior deputy secretary seems to be in charge of NAMA.

There are powers in the legislation for the Oireachtas to summon NAMA before it, as the Deputy knows, but it should not come to that.

Fianna Fáil composes the committees.

I assume that NAMA will be anxious to give all the information possible to the committee.

That is not true.

Members of the House should be aware the Opposition was consulted about the appointments to the board of NAMA and had a real say and input in that regard.

It is another HSE.

Through the party leaders and——

The Labour Party has no nominees on the board of NAMA.

Will Deputy Burton please stop interrupting the Minister?

Fianna Fáil has no nominees on the board either. Persons were nominated to the board following a consultation process with the Opposition parties. I am sorry, but some of the names put forward by the Opposition parties were appointed to the board. This board is not acting in bad faith, and neither am I.

The Minister is acting as a lawyer now and putting up accusations that were not made.

The Deputy has made some big accusations today.

The Minister is not in the High Court now, so does not have to play the lawyer.

We are in Dáil Éireann. As far as the statutory instrument Deputy O'Donnell referred to is concerned, it is SI 127 of 2010. It concerns guidelines issued under section 210(1) of the National Asset Management Agency Act regarding lending practices and procedures and relating to the review of decisions of participating institutions to refuse credit facilities. That is the statutory basis for the credit reviewer's role.

Based on whether they give it out.

That is the statutory basis for the credit reviewer's role.

Deputy English had a number of questions, and perhaps he might refresh my memory. I believe he was concerned, first, about the value of the haircut imposed by NAMA. Everyone has recognised——

It was a very dramatic haircut, but that was not my main concern.

He was concerned about the recoverability of NAMA's loans.

I am very concerned.

It is clear from what NAMA has done to date that it has valued the loans at a very substantial discount, so it is making its own assessment about recoverability in that context.

(Interruptions).

The Minister is not finished. I understand that values have bottomed to 50% or less in some cases. That is fair enough, and indeed better than we had thought. However, in some cases developers might never be able to repay any of that because, as is evident at the moment, there is already €10 billion of rolled-up interest. Why should they start paying tomorrow when the assets are with NAMA? That is my concern.

The Minister has said previously that he will chase personal assets, if necessary, to have this money recouped. My concern is——

Can I reply to the Deputy, because he said I smiled at the time when he put the question? The reason I smiled is that I found it unusual for a child to be described as a special purpose vehicle.

That is all right.

However, there is power in the NAMA legislation to set aside transactions executed in favour of family members, that would attempt to defeat its purposes in the collection of the debts. That is the statutory position in that regard. The ingenuity of the professional advisers who advise those who seek to arrange their affairs to avoid enforcement has to be matched by the ingenuity of NAMA in dealing with them.

On Deputy O'Donnell's question about commitments and the position on capital, of course I made it clear at all stages to the regulator — as I am bound to do as Minister for Finance — that the State would meet whatever minimum capital requirement was there for Anglo. Were the State not to give that undertaking, which is one that is frequently given by me in this House——

The Minister gave a commitment on Anglo and the €8.3 billion, specifically.

All institutions in relation to capital, as I have outlined both in the supplementary——

The Minister is not answering the question.

Will the Deputy allow me to answer the question? Regarding the supplementary budget last year, first of all, it was made clear that as a result of NAMA occasioning losses, the State stood ready to provide capital by way of ordinary shares, equity. Likewise when the NAMA legislation was introduced last September, a similar undertaking was given on the floor of the House, and the Financial Regulator would have been assured at all stages with regard to Anglo Irish Bank, specifically, and any other institution in respect of which he made an inquiry that the State stood ready to provide capital. Otherwise——

Was there a specific figure?

——the institution would be faced with an immediate——

Was there a specific figure?

Can I finish the answer? It would be faced with an immediate call, and the State would be faced with an immediate call as well.

With regard to the promissory note, it was approved by the Government last Tuesday and by the European Commission. That is the sequence of events. There is no hidden commitment or secret agreement or understanding. There is, of course, the working through of the accounts of the body. That had to take place, by way of forward planning, so the announcement could be made by the due date so financial stability could be maintained in our banking system.

Why did the Minister not say that in his speech last Tuesday?

I call Deputy D'Arcy.

Will the Minister answer my question about the third banking force?

I am allowing Deputy Michael D'Arcy to ask a two sentence supplementary, no longer than that.

He did not answer my question about Irish Nationwide Building Society and EBS.

Deputy, resume your seat.

He is avoiding answering questions.

He did not answer my question either.

I am not avoiding it.

Will you answer it now?

Unless I get the co-operation of the House, the Minister will not be allowed to answer.

What is the Minister's opinion of the significant conflict that is taking place at present between his Department and the NAMA structure and the Minister for the Environment, Heritage and Local Government, who is instructing planning sections, via departmental circulars, to de-zone land? There is an incredible conflict in that regard. It is important to hear the Minister's view——

The Deputy will have to pursue that through a different avenue such as parliamentary questions to the line Ministers.

It is very important with regard to NAMA because property has already gone into NAMA where land has been de-zoned. The haircut we are discussing is already out of date and is on the way down. This is something both Ministers will have to sort out between them.

We will conclude this after the Minister replies.

I understand the point Deputy D'Arcy is making, although it is not directly relevant to this debate. It is an issue, but one we can discuss at another time. Deputy Burton asked about the future of EBS and Irish Nationwide Building Society. I outlined the position on an institution-specific basis with regard to both institutions in my speech last Tuesday. Each institution must submit a structural plan by the end of June to the European Commission for final approval. We will work with the institution and the Commission in that regard.

So the third banking force is gone?

A question about the third banking force was asked. The most important issue——

We are moving on to statements on obesity.

I asked a question about the mortgage debt group.

We are moving on to statements on obesity. The Deputies have had a good innings. They will have to pursue the matter through parliamentary questions or Adjournment debates.

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