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Dáil Éireann debate -
Tuesday, 20 Apr 2010

Vol. 706 No. 3

Central Bank Reform Bill 2010: Second Stage.

I move: "That the Bill be now read a Second Time."

It is now three weeks since I outlined to this House the last major element of the Government's strategy to resolve our banking crisis. The decisive and bold steps we have taken are not popular, and the honest and full disclosure by the Government and its agencies of the appalling mess we have uncovered within our banks has shocked the nation. However, I believe there is recognition among the citizens that the measures we have taken are necessary and that they are the correct measures to put our financial institutions back on a sound footing so that they can return to the business of serving the best interests of our economy.

I believe public confidence in the system of regulation we have put in place is growing by the day and I believe that the work of NAMA in cleaning up the banks' balance sheets and forcing them and their borrowers to face up to their losses is winning the respect of the public. I want to acknowledge, in particular, the contributions of the Governor of the Central Bank, Professor Patrick Honohan, the Financial Regulator, Matthew Elderfield, and the chief executive of NAMA, Brendan McDonagh. In the past three weeks, they have, in their respective roles brought enormous credibility and professionalism to the new structures the Government has put in place to resolve the banking crisis.

The decisions we have taken have met with approval internationally. The IMF has stated the measures we have put in place will preserve our financial stability and ensure our banks can withstand any future losses. The Commission Vice-President for Competition, Joaquín Almunia, has also endorsed our actions. Specifically he said, "There is no doubt that both Anglo Irish Bank and INBS need a significant recapitalisation to meet their obligations. The measures are also necessary to preserve financial stability in Ireland." There has been favourable commentary from respected newspapers such as the Financial Times and The Wall Street Journal as well as The Economist magazine and Newsweek. The financial markets have reacted favourably. The ratings agency Moody’s described NAMA as an ingenious mechanism with several successful historical precedents.

All of this international approval reinforces the confidence engendered by the manner in which the Government has addressed the imbalance in our public finances in the past two years. The fact is that Ireland is now regarded by international investors as a country that faces up to its problems and deals with them effectively. The credit for this growing confidence rests with the citizens themselves. They have demonstrated their gritty determination to get this economy back on the road to growth. They have shown the world that the enterprising spirit that brought us the boom is alive and well and will lead us back to recovery.

The ESRI in its quarterly economic commentary published last week confirmed the forecast of the Central Bank of Ireland and of my own Department of a return to growth in the second half of this year. There is mounting evidence that economic conditions are stabilising. Consumer sentiment is improving, car sales have increased noticeably, while surveys of manufacturing and services firms confirm we are moving in the right direction. The emerging recovery is, out of necessity, being led by the exporting sectors of our economy. This reflects the somewhat improved international economic environment, as well as the competitiveness we have regained through the difficult budgetary measures we have taken.

We know from past experience that employment growth can lag behind economic recovery. However, as the recovery gains momentum, the sole focus of the Government will be to foster the conditions in which jobs can be created. Let us remember that is what the banking measures are all about. Unless we have healthy banks providing credit to viable businesses, we will not create jobs. There is no gainsaying that reality. No amount of political mischief making about our motivation in solving this banking crisis will distract us from the objective of getting our people back to work. That is why we want to move forward with financial regulatory reform as quickly as we can.

The Central Bank Reform Bill is a crucial step in a comprehensive programme to put in place a domestic regulatory framework for financial services that meets the Government objective of maintaining the stability of the financial system; that provides for the effective and efficient supervision of financial institutions and markets; and that safeguards the interests of consumers and investors. This is the first of a three-stage legislative process to create a new fully integrated structure for financial regulation. It provides a statutory basis for the new structure to replace the existing Central Bank of Ireland and Financial Services Authority of Ireland.

Deputies might well ask why a three-stage structure. This is the first Bill. The third Bill is a consolidation Bill and the other Bill contains further reforms. However, it is important to note that the regulator was recruited as the head of financial regulation and the Governor of the Central Bank of Ireland was appointed as governor with the intention that their positions be reflected in legislation as quickly as possible. In other words they were appointed on the basis that this legislation would come into force. It is of urgent importance that we enact the necessary legislation that provides for a revised corporate structure within which the governor and head of financial regulation can operate.

A second Bill, to be brought before the House in the autumn will enhance the powers and functions of the restructured Central Bank of Ireland regarding the prudential supervision of individual financial institutions; the conduct of business, including the protection of consumer interest; and the overall stability of the financial system. A third Bill will consolidate the existing statutory arrangements for the Central Bank of Ireland and financial regulation in the State. This legislative programme, while demanding and complex, is essential. A sound financial regulatory regime is fundamental to a sustainable and dynamic financial services industry.

Prior to the financial crisis, there was a view that the structures and systems responsible for financial regulation were effective and appropriate. As we now know, that confidence was seriously misplaced. The previous regulatory system failed spectacularly to prevent what we now know to have been grossly excessive and irresponsible lending to the property sector. As a result, our most systemically important banks have had to be recapitalised and Anglo Irish Bank has had to be brought fully into public ownership. The financial system overall has been severely shaken and customers and households are managing unprecedented levels of debt.

Wide-ranging reform is urgently required. We need a system where the overarching objective of the stability of the system informs directly the supervision of individual firms while at the same time safeguarding the interests of consumers and investors. The Central Bank Reform Bill delivers on that clear and simple objective and it is important it is enacted as soon as possible.

My Department has initiated consultations with key stakeholders. I will reflect on the issues emerging from that process in the coming days. I understand Opposition spokespeople have been also briefed by my Department and I will, of course, reflect on the views expressed in this debate also.

The Bill contains significant changes. The reformed institution will be known as the Central Bank of Ireland. The Irish Financial Services Regulatory Authority will be dissolved and the post of chief executive of IFSRA will be abolished. A new integrated structure with a unitary board, the Central Bank Commission, is being established to be chaired by the governor. It will be responsible at once for the stability of the financial system overall, prudential regulation of financial institutions, and the protection of consumer interests.

The head of financial regulation and the head of central banking will be given a statutory basis. The Bill includes transitional arrangements to enable the incumbents of the posts of chief executive of the Financial Regulator, Matthew Elderfield, and the director general of the Central Bank of Ireland, Mr. Tony Grimes, to take up these positions upon commencement of the relevant sections of the Bill. The statutory positions of Registrar of Credit Unions and Financial Services Ombudsman will not be changed.

The Governor remains solely responsible for European System of Central Banks-related functions. The bank's independence in this regard is strengthened further by the Bill. In order to put in place an unambiguous regulatory focus, the bank's statutory role of promoting the development within the State of the financial services industry will be removed. Alternative and improved arrangements for the development of the financial services industry are being examined.

Apart from providing for the new fully-integrated structures, the Bill enhances accountability and oversight mechanisms of the governance of the bank and its regulatory performance. Under its provisions, a committee of the Oireachtas will now receive an annual regulatory performance statement. This innovation is consistent with the recent recommendations of the Comptroller and Auditor General in his special report on the Financial Regulator. The Bill requires the bank to arrange regular peer reviews of its regulatory performance at least every four years and to report on such reviews in the performance statement. The bank will also be required to prepare a strategy statement every three years in addition to its annual report and accounts.

The Bill transfers responsibility for consumer information and education to the National Consumer Agency along with associated staff. In this way, the new institution will have a sharper focus for regulating how financial institutions deal with their customers — the so called "conduct of business" regulation. While the post of consumer director and the statutory consultative consumer panel will be abolished, the consumer function will be integral to the bank itself. Consumer issues will have to be planned and reported on in the regulatory performance statement and the bank's performance in this area will be subject to Oireachtas scrutiny and oversight.

Both the consultative consumer panel and the consultative industry panel are being abolished and replaced by new arrangements through which the bank will have the power to establish expert groups to advise it on the exercise of its functions. Specifically, it must establish a group to advise on consumer-related functions. The bank will be required to report on all advisory groups in its annual report.

The Bill gives the National Consumer Agency the power to impose levies on financial service providers for the purpose of funding the functions assigned to it. In addition, the bank or a body prescribed by the Minister for Finance, including the Pensions Board, the Financial Services Ombudsman and the National Consumer Agency, may collect the various industry levies as an agent of the others.

The Bill provides for new powers for the bank to ensure the fitness and probity of nominees to key positions within financial service providers and of key office-holders within those providers. These are the powers to which Mr. Elderfield referred in his evidence to the Joint Committee on Finance and the Public Service last week. It was my view that rather than waiting for the next Bill which will enhance regulatory functions, these powers should be brought forward in this legislation because of their importance in helping to set the tone of the new regulatory arrangements. We have seen, as late as yesterday, the devastating effects of irresponsible and incompetent behaviour at senior levels in financial institutions and we must ensure, as a matter of urgency, that the powers exist to prevent such behaviour in the future. These new powers for the bank will help restore confidence in the management of financial institutions both domestically and in international markets.

Two other measures contained in the Bill are not related to the reform of the bank's organisational structures. First, greater flexibility is being given to credit unions to reschedule loan arrears subject to appropriate liquidity, provisioning and accounting transparency. Second, the Insurance Act 1989 is being amended to enable the bank to appoint employees of the bank or other suitably qualified persons to be authorised officers for the purposes of the Insurance Acts. This gives the bank flexibility to ensure compliance with insurance regulations.

Overall, the structural changes contained in the Bill will deliver better co-operation and co-ordination between prudential supervision of individual institutions, conduct of business regulation and the maintenance of financial stability overall. The Bill establishes a new financial regulatory regime. I am confident it will attract and retain the confidence of consumers and investors.

The causes of our financial crisis will be investigated by a commission of inquiry later this year. As the House is aware, two separate scoping inquiries which will inform the commission's terms of reference are now under way. The causes of the global financial crisis have also been the subject of detailed analysis. The Group of Twenty countries and the EU have been working to put in place a wide-ranging programme of reform to address many of the weaknesses in financial regulation, supervision and corporate governance that contributed to the banking crisis. This programme of reform will lead to improved supervision and international co-operation. It will strengthen prudential requirements, improve risk management and market integrity and provide greater transparency of the world financial system. The scope of regulation is being expanded to include parts of the financial system that hitherto had been considered of little systemic importance. Governments and regulators now recognise that the systemic nature of individual components of the financial system goes far beyond traditional and more visible sectors such as banking. The second Bill, to be published in the autumn, will deal specifically with necessary enhancements and adjustments to the new institution's powers and functions, and will take account of EU developments and emerging best practice at international level.

Today's Bill amends the Central Bank Act 1942, which itself has been subject to several major and numerous minor amendments over the years. The result is a collection of related enactments that urgently require consolidation. The European Central Bank has drawn attention to this requirement on a number of occasions, most recently in its opinion on the heads of the Bill before the House today. I intend that the programme of regulatory reform, beginning with today's Bill, will deliver a consolidated text as soon as practicalities allow.

The Bill is necessarily complex in its composition. However, the central aim — to put in place a unified and integrated structure — is straightforward. The bulk of the amendments to the 1942 Act are to be found in Schedule 1, which begins on page 35. Section 14(1) provides for the wholesale implementation of the changes set out in the Schedule to the 1942 Act. These changes give effect to the structural changes in the current arrangements. These are as follows: the creation of the Central Bank Commission; the dissolution of the Irish Financial Services Regulatory Authority; the establishment of a new management structure within the bank; and the introduction of new accountability measures; and, in particular, enhanced accountability to the Oireachtas.

Section 2 provides for the commencement of the Act by way of ministerial order, with provision to allow for various elements of the Act to take effect on different dates. Section 3 provides that the interpretation of expressions in the Act is to be the same as the interpretation of expressions in the principal Act unless otherwise stated.

Section 4 provides that the chief executive of the Irish Financial Services Regulatory Authority immediately before the commencement of the section is to be the first head of financial regulation and will hold that office until he or she would otherwise have continued to hold the office of chief executive. Sections 5 and 6 carry over the terms and conditions of employment of existing Central Bank employees and set out the arrangements whereby staff of the Central Bank may be seconded or transferred to the National Consumer Agency to carry out functions now being transferred to the agency.

Sections 7 to 12 set out the continuity provisions that enable the Central Bank to carry on various activities that it is inheriting from the previous regulatory structure. Sections 14 and 15 provide for the amendment of the Acts and other Acts referred to in the Schedules to the Bill. Sections 16 and 17 provide for the replacement or deletion of certain obsolete references.

Part 3, covering sections 18 to 44, provides for a "fitness and probity" regime to be applied by the Financial Regulator. This will enable the bank to regulate appointments within financial service providers to help ensure the fitness and probity of significant office holders. The main elements of the provisions include: a measure that will enable the banks to prescribe functions which are to be "controlled functions" and to suspend persons performing such functions pending an investigation into whether they should be prohibited from performing these functions on the basis that they are not fit and proper persons to perform them; the power to suspend a person for a maximum period of two months where the head of financial regulation, or his nominee, is of the opinion that there is sufficient reason to suspect that a person is not a fit and proper person; powers for the Central Bank to prohibit a person from carrying out controlled functions with the order being contingent on, among other things, the Governor of the bank, or his nominee, forming a reasonable opinion that the person is not a fit and proper person; powers for the bank to apply to the High Court for an order prohibiting a person from performing a controlled function should a direction not be complied with; powers to permit the bank to prescribe a subset of controlled functions which allow the person concerned to exercise a significant influence on the conduct of a regulated financial service provider; and power to allow the bank to issue standards of fitness and probity in respect of controlled functions and prohibiting regulated financial service providers from permitting people who do not satisfy these standards from performing controlled functions.

Schedule 1 contains the key reforms to the structures of the bank. Items 1 to 19 set out various changes to definitions and interpretation provisions. I will focus on changes of substance rather than technical or consequential changes. Items 20 to 27 relate to the establishment of the Central Bank of Ireland, its functions and objectives and other related matters. The primary objective is to maintain price stability. Other objectives and functions include the stability of the financial system overall; the proper and effective regulation of financial institutions and markets; the efficient and effective operation of payment and settlements systems; the provision of analysis and comment to support national economic policy development; monitoring of the provision of financial services having regard to the public interest and the interest of consumers; and the collection, study and publication of data that deal with monetary and credit problems.

Importantly, item 23 inserts a new provision which puts beyond all doubt the independence of the bank, the governor and the Central Bank Commission in matters relating to the Treaty of Rome and the Statute of the European System of Central Banks. I believe the Bill as published should copper-fasten this independence in a way that respects both the letter and spirit of the relevant statutes and which provides the necessary assurances as to the robustness of our regulatory system. The European Central Bank has attached the same importance to this issue in its recent opinion.

Item 28 substitutes new sections into the Central Bank Act relating to the new boardroom arrangements for the Central Bank commission. The commission is to consist of the Governor, who is the chairman of the commission, the two heads of function, the Secretary General of the Department of Finance and between six and eight other members appointed by the Minister for Finance. The amendments also provide new powers to enable the commission to establish advisory groups. While they include a specific requirement in this regard in respect of its consumer-related functions, the bank will also take into account the importance of an industry voice in exercising its powers in this area. Item 28 also provides that functions may be delegated within the Central Bank in certain circumstances.

Items 30 to 34 deal with the Governor, providing that, to underpin the independence of the Central Bank, he has the sole right to determine budgetary or funding issues in relation to the bank.

The 1942 Act is being amended to remove the requirement for a unanimous resolution of the board of the bank to request the removal of the Governor from office for specified grounds of serious misconduct. This requirement was an anomaly in the original legislation that did not make sense. In removing it, there is no diminution of the security of the governor in his post but merely a more logical procedure for an admittedly unlikely scenario.

The Minister for Finance may appoint members of the commission if satisfied that the people nominated have experience in a relevant field of expertise, for example, financial regulation, banking or consumer interests. Members are ordinarily appointed for a term of five years, except for the Governor, the heads of function and the Secretary General of the Department of Finance, who serve as members for as long as they hold their respective offices. Members of the Houses of the Oireachtas, the European Parliament, a local authority or persons who consent to be nominated to become members of one of those bodies are not eligible to hold the office of head of function or to become a member of the Central Bank commission.

Item 39 sets out the management, finance and accountability provisions for the Central Bank. I am pleased to be able to enhance the role of the Oireachtas in overseeing the performance of the bank. This was a major consideration for the Government when deciding on the elements of the reform package. The bank is required to submit a strategic plan once every three years to the Oireachtas through the Minister for Finance, specifying the bank's objectives and its plan to achieve them. Additionally, an annual regulatory performance statement is to be prepared and presented to the Minister for Finance, which will include details of the bank's internal audit function and in respect of the activities of the Registrar of Credit Unions. This performance statement will form the basis of an examination by the relevant committee and the committee may require the governor, the head of financial regulation or the head of central banking to appear before it to be examined on the contents of the statement. This will ensure regular parliamentary consideration of the state of financial regulation. The bank will also undergo a review of its performance by one of its peers, or another suitability qualified person, at least every four years.

Part 5 of Schedule 2 provides for the amendment of the Consumer Protection Act 1995 to take account of the dissolution of the Irish Financial Services Regulatory Authority and the creation of a unitary structure. This part provides for the transfer of certain functions formerly performed by the consumer director to the National Consumer Agency.

Part 7 of Schedule 2 introduces an important amendment in respect of credit unions. As Minister for Finance, I have supported the development potential of credit unions to ensure they continue to provide for the financial, saving and borrowing needs of the communities they serve. Many credit union members are experiencing difficulty in meeting loan repayments due to unfavourable changes in their financial circumstances in the current economic environment. Increasing the lending limit for credit unions and formalising arrangements in the area of rescheduling of loans will facilitate credit unions in their wish to ease the position of these members. Accompanying requirements with regard to liquidity and provisioning will protect the financial stability of credit unions and ensure that the security of members' savings is maintained.

Item 2 replaces section 35(2) of the Credit Union Act 1997, changing the 20% limit, which applies to the total loans outstanding over five years, to a 30% limit. Item 3 provides that the Central Bank may impose on credit unions requirements in relation to their lending practices. This includes provisioning for bad and doubtful debt, liquidity requirements, controls and reporting. The Registrar of Credit Unions will adopt a balanced and proportionate approach in the application of the loan provisioning requirements which are proposed to be introduced. Depending on the circumstances, a missed repayment on a rescheduled loan may not always trigger a full provision against the loan provided that the credit union is satisfied that the loan continues to perform in accordance with its new terms.

The new section 35B imposes on credit unions a requirement to have appropriate processes, procedures, systems, controls and reporting arrangements in place to monitor compliance with the requirements of section 35 and section 35A. These counter-measures are required to balance against the greater risk attaching to increasing the lending limits and rescheduling loans. Item 39 of Schedule 1 of the Bill explicitly underlines the importance of the work of the Registrar of Credit Unions through the requirement that the annual regulatory performance statement should include details of the activities carried out during the preceding year by the office-holder.

I would like to refer now to a number of procedural matters. As Deputies are aware, the Government is required to consult the European Central Bank on legislative proposals of this type. In advancing work on the Bill, I particularly welcome the publication of the ECB's opinion on the Government's draft heads and I will make arrangements to lay the opinion before the House prior to consideration of the Bill on Committee Stage. I am keen to work closely with the ECB to ensure the best possible reform of the structures of the Central Bank of Ireland and this opinion is an important part of that process.

I am also pleased to note the endorsement by the ECB of the general approach being taken by the Government. There are no issues of principle for us in the opinion. To the extent that issues have been raised, these have already been addressed in the final text of the Bill or can, if necessary, be dealt with as the Bill progresses through Dáil Éireann and Seanad Éireann.

I should also inform the House that it is likely that I will be bringing forward amendments to the Bill on Committee stage. I will give Deputies details of the amendments in advance and my officials will be available to brief Deputies on them as required.

In my contribution, I stuck faithfully to the subject of this Bill. Without wishing to pre-empt the contributions from the Deputies opposite, I can safely predict that in their contributions they will return to the issue of the State guarantee. In that regard, I remind them of a very detailed and lengthy discussion of that matter that took place in committee on 26 February 2009. I recently reread the transcript of that hearing and I believe it answers many of the questions that have again recently been raised by Members of this House.

I look forward to hearing what the Deputies have to say about the Bill. I am open to constructive suggestions and I will listen very carefully to any proposals that emerge. This Bill is urgent and essential. I am confident the approach we are taking is the correct one and that the new structures we are putting in place will help to ensure a robust regulatory system that will win confidence here at home and internationally. I commend the Bill to the House.

I move amendment No. 1:

To delete all words after "That" and substitute the following:

"Dáil Éireann declines to give the Central Bank Reform Bill 2010 a second reading because:

I. It has not been rooted in any proper investigation of what has gone wrong, nor any serious attempt to make key players accountable for the errors committed, both of which are necessary to determine whether this Bill is an appropriate response.

II. It infers that the most urgent reform is to change the architecture of the existing regulatory bodies, when there is no verifiable evidence that such architecture was in any significant way responsible for the shortcomings of the regulatory system.

III. It preserves the system of appointment of Directors to the new Central Bank Commission exclusively to Government with no proper scrutiny by the Oireachtas or any other external body.

IV. It does not give the new Commission the necessary ‘bank resolution' powers needed to put failed banks safely into a managed administration when that is the most appropriate policy outcome.".

It is sad to say that once again we are being asked by the Government to accept on faith that it knows best when it comes to what is to be done to resolve the banking crisis. Here, it is telling us that, without any investigation of what went wrong, it knows exactly what the new architecture ought to be and knows what sort of engine will drive a new regulatory system, although it does not know the destination of the new regulatory system, which powers it needs, what it is to investigate or what it must hold to account.

That is an extraordinary approach, that we start off by designing the engine and then find out what sort of terrain we must bring it across. That, however, is the Government approach. If we have learned one thing from the debate about banking to date it is that such faith in Government is simply not justified. We must treat these faith-based solutions with extreme scepticism.

We were told when the banking guarantee was introduced that it would be the cheapest bail-out of any country. The Government then extended the guarantee to bond holders. The present Governor of the Central Bank was explicit in his view that money that could leave the banking system — deposits — should have been guaranteed, and that the guarantee should have been extended to new investors entering the market in bonds for banks. The Governor of the Central Bank is now regarded rightly by the Government as the source of some expertise in handling banking crises, but where was the consultation with him when this guarantee was designed? It was supposed to be the cheapest bail-out of any country and is proving to be anything but.

We were also told that we must keep Anglo Irish Bank and the Irish Nationwide building society as going concerns and that such an approach was a pillar of a banking solution. The estimate of the cost of keeping Anglo Irish Bank going was €4 billion and we thought Irish Nationwide might cost €1 billion. However, we know now Anglo Irish will cost €22 billion, and rising, and the cost for Irish Nationwide is €2.7 billion. The truth is that 70% of the recapitalisation money we are sinking into those banks will not result in one red cent of new credit going to businesses that might build a future for this economy. That is the reality but the Government continues to insist that these are banks and institutions of huge systemic importance that must be kept afloat at all costs.

The third element of the banking strategy, on which we were given assurances time after time, was to trust NAMA because it would get credit flowing. Yesterday we heard from Irish Nationwide Building Society that it will not get one ounce of credit going and it is clear that the €2.7 billion will be used immediately to pay bondholders. From the same stable that produced all these wonderful solutions to our banking crises and about which we are now learning the true cost, we have this latest prognosis.

The important point is that this Bill is about ensuring this will never happen again and that never again should we have to cross this threshold. It defies belief that we should start a "never again" process without knowing what went wrong and without having the results of the investigation. The genesis of sorting out the architecture of the solution comes from the school of thought that says we should circle the wagons and get back to what is known as business as usual as quickly as possible. That is what many people in the banking system want to happen. They do not want a lot of awkward questions but want to get back to business as usual, blaming the problem on some kind of architecture that was misdesigned back in 2002. They believe that whoever designed it back then got it wrong. It was the Minister's predecessor, Mr. McCreevy, who designed it, with the help or hindrance of his colleagues, the then Deputy, Michael McDowell and Deputy Mary Harney, now Minister for Health and Children. It was a camel produced by different groupings that came up with the idea.

With my hand on my heart I can say we tabled a reasoned amendment at that stage, stating precisely what was wrong with this bit of financial regulation. It involved taking a huge bulldog clip to a heap of powers that were centred in areas of enterprise and employment and in the Central Bank. They were scattered through nine or ten different Bills. The regulation put a big bulldog clip around these powers and posted them to the new agency, asking it to look after them. Perhaps it was prophetic of me at the time but I said we needed to examine those powers to see whether they were up to regulatory best practice and capable of doing the job we were asking them to do. Mr. McCreevy was in the Minister's seat and refused to allow that happen even though Enron and All First had broken around our ears. The entire regulatory regime was seen to be challenged by weaknesses in corporate governance and the authors of the piece of legislation we are deciding now to change would not take the time to undertake that scrutiny.

That said, nobody in their wildest dreams believes that our bipartite board — two different boards with largely overlapping representation; a regulatory authority that was slightly separated from the Central Bank — was the cause of this problem. If the Minister believed that it would have been peppered everywhere in his speech that this was something with which we really must get to grips. It did not happen because it was not the cause. This makes me very suspicious of the thinking that is going on in official circles concerning what must be done to cure the situation. The thinking is that we should make a few running repairs to what is going on and then press on at all costs. That is not good enough.

It is becoming clearer to the general public that we need transformative change in banking policy. We need an entirely different culture to be applied in banking, one different from any we have seen. As recently as this week we saw that this damaged and broken culture is alive and well and still kicking down in those banks. They feel there is nothing unusual about finding €1.9 million for a pension fund for a chief executive, this at a time when people are losing their homes and their jobs and are having their pay cut. They are unable to get by and the reason is the mismanagement of those very bank executives who think it is acceptable to push on and do what they always did. There was an arrangement so they will stick to that arrangement. That is not acceptable and the sooner people cop on, not only in Government but in the wider banking circle, that the public will not wear that the better it will be.

People will not suck it up any more. They want a change of culture and approach and they want it to start now. They want accountability. That is the most crucial point. As people have pointed out, accountability is not about the Taoiseach saying he used the best advice at the time. Accountability is about asking whether that advice was adequate, whether it was taken, whether it was based on proper research and whether the people who offered the advice were sound in their beliefs because they had consulted properly with all those who might have offered an alternative view. It is about asking whether they tested the advice and offered it in good faith so that we could see it was adequate. That is the chain of accountability but no such chain is being applied here.

Coming up with this Bill is totally self-serving as far as the Central Bank and its role in the regulatory authority are concerned. This is not accountability but solving a problem that was never greatly exposed as a problem. The Minister knows as well as I do that the problem was the cosy circle. Bankers believed they could do what they liked. They could walk on water and it would come all right in the end because they were pumping up the property bubble at a great pace. Regulators accepted on faith what their betters in the banks told them and never questioned it, never sought alternative advice. They did not hold bankers up to proper scrutiny or probing as they ought to have done. The Government did not only luxuriate in the company of these titans of the property bubble but also fuelled the bubble with inappropriate fiscal policy and tax policies. Senior advisors — the permanent government of this State — were too much in thrall to the entire system and they, too, did not play their proper role of providing the right sort of expert advice to challenge what was going on or equipping themselves with the sort of advice that was necessary in the regime they were overseeing.

Yesterday the Irish Nationwide Building Society and its report reminded us of everything that was rotten. Institutions were run as personal fiefdoms. Even now, those who ran them have not suffered in any way or had any consequences for what has happened but the consequence for taxpayers, mortgage holders and people looking for jobs is extraordinary. Ordinary people have been brought to their knees and they want accountability. They want it now. They will look to other countries to see what those countries have been doing. They look to the United States where they see there are 42 bankers in jail and the banks are already paying back some of the money extended by government. They look to Iceland where the prime minister, the minister for finance, the governor of the country's central bank and the head of the regulatory authority have all been found to be negligent by a justice of the supreme court. Those cases in which they were found negligent are very similar to what we have seen in this country, such as the drive for short-term profits without regard to risk, cutting tax during a boom, policy makers ignoring an imbalance in the economy and increased risk taking in banks not being met with the appropriate regulatory response. The list continues and is very close to what went on in this country. However, in Iceland at least the people have a clear decision that there was negligence. The finger has been pointed and there is accountability. People can understand that and move on, hoping to be able to say they now know what went wrong and that they can design a structure so that it will never happen again. Here we are being asked to accept a structure without that "never again" analysis.

I must ask the Deputy to adjourn the debate.

Perhaps the Acting Chairman will let me know how many minutes remain to me.

The Deputy has almost 17 minutes left of his 30-minute slot.

Debate adjourned.