As I was outlining last night effectively the Government is turning to the Dáil once again and asking us to accept on faith that its solution to bank regulation will be the best possible. I simply believe its record does not stand up to scrutiny. The Government states that the important thing at this time is to reorganise the architecture of the Irish regulatory system when there is absolutely no evidence to suggest that architecture was in any way responsible for what went wrong. Equally it is proposing to push ahead with creating this new system without completing any investigation into what went wrong or any accountability for those who were intimately involved in what went wrong. Both of those are necessary before we can see that we have an adequate system for dealing with a regulatory regime for the future.
It is now clear to me and to many people in the general public that many still in the banking system believe that once the taxpayer has ponied up with the guarantee, the cost of NAMA and the recapitalisation they can simply return to business as usual. However, the taxpayer is in no mood to accept that. The taxpayer rightly demands to see in Ireland the same sort of accountability as we have seen in other regimes, where individuals in the public service who carried responsibility or private bankers who carried responsibility are openly and clearly held to account and there are consequences for their accountability. We have not seen that and we cannot design a system for the future without having seen that level of accountability and without having seen whether there are flaws in our existing legal regime that are preventing these people from being properly held to account.
The truth is that the mysteries of banking have been stripped back to reveal a system that was easily corrupted by buccaneering methods, paid obscene bonuses for short-term profits and was built on the notion of commissions without any regard for the long-term profitability and without any risk assessment involved. We have seen large banks into which the State is going to pour billions of euro run without proper risk assessment and yet none of the people is being held accountable. Boards did not do their duty to their shareholders and shareholders have been left penniless. There was a cosy relationship with Government, the regulators and the Central Bank of Ireland, and there have been no clear consequences for that. Even today the Minister has proposed that the very same way of appointing the old banking commission will apply to the appointment of the new banking commission. It will still be Government selection with no role for the Oireachtas to vet the suitability of those being appointed.
If we are to adopt a "never again" approach as we need to, the Minister should start to think afresh the ideas that are received wisdom, which he is getting from those within the system. There must be a new dispensation in respect to banking which must be much more radical than what is offered by the Minister in the Bill or in any of his pronouncements to date. The issue of "never again" is not tackled in this legislation. I accept that the Central Bank of Ireland will no longer have the role of promoting financial services, but no other change in its approach has been proposed by Government. We are proposing to design how the board will be appointed, who will be its members and how it will be structured without yet being sure what we want them to do. I would submit that is like designing a building without first knowing its function; it is not appropriate.
There are real issues that the House needs to debate seriously. What restructuring of our domestic banks is needed to deal with the risk of this ever happening again? We have had no debate on that matter, which bears on the type of architecture. Why do we not have a bank resolution scheme that would allow failed banks to be closed down safely? That has been put in place in other regimes, including in the UK. We do not yet have such a bank resolution scheme in place.
What are the new clear bank offences that are to be created? It is now 15 months since the Office of the Director of Corporate Enforcement indicated that there was a case to be answered in Anglo Irish Bank and we have yet to see a single charge laid against anyone. Are there obstacles to successfully pursuing offences in the corporate governance area? Are the offences not sufficiently specific? We need to know those in order to know what sort of regime we need in place for enforcement. Is the link between the regulatory system and the Office of the Director of Corporate Enforcement adequate? By passing this legislation we are assuming that everything is fine in that relationship. As I understand it that relationship has meant that to date no fines have been issued from the Financial Regulator against any of the banks for the wrongdoing that occurred. Everyone is standing back until the Garda fraud squad and the ODCE are finished. Is that adequate? Do we have adequate systems in place to enforce this? That is a vital and relevant question before we put to bed the regulatory and central bank structure for the future.
Should we simply be making reckless lending enforceable in the courts? Is that something we should consider? Much of what was done here was simply reckless and should never have happened. If we are going to shift the onus away from the bonus culture to one of long-term responsibility do we need to copper-fasten it in some way? Do we need to have living wills where those banks that are systemically important know at the outset that certain bondholders will need to take responsibility in the event of things going radically wrong?
Earlier today the Taoiseach was taking questions on whether we should be taking powers to prevent this argument that the pension scheme for the chief executive is some way not the public concern when the public will need to walk in and take over when things go radically wrong and bear all the burden of the horrendous mistakes. The Taoiseach has to come in and say that is not part of our regime and that we have no say in it. We must question whether we should have a say in that. I believe it is absolutely unacceptable and offensive to the public to see banks behaving as if nothing has changed while they have seen their jobs wiped out, their houses being repossessed and the economy in tatters with the taxpayer stumping up. We need to have such a serious debate on the regulatory regime.
The Minister is introducing legislation as if it was in some way the first and vital task in fixing our problem. At best this is fixing a minor flaw in the regime. We should not be cementing in a structure that is curing a minor flaw when the results of the major investigation into what went radically wrong are still not at our disposal. I believe the Minister is making a mistake in what he is trying to do. It shows that a culture is still alive and well that believes all that is necessary are a few running repairs and let us press on back to business as usual.
