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Dáil Éireann debate -
Wednesday, 28 Apr 2010

Vol. 707 No. 4

Central Bank Reform Bill 2010: Second Stage (Resumed).

The following motion was moved by the Minister for Finance, Deputy Brian Lenihan, on Tuesday, 20 April 2010:
That the Bill be now read a Second Time.
Debate resumed on 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.".
—(Deputy Richard Bruton.)

I welcome the opportunity to contribute to the debate. I compliment the staff of the Oireachtas Library and Research Service on the comprehensive supporting material they have provided for all Members.

An editorial in the latest edition of The Sunday Business Post stated: “The more we learn about the behaviour of those who have led our financial institutions in recent years, the more obscene the lavish way in which they have rewarded themselves appears.” Members and the public are no longer shocked by revelations about financial institutions which are emerging day after day, week after week. This learning curve started for most in 2008 and it has continued to the present day. Only last week in the most recent chapter we learned of the Taoiseach’s endorsement of a €1.5 million pension top-up for Bank of Ireland’s Richie Boucher, which he subsequently relinquished. Prior to this, a €1 million bonus was paid to Michael Fingleton, former chief executive officer of Irish Nationwide Building Society, INBS, which has not been returned, despite many promises. That list is lengthy and it is likely to continue. Will the legislation bring an end to the obscene rewarding by the banks of their own executives? Will we ever find out the true level of self-rewarding within the banks?

The Minister for Finance capped the pay of new executives appointed to the lending institutions but too many of the old brigade are still in place. Many of them sat idly by while irregularities were perpetrated. If they are forced to leave, they will not go empty handed, given the pattern to date. It seems few knew what was happening while others were in denial. Even when the Taoiseach referred to his tenure as Minister for Finance in the House last week, he declared it was not his duty to monitor the activities of the banks or to inquire when the signs of failure were apparent to the public. There were serious problems in the banking world. During his term as Minister for Finance between 2004 and 2008, most of the banks' reckless lending to developers took place and, at the same time, the economy went from boom to bust. He became part of the cause, despite his repeated denials. Only last week when addressing this legislation, he stated, "We should forget about looking back at the past".

We were told that prior to the start of the financial crisis in 2008 that financial institutions were preparing regulations for the Government. This was raised by Deputy Gilmore this morning and no answers were forthcoming from the Taoiseach in response to the Deputy's questions. Is it not a pity that a regulator such as Mr. Elderfield was not in place at the time? Surely he would have directed that many of the bosses in place then who were responsible for reckless lending take a walk and rather than receive a bonus and he would not have allowed related top-ups. He needs to be complimented on his approach. The regulator needs competent personnel and he stated he is taking steps to address "the critical absence of intellectual firepower within his staff and will appoint experienced and effective staff who will perform their duties properly".

When one sees the deceit that sections of banks engaged in during the years leading up to the crisis and during it, is it any wonder future generations of taxpayers will be burdened for their lives? I refer to INBS and Anglo Irish Bank, which the Minister for Finance alluded to during Question Time. The wreckage left behind by Mr. Fingleton only came to light recently when the annual accounts of the society highlighted losses of €2.5 billion. This was a traditional home loan institution but, unfortunately, its supposed success in the commercial world was a major factor in its downfall. The new chief executive officer of INBS, Mr. Gerry McGinn, said, "What happened at Nationwide is an outrage." The Government had to put €2.7 billion into the bank to shore it up and to avoid its collapse. The shock for those who examined the procedures adopted at INBS was the lack of written documentary evidence, as would be the normal practice if proper procedures and paperwork were followed for commercial developers. There is no evidence of security and more than €8.3 billion in loans will be transferred from the institution to NAMA.

It is hoped the purpose of the Bill is to create a single and fully integrated Central Bank board and commission and to rid the system of the failed regulatory institutions. If, as intended, the heads of the Central Bank and the Financial Regulator's office can control and regulate all financial institutions, the Bill will be worthwhile. The new fully integrated Central Bank will replace the boards of the Central Bank and the Irish Financial Services Regulatory Authority. Their past failure merits this action. One of the main provisions of the Bill is to enhance financial regulations and controls, particularly in the area of enforcement. The new role of the Central Bank, as anticipated by the Minister for Finance's reforms, will be to place itself at the centre of financial supervision, stability and oversight.

The Minister informed us that the new structures will ensure Ireland is regulated to the best EU and international standards as a result of this legislation. The Central Bank of Ireland in its early years did not carry out functions generally regarded as characteristic of a central bank and it did not take responsibility for licensing and supervising banks until 1971. In July 1998 a report by the Oireachtas Joint Committee on Finance and the Public Service warned that the fragmented regulatory structure had allowed many irregularities to emerge, including overcharging. Following the recommendation of the committee, the Government announced a single regulatory authority.

Part 3 is the most important element of the legislation in that it sets out the powers of the Central Bank in regard to key officeholders and the main financial institutions and, in particular, it has the power to intervene in sensitive and influential appointments. The Central Bank commission will comprise the Governor, the chairperson of the commission, the head of the Central Bank, the head of financial regulation and the Secretary General of the Department of Finance. These will be ex officio appointments but between six and eight additional appointments to the commission will be made by the Minister and it is important that each of them be properly scrutinised in order that he or she will be fit for purpose. Will the Minister have a watchdog role or will the Secretary General of the Department take on that responsibility? In the past, many of the appointments made to bodies were of friends or acquaintances of Ministers and others. We hope that on this occasion such practices will not be repeated. We are told that when the provisions of the Bill are enacted that they will restore confidence in the management of financial institutions. We hope that will be the case. That will be welcomed in this country and internationally. Hardly a day went by in the past two years without headlines in the media revealing another scandal — another banker discredited or another link to a developer — caused by the reckless action of the executives of those lending institutions which brought about the failure and crisis in the banking system.

It was a great pity that the bank leadership retreated into denial rather than tackling the problem at the first sign of the crisis becoming serious. Had that happened, much of the subsequent hardships to be inflicted on taxpayers would have been avoided. The failure of proper Government attention to the financial crisis also contributed to the problems. People who highlighted the oncoming problems were criticised for talking down the economy and doing the country a disservice. It must be seen therefore that the current crisis occurred as a result of neglect of duty and recklessness by bankers, the regulators and the failure of the Department of Finance to ensure proper procedures were followed.

One would have thought that the people charged with responsibility, namely, the management of the banks, would be removed from their positions because of their failure and in many cases, irregularities, in their work. The Minister has declared that he will pursue each of them vigorously but the inquiries currently taking place have as yet yielded little result. No confidence will ever be restored into the banking system by the public despite this legislation until some of those people are brought through the courts and put behind bars, as has happened in other jurisdictions.

The defiance of some banks in the face of change has led to promotions in some cases of those who were at the centre of their failure. If we are serious about restoring confidence in the banking system, which is essential for the recovery of the economy, then we must follow the example shown by other countries who have dispatched those who were to blame. There is no shortage of experienced and well-qualified persons who could ensure the proper governance of the banks, which is the job that is required. Given that the State is currently a large shareholder and owner of the banks — at such a high cost to the taxpayer — surely the Minister can demand change and oversee the proper working of the financial institutions? It is essential that the Bill is capable of bringing about the necessary reform of the banking sector. It is important that Mr. Elderfield and Professor Honohan are given the necessary legislative support to do their work effectively. They have the expertise to do what is necessary. Let us hope that no obstacles will be put in their way either by the Government or bank personnel.

One assurance that is giving hope to the public is the stated intention and determination of Mr. Brendan McDonagh, the chief executive of NAMA, who appeared before an Oireachtas committee last week. He insisted that NAMA will pursue the borrowers to recover what they owe. He said his role was to protect the interests of the taxpayer.

I welcome the section dealing with credit unions, which have remained the friend of the small borrower in the past two years in particular, and the fact that they will now be allowed to reconstruct their lending procedures and the underpayments that have been made by various people who have loans from them. I support the Bill. I hope the legislation will ensure the work is carried out as intended and that confidence can be restored in the banking system.

I welcome the Bill and the promise of further legislation in this area in the course of the year. It is essential that we continue to strengthen the banking and financial sectors from a legislative perspective as things change in this country and as we are influenced in the context of that change by outside markets and other countries.

Having listened to what was said in the debate by both Opposition and Government speakers, if we want to be convinced about whether we are influenced or affected by what happens elsewhere in the world we need only look to what happened in Greece yesterday and see how the markets were affected. Trade in Greek banking shares fell by 12% while Bank of Ireland shares fell by 10%. That shows we are in the grip of a global situation and that we are affected by it.

As a small country we need to be in a position to respond to the challenge in a way that is dramatic and radical in order to protect our interests both at home and abroad. In that regard I compliment the Minister for the manner in which he has dedicated himself to the task of ensuring that the necessary change is effected as quickly and efficiently as possible and that it is underpinned by appropriate, strong legislation with the aid of appropriately qualified people such as Professor Patrick Honohan, Mr. Matthew Elderfield and others to ensure that the legislation and regulations are followed. What happened yesterday in terms of the junk status accorded to Greek shares is having an impact around the world especially on Portugal, Spain and this country. In contrast, it was good to hear Mr. John Corrigan outline the fact that while we have to raise €20 billion this year, some €12 billion has already been raised and that there is a cash balance to our credit of €20 billion to give us the time, if necessary, to deal with issues that might arise in the short term.

Yesterday's events also underline the importance of the ratings agencies Standard and Poor's and Moody's and it puts into stark contrast the action we have taken compared with the inaction of other countries. That action has stood to us in terms of our public sector pay bill, the need for reform and the outlining of that reform in the Croke Park deal. It puts at centre stage the efforts of the Government to ensure we have a deal in place and that we are willing to take the necessary measures to reform our financial institutions and the public sector and for the Government to react speedily and do what is required because we are being watched by other economies and those within the European Union. The eurozone is central to everything we do and the protection offered by it through Germany and other larger countries is essential to future job creation, our markets and trade abroad.

It was with some reluctance that I supported NAMA. It came at a time when we were in turmoil. We were looking back at a marketplace that had performed well, created jobs, and given us the appropriate level of taxes to spread equally across society and to help those who were marginalised or dispossessed and needed help and assistance. It was with some disbelief that we considered the activities of the banking sector and how the country, through the activities of one bank in particular, was brought to its knees, and how the tax take, which was affected because of reduced economic activity, dropped to almost €30 billion. That is a lesson for this and future Governments.

I do not mind saying to the public that a certain amount of sorrow and an apology are needed in so far as any of us in this House or in politics generally added in any way to the confusion, lack of regulation or poor decisions. The Minister for Finance has already said this. Having reflected on what happened, there is an onus on Members of Parliament to learn from the past and decide what needs to be done.

There is a lot we can learn from the past. We must examine all that happened in the banking sector. As new figures emerge in the banks, as new appointments are made and as we move the taxpayer to the fore in terms of saving the economy and restructuring and recapitalising the banks, there is a definite need for an open public inquiry into what happened in the banking system. The Minister for Finance has put in place all the measures necessary to gather independently and analyse all the required information. Committees in the House may examine the reports when compiled. Much more needs to be done, however, particularly because of what we have discovered in Anglo Irish Bank and Irish Nationwide.

The public wants to understand, in layman's language, what happened and to see those who were central to the wrongdoing in the banking institutions brought to court or at least made answerable for what they did. Whatever is necessary to strengthen the bank report, make it public and ensure it is debated by this House or an Oireachtas committee should be done. We must review our projects and the commitments we make. As we introduce new legislation to improve regulation, we must reach out to and try to explain developments to the public, who are quite cynical and sceptical about what we are doing in the House regarding the banks.

As this Bill is debated in the House, there is a need for the Department of Finance to reach beyond the House and explain in layman's language exactly what it is about and what the Oireachtas is attempting to do to ensure the existence of a proper banking structure that is regulated and transparent and which serves the public as it should. The onus is on the Government, Department of Finance and Members of the Oireachtas to ensure the deficit of ordinary information is addressed such that legislation such as this Bill can be understood. That is why it was so important to stop the paying of bonuses to bank officials. It is important that there be a cap on salaries and no further payments of the kind made in Irish Nationwide or Bank of Ireland. In respect of the former institution, it is important that the money due to the State, €1 million, be seen to be returned to the State rather than anywhere else.

With regard to the boards of the banks, we can report the actions taken by the Minister to ensure board members are appointed in the public interest. It must be said directly to them that they are not appointed just to fill a position but that they have a role to play in the interest of the public. Irrespective of what happens in a bank, be it in terms of salaries, pensions or other actions, it is up to the board members to give voice to the public's opinion such that the public interest will be protected at all times. If board members' positions are to be credible and if the moneys they are being paid to do their job are to represent value for money for the taxpayer, they must be seen to be taking the appropriate action and scrutinising each transaction within the banks to ensure we are on the right track in terms of regulation and accountancy.

We must also consider the need to convince the public, particularly the business sector, that as we legislate in this area, but not just in this Bill, the banks will be open for ordinary business. The Minister addressed this during Question Time. It is essential that the banks be open for ordinary business if public confidence is to be inspired and if we are to convince people outside this House that we are acting in their interest.

This Bill and what is being achieved will strengthen the whole banking sector. It will show people abroad involved with markets that affect this country that we are going about our business and determined to get it right, regardless of the pain. This is essential. There is a need to convince businesses in this country, which remain unconvinced, that the banking sector will be open for business and available to assist with the establishment and growth of businesses. The sector must ensure businesses, some of which are customers of the major banks, that if they, the businesses, are in trouble, there will be a way out for them. Just as we are seen to use taxpayers' money to bail out the banks, it should be seen that money will be readily available in the banks for businesses, including small businesses and farms, that need assistance. There is no evidence of this yet.

We need to use some of the existing agencies. The Minister for Finance mentioned Enterprise Ireland. I have great respect for the work it does with Irish companies at home and abroad to ensure we can gain access to the various markets that will be so necessary to achieving essential export-led growth. There is a fund to help the export sector.

Instead of decreasing the money allocated to county enterprise boards, we should not only be increasing it but also ensuring, perhaps through the National Treasury Management Agency, that €0.5 billion or €1 billion will be made available to the boards so they will be in a position to offer small companies short-term soft loans to help them surmount particular problems, diversity, expand or sustain existing employment levels. This is essential and involves the sensible use of the 35 different boards. We need to consider this. It is fine to focus on the work on the banks, much of which we have done, but we now need to work more with the SME sector throughout the country.

The credit unions were mentioned, as was the effort they are making to fund small businesses and ensure they have sufficient working capital. This work needs to be supported by the Government.

The other area that concerns me as we finance and recapitalise the banks is the discussion on mortgage holders. A growing number are facing the threat of repossession and court action. We need to ensure that the banks will offer them interest-only loans for a given period and extend their overall mortgage repayment periods. We must also consider the repayment of the capital and how the banks respond thereto. We need to ensure the banks are giving the same assistance to the affected individuals as we are giving to the banking sector.

In this House, we need to look radically at how we will regulate the sub-prime market. The majority of houses under threat of repossession are associated with the sub-prime market. I will not say that people were encouraged in those years of the boom, but they wanted to be like everybody else, in spite of not having the income, perhaps, to own their own house. The only option for them was the sub-prime market. Many houses are now in negative equity and these people are in the area of sub-prime. We need to do something about them, not to ignore them but to include them in some way as regards how that whole area may be regulated, to ensure they have homes for the future. As they fall into arrears and are not recognised within the banking sector, they have not got any rights if the house is dispossessed, to go back into the local authority sector. Therefore we need to do something for them to ensure that this happens.

The last appeal I would make to the Minister is beyond the area of Enterprise Ireland, the county enterprise boards and the credit unions. It is something the Government can do itself in regard, for example, to the hospitality or retail sector. We need to be radical in terms of how we fund local authorities or allow them to fund themselves. We need to reduce the burden of over-stated commercial rates. If a Bill is being considered in the future in regard to the financial area, such as the present legislation, then we should extend our consideration beyond the obstacle of local government funding towards ensuring that commercial rates are dramatically reduced.

Only last week I met a group of people who are being subjected to the upward only rent review process, which is a serious problem for properties quite close to Leinster House. I see no reason why the institutions, some of which we are supporting, cannot be influenced into giving a break to their tenants and reducing the rent downwards to where it should be relative to property valuations in the marketplace today. That is essential across the country and in most cases it will be found that while individual landlords will reduce the rent, the institutions and those people who own major properties are simply sticking to the upward only rent review process. That is neither acceptable or sustainable because people who are in these properties will not be able to continue to give the level of employment they do since they do not have the turnover necessary either to pay the bills, expand the business or even sometimes pay the rent. In some cases the rent could be equivalent to 14% of turnover and that is not sustainable.

I would ask, through the Department of Finance, because it is dealing with the larger banks that issues such as this should be considered. It should not be afraid to bring the discussion beyond recapitalisation and take it into the other areas, which although peripheral, are essential to the economic development and sustainability of jobs throughout the country.

If we had to be convinced by the actions of this Government and what was necessary, yesterday's happenings in Greece and in the money markets should convince anyone that this is what Ireland needs to do. This is the path we need to be on and we need to take radical steps and not be afraid to overhaul the status quo and ensure we have policies that are fit for purpose in the future.

I agree with the previous speaker on the issue of Greece and how it puts the Irish situation into context and makes it clear how important it is to get our banking structures right. I am old enough to remember the early 1980s when the interest rate for long-term loans was 10%. Within a year it went to 22%-23% and that caused an enormous amount of damage. Many younger people today do not believe that will happen, but they need to be absolutely sure, because the danger is always there. We have become accustomed to relatively low interest charges and we sometimes do not realise how this could happen.

The main purpose of this Bill is to create a single fully integrated Central Bank with a unitary board and a Central Bank commission chaired by the Governor. The Irish Financial Services Regulatory Authority is involved and most existing functions will merge into the new structure. There is no doubt that the Bill reads very well and there should be sufficient goodwill based on the knowledge that we need proper regulation and a proper structure. However, some of the background information available to us indicates that the McDowell report into financial regulation was instigated in 1998, 12 years ago. There was seen to be a need at that time for something to be done. It appears there was overcharging at National Irish Bank, a committee was set up and so on. After that committee had dealt with the issues and put forward its proposals, the Central Bank and Financial Services Authority of Ireland Act 2003 was put in place. The Financial Regulator was established as an independent office within the Central Bank and Financial Services Authority of Ireland, reporting to both the board of the Central Bank and the Minister for Finance.

When one looks back and sees what has happened in recent years, we were, nonetheless, supposed to have the proper degree of regulation in place. The Financial Regulator was to report to the Minister for Finance and one wonders what has happened in the meantime since we find ourselves in such a mess. Was the Financial Regulator doing his job? Was the Minister for Finance paying attention? It must be remembered that the Taoiseach was the Minister for Finance during part of that period.

We are told that one of the functions of the Financial Regulator is for him or her to prudently regulate for the safety and soundness of financial institutions; the stability and integrity of the payments system; the prudential supervision of financial institutions; and crisis resolution and issues related to market integrity. I do not believe that the criteria were satisfied in 2003 when one considers that list. I could go on, but we have to deal with the present.

The Central Bank may make regulations prescribing control functions and nominees to ensure the fitness and probity of key office holders. That has never seen to be more important than in recent times as far as Anglo Irish Bank and Irish Nationwide are concerned.

I am more conscious than most about the need for some type of regulatory service. Only yesterday the house of a constituent was pictured in the paper, where it was being bulldozed away. That was happening because an insured architect had not done his job correctly. The insurance was tied to €300,000 or thereabouts, and it had to cover legal costs. In that case the architect admitted that he was responsible, so one might reasonably believe no legal case was necessary. However, the insured party's solicitor got €60,000. According to the paper and the figures I have been given, the other company which was supposed to service the client, a local insurance company in Monaghan, is looking for €137,000, so that the client will be left with a figure of around €100,000. That client tried to use the existing legal structures to obtain support, but thus far it has been limited.

I raise this issue because we need to be sure the systems work. The system we had in place was a total disaster as far as Anglo Irish Bank was concerned. Mr. FitzPatrick was able to make available more than €100 million in loans to himself and so many other people within the organisation. There were no controls. Money was going from one organisation to another to create fictitious returns. People put all their savings into the bank, having been led to believe it was sound. The then Financial Regulator went before an Oireachtas committee and assured its members that the bank was safe and that there were no problems. He was the regulator in charge of the sector and answerable to the Minister for Finance, yet the country was not made aware of what was going on. I am thinking in particular of Seán Quinn and his family, who were led to believe this was a marvellous bank in which to invest — in fact, they borrowed money to invest in it.

This was the type of thing that was going on, yet the regulator did not act or advise anybody based on the 2003 Act. We now see the problems that have resulted. The nation is providing €22.5 billion over the next number of years. Who will pay for that? It will not be my children, because I do not have any, but for those who do, it is not only their children but also their grandchildren who will be paying for it. We need only remember what happened with PMPA; that was a small issue compared to this.

It is important that the Minister gets this Bill right. As I have said in the House many times, we are great at producing legislation but not so good at making sure it is used in the way it should be. Fine Gael has a number of issues with the Bill, most of which are fairly simple. As yet we have not considered what happened with Anglo Irish Bank and Irish Nationwide Building society or even banks such as AIB and Bank of Ireland, which also got loose and went mad. No proper investigation has been done. There are 40 people in jail in the USA for financial crimes, but not one person is in jail here yet, and there is not even a question of anyone going to jail. We need a proper investigation.

We need urgent reform to change the architecture of existing regulating bodies based on facts. There is no point in just doing it on a whim, without proper advice and structures. We also need a system for appointing directors to the new central banking commission that is not exclusive to the Government. The Government should appoint people to such positions with the support of the other parties in the House, having brought them before a committee of the House to ensure they have some knowledge of what they are doing. This is being done elsewhere, including in the United States. The President of the US is directed by law to select afair representation of financial, agricultural, industrial and commercial interests and geographical divisions of the country. He cannot just appoint political hacks. It should not just be the people from the Galway tent who are appointed to these boards. They should be people of the highest standard and appointments should be carried out with due diligence and proper scrutiny.

In the United Kingdom, such directors are appointed by the Crown. Prospective members of the monetary policy committee appear before an appointment hearing of the treasury committee, and the committee presents to Parliament its assessment of the candidates. The committee does not have a veto, but it can at least assess them. We need to be absolutely sure, when these committees are set up, that they are properly scrutinised.

The previous speaker spoke about NAMA and the promise of Brendan McDonagh to pursue debtors. That sounds great, but how does one pursue a person with a debt when his or her property is worth one tenth of what it was purchased for? We must be realistic. There are properties out there that are worth only a tenth of what they were purchased for. The banks are realising that some properties are worth only 50% or 60% of what was paid for them, but there are some that are worth much less even than that. There is no point in promising to get money out of a stone. I wish him well, but the whole issue needs to be considered. I do not believe for one second that NAMA will do the job it is supposed to do.

For ordinary people, there is still a major problem with the banks. We have introduced many banking regulations and promised that money will become available to business people and industries, but I assure the Minister that as yet that has not happened. Unfortunately, every time I open my office door or hold a clinic, people come to tell me of their desperation.

I cannot help returning to an issue that was raised by Deputy McGuinness a few minutes ago, that of commercial rates. Between the banking squeeze, rates, water charges and waste charges, the pressure on small businesses is massive. A small business person from a local town contacted me the other day to say she had paid €84,000 in water charges and could not afford to pay her rates, although she will be brought to court if she does not pay them. She has been told that if she cannot utilise the whole premises in which her business is situated, she could rent out part of it. Anybody who knew the area would know that this would not be possible, in view of the type of product the business is using.

This is the difficulty we are in. If some capital was released to this person, she could continue in business, employing 12 people — I know 12 people does not sound like much to some people, but in a small town it is important — and she could also pay her rates. She would love to be able to pay her way. Rates must be dealt with as well, although they are not relevant to this Bill. The issue is important to business people who cannot obtain money from the banks at present.

Another issue that must be dealt with quickly is that of mortgage relief. Deputy McGuinness mentioned sub-prime mortgages; this is something on which the Government must take a strong line. I know it has put more pressure on sub-prime mortgage lenders, but it is ludicrous, wrong and immoral that a person can be landed in the High Court because he or she cannot afford one mortgage payment and a charge of €12,000 can be added on to what is already a difficult mortgage. This needs to be addressed.

I agree with Deputy McGuinness on the importance of the credit union movement. Without credit unions, many small business people could not keep their doors open. However, even though 98% of credit unions have never been in trouble, they are all coming under desperate regulatory pressure. Some of the regulations they being are asked to obey are unreal. If, for example, a good client becomes ill and fails to make a payment, the credit union is prevented from making other loans. That is ludicrous and cannot be justified.

The county enterprise boards and the Leader programme are important but clients are unable to find the matching funds required. A number of worthy projects have been proposed and since the day it was established, Leader has had a reputation in my area of Cavan-Monaghan for being prompt in giving out money and creating employment provided that forms are filled out properly. Its main job has transformed into encouraging people to get involved but its prospective clients are finding it impossible to get money from the banks.

I will welcome the Bill if it works but amendments will be required on Committee Stage. Part 3 of the Bill appears to be extremely important. It provides the Central Bank with the power to regulate sensitive or influential appointments in regulated financial service providers, including the power to direct that a person should not be appointed to perform a controlled function or should be removed or suspended from the performance of a controlled function where the bank is satisfied that the person is not a fit and proper person.

I have first hand knowledge of the extraordinary pressure the Quinn affair is putting on that company's workforce. The Quinn company and its employees have built up a tremendous reputation in Ireland and abroad. It is important that regulators or administrators are able to deal with issues swiftly. In the absence of decisions, Quinn Insurance is losing UK and Northern Ireland trade. I do not want to undermine the role of the regulator but the emphasis must be on making decisions swiftly. The administrators were appointed to ensure the company is run in a financially sound manner but this will be an impossible task without the proper tools or the company being able to access 80% to 90% of the UK market. I urge everybody concerned about banking issues and the protection of jobs to encourage the regulator to make decisions on Quinn at the earliest opportunity.

I am grateful for the opportunity to speak on the Central Bank Reform Bill 2010. This is an important debate and we should be focused on solving the urgent crisis in our banking system and the economy. The banks and big businesses have disgraced themselves and let down the people of this country. Shame on them for their irresponsible actions and I hope we see justice soon.

The purpose of this Bill is to create a fully integrated Central Bank with a unitary board, the Central Bank commission, which will be chaired by the Governor of the bank. The Irish Financial Services Regulatory Authority will be dissolved and most of its existing functions will be merged into the new structure. The Central Bank is responsible and accountable for the prudential supervision of individual financial firms, the conduct of business, including protection of consumer interests, and the stability of the financial system overall.

Recent events have undermined consumer interest and destroyed the stability of this great and beautiful country. Once known as the land of saints and scholars, Ireland today is better known as the land of scandals and tribunals. Politics, banking, the church, business, medicine, the law and the Garda have suffered from an erosion of public confidence in the wake of astonishing scandals. Over the past decade, Ireland has undergone rapid social, economic and political changes which have had a profound impact on our value systems. For example, the decline in the Catholic Church's authority and influence has forced many people to seek other sources of ethical and moral guidance. Ireland was fairly prosperous at the beginning of the 21st century but this created dilemmas in regard to the distribution of resources and the tension between the rights of the individual and the overall good of society. The people to whom we once looked for guidance, namely, the political elite, the church, the medical establishment, bankers and business leaders, have had their credibility tainted by damaging scandals.

I have raised these issues on previous occasions both in the Dáil and in wider society. I voted against the budget because I believed it was unfair. People with disabilities and their carers faced cuts of 4%. Recipients of blind pensions suffered a drop in income of €450 per year. This is not social justice. The elite took a 5% pay cut while their office cleaners took a greater cut. Public servants were attacked and vilified by some politicians and sections of the media and attempts were made to divide public and private sector workers. I am trying to end this division. I am also fighting hard for the hard-pressed mortgage holders and I will continue to fight for a better future for us all. Our future must be built on equality and justice.

As an Independent Deputy, I am open to the idea of a national Government which would deal with the economic crisis. Such a Government would present an opportunity to select talented Members from various parties who would put their country first. I would be interested in hearing my colleagues' views on this issue. We have to pick the best people to solve this crisis.

Section 11 of the Bill provides that orders and directions of the Irish Financial Services Regulatory Authority which are not yet spent remain in force and that the Central Bank can enforce them. Section 12 provides that inquiries and assessments being undertaken by the Irish Financial Services Regulatory Authority may be completed by the bank. Section 13 provides that where the Irish Financial Services Regulatory Authority was involved in a legal action, including where the authority was undertaking a prosecution, these continue with the Bank substituted for the authority.

These provisions bring me to the big issue of light and heavy regulation. We have seen the negative impact of light regulation in this country. We have seen businesses go down the tubes and corrupt bankers, developers and others leading young couples and families astray. We have also seen politicians failing to give leadership on this issue. People were not doing their jobs — that is the reality, which we must face. If a person is appointed to do a job in the interests of the taxpayer or the State, that person has a statutory duty to do that job.

I question some of the past practices in regard to regulation, which is also very relevant to today's debate. I ask the Minister, the Government and all the political parties, and our new watchdogs over the banks, to keep a very close eye on what is happening. Recent days have again shown that we need to be extremely vigilant in regard to this issue.

I welcome the appointment of our new regulator, who is making an effort to do something about this. I strongly support his view in regard to many of the problems we are trying to solve. However, where there is regulation, there must also be common sense and proper process and proper systems in place to deal with the issues. I met the staff of the Quinn Group earlier and I was impressed by their professionalism and commitment. We must ensure we try to protect these jobs. The deadline is on Friday. I say to the staff and those involved in this issue that it is a duty of Members of the Oireachtas. The staff made the point to me earlier today that while they fully support the regulator, they would also like to see proper process and the common sense that is needed to save these jobs. As I said, Friday is D-day for those staff.

Part 3 of the Bill provides the bank with the power to regulate sensitive or influential appointments in regulated financial service providers, including the power to direct that a person should not be appointed to perform a controlled function or should be removed or suspended from the performance of a controlled function where the bank is satisfied that the person is not a fit and proper person to perform such a function. I welcome this aspect of the Bill, which is the way forward and the type of measure we need. The bottom line is that we must bring trust and confidence back into the banking system. We cannot move forward or deal with the issue unless there is trust and confidence.

Sadly, in the past year and a half, that trust and confidence has gone. The Members of the Oireachtas — I include all Members, including the Independent Deputies — must ensure we play a part in trying to regain the trust and confidence of our people. There is a lot of anger and negativity. We have to show leadership, which is why I again put on the table the question of a national Government. Perhaps we should, for a couple of years, put in the best people in the country to get us out of this mess. We can then go back to party politics.

Independent Deputies like myself are always open to new and radical ideas. Of course, I would have certain conditions in a situation like that, namely, that there is a strong commitment to social justice and to the weaker sections of society.

With regard to the debate about regulation, I emphasise the need for trust and confidence. At present, many of us are trying to debate how we fix the banking crisis. We do not like what we have seen but we have to fix the mess. I urge all politicians to consider this when debating the issue. Of course, there were many times when it turned my stomach when this issue arose in the House. However, when I looked around honestly and objectively, I saw no credible alternative.

As far as I am concerned, bankers, developers and corrupt politicians should be charged or prosecuted for ruining our country, but, as I said, we also have to deal with the mess. There has to be a major clean-out of the top positions in banking. I welcome some recent developments, including the proposal for targeted lending of not less than €3 billion each from Bank of Ireland and AIB for new and increased credit facilities for small businesses in 2010 and 2011, which is a sensible solution. I also welcome that Bank of Ireland and AIB must make available €20 million each for seed capital to be provided by Enterprise Ireland, which is the kind of proposal we need to see on the table. In addition, the two banks will each set up a fund of up to €100 million for environmental, clean energy and innovation projects. I welcome the sections dealing with credit review processes for banks as a sensible option.

While we are discussing this issue, let us remember the 15,000 families who are helped through the mortgage interest subsidy scheme. It is important to recognise many of these were victims who lost their jobs and find themselves with huge mortgages to pay. Many of them turn up at our clinics on a regular basis. At least we are making some sort of effort to help them in regard to their mortgages. I firmly believe no legal action should be taken against genuine householders and borrowers.

The deposit guarantee scheme that covered €100,000 per depositor per institution was a very relevant measure at the time. We have to fix the banking system or we are going nowhere, and those that say otherwise are misleading the people — that is the bottom line. I voted to assist our country even though, at times, some of the decisions turn my stomach. There was no other option. The people are demanding solutions, not cheap political soundbites. That is the sad side of this House. I saw an opportunity for Deputies to unite to try to help each other to solve the financial crisis but I was disappointed when I heard soundbites from many of them. It is up to all Members of the Oireachtas to put our people and our country first, even if it is not popular.

With regard to the Bill, the explanatory memorandum notes that item 22 of Schedule 1 inserts a new section 5C into the Principal Act. It provides that the bank will have the power to undertake and publish studies, analyses and surveys into the provision of financial services. In doing so, the bank has the power to compel the provision of information or the attendance before an employee or officer of the bank by a person who is relevant to the undertaking. Failure to co-operate is an offence, which I welcome. In addition, the head of financial regulation may cause an investigation into a relevant person. Failure to co-operate with an investigation is also an offence. Conviction on indictment under this section could result in a maximum fine of €30,000 or imprisonment for up to five years or both. Summary conviction could result in a fine of up to €3,000 or a maximum prison term of 12 months or both, rightly so. Item 22 is an important part of the Bill.

We must face up to the reality and deal with white collar crime, which clearly took place in this country in recent years. If a young person in Coolock or Donnycarney was involved in petty crime, he or she would be banged up in Mountjoy Prison for six months. Here is a situation where people were involved in much more serious crimes and we must respond. We must see the justice system kick into action on this issue. Low paid workers come to my clinic who have been turned down for carer's allowance because of a couple of euro here and there, and it gets up my nose that we see these guys — the senior bankers and white collar criminals — walking away scot free after damaging this State to the tune of hundreds of millions of euro. Where is the justice in that? Where is the social justice if we do not stand up for the decent people of this country? I raise this issue because I have been deeply involved in campaigning on the carer's allowance issue and with regard to disabilities generally.

With regard to the blame game, in my speech today I have referred to many situations, professions and people. However, many more were involved in this game, although one does not often read it in our national newspapers. Many others were involved in housing, in crazy investments and in misleading young people, and they must be challenged. They made a contribution to the downturn.

It gets up my nose when I hear people blaming all politicians and saying "You are all the same". We are not all the same — that is the bottom line. The vast majority of Members of the Oireachtas, across the parties, are trying to do their best for their community and their constituents. Yet, we have the label brigade and the blame game brigade lashing out every night on the television and in the media. The Deputies in this House want to serve their country and serve the people. My experience in this House is that the vast majority of Deputies are in that direction. Anybody who has another agenda should be rooted out of the Houses of the Oireachtas. I say this because it is very relevant to the banking debate today.

With regard to Chapter 2A, dealing with finance and accounting, section 32C provides that each year the bank is to give an estimate of the costs associated with, and the income from, its activities in regulating financial service providers for the coming year to the Minister for Finance. Section 32D sets out the powers of the bank to impose levies to finance its activities with regard to financial supervision. Section 32I requires the bank to prepare and keep accounting records and to transmit to the Comptroller and Auditor General a statement of accounts within six months after the end of each financial year. Section 32J provides for reports to the Minister of operations and returns of the bank within six months after the end of each financial year. Section 32 is about accountability which is crucial. In the past there was no accountability. People were not doing their jobs and other people were ripping off other people. I hope these issues are raised in the debate.

Part 7 of the Bill provides for the amendment of the Credit Union Act 1997, to take account of the dissolution of the Irish Financial Services Regulatory Authority and the creation of a unitary structure and to amend the provisions of section 35 of that Act. Section 35 of the Credit Union Act 1997, limits credit unions in the area of longer-term lending. The issue of the credit unions arose during the NAMA debate. The credit unions have made a significant and positive contribution to Irish society. I was a founder member of the INTO credit union. However, some people in the credit union movement acted irresponsibly and did not act in the interests of the members. There must be vigilance at all times.

Currently under section 35, a maximum of 20% of a credit union's loan portfolio may be outstanding for periods in excess of five years and only 10% of the loan portfolio may be outstanding for periods exceeding ten years. It is proposed to relax these limits.

Part 10 provides for the amendment of the Insurance Act 1989, to take account of the dissolution of the Irish Financial Services Regulatory Authority and the creation of a unitary structure. The amendments also permit the bank to appoint employees or other suitably qualified persons as authorised officers for the purposes of the Insurance Acts.

I emphasise the importance of the Quinn company to the economy of the State and I support the staff. Even though the problem does not directly affect my constituency I see it as a company with potential. I met the staff today and they are making a massive contribution. This is not a party political issue and we should be united in our attitude to the company even if it does not directly affect our communities. I support the staff and I will be willing to help them in any way as an Independent Member of this House

Anyone who does not have the bottle to deal with the banking crisis should not be an elected Member of the Dáil. The Irish economy is experiencing one of the worst recessions of any developed country. Unemployment which stood at 5% in 2008 is already forecast to reach 14% by the end of this year. This is a very sad situation for the 435,000 unemployed people.

I receive many CVs from young people hoping to find work in my constituency. A total of 100,000 are expected to leave Ireland over the next two years, that is 50,000 a year. We are losing many graduates who are going to England, Australia and America.

I refer to some ideas to solve the crisis, such as the idea of a national government. I also support the Labour Party Private Members' motion for the establishment of a strategic investment bank with the primary objective of investing and lending for national economic development, including investment in infrastructure and the enterprise sector. I will support sensible ideas.

I hope that we can all work together to clean up the banking system once and for all and lead this country to a positive future. To those in banking, I say that management is doing things right; leadership is doing the right thing. All Members of the Oireachtas have to show leadership and they should get out of Dáil Éireann if they do not wish to do so.

I am pleased to have the opportunity to contribute to the debate on Second Stage of the Central Bank Reform Bill 2010. Second Stage is the opportunity to expand on our views and this debate gives Members scope to say many things that need to be said about the banks. Never before was Ireland in such a banking crisis. Never before were people as frightened because of such a crisis. The banks are central to all our lives. They are central to our Government, central to private enterprise and central to each one of us as we go about our daily lives, whether we rear our families or look after ourselves in our older years, whether it is to put a roof over our head, to buy our first car or whatever we want. We will always need banks unless we are in a very privileged position and most people are not in that situation. Ordinary folk have to go to the banks to get funding for education and for many other aspects of their lives.

We cannot underestimate the essential role the banks play in our daily lives and this is the reason we were so frightened when the banks got into trouble. People were at a loss to know what was going to happen their businesses. Small businesses were in fear because they were being denied simple lines of credit which they had previously received. Family homes were in danger of being repossessed. The terms of loans were being shortened and credit was being called in. The position of credit availability to small businesses was a significant worry. Young people in college who had taken out loans were very worried.

The attitudes of the banks will have to change. It is a very simple thing to say those at the top of the banking institutions should be in jail. I have heard this view expressed many times. There was a culture which allowed this crisis to happen. What of the regulators and the people who were in charge? I wonder would this crisis in banking, as we knew it, have happened 20 or 30 years ago? Would it have happened if there had been more say at the local branch level?

The local bank manager knew a lot of people in the area. This discretion and responsibility was taken away and given to people up the line. In the past, the local bank manager sanctioned loans for customers who wished to buy land or a house. His word was accepted. However, in the past number of years, the information on an individual is put into a computer and sent to headquarters. The regulator was supposed to be keeping on top of all these transactions. Instead, there was a major crash when things were done differently. Due consideration should be given to looking at the way we do our banking. I am concerned that we are now discussing this Bill before the review has finished. The legislation should not be changed ahead of the results of the review as this might allow for dramatic new ways of addressing the problem. The local bank manager should be central to the system. Just like the local garda or the local teacher, the local bank manager knows his or her people, their capabilities and their track records. He or she knows which are the people who will go through thick and thin to pay off a big loan. Each individual has a different attitude to paying back a loan. Some cannot live with the worry of outstanding loans to banks or building societies and get it paid off in a short period. Again, the local bank manager would be able to deal with this.

One reason many people and small businesses are in trouble is because of the non-availability of long-term credit. In the past, when one wanted to buy land, for example, one could get a long-term loan from the Land Commission. Land rent was paid on it over many years until one eventually owned the property. Such a system should be reintroduced. Instead of businesses being put under pressure to pay back their bank loans in a short period, credit lines should be extended.

Yesterday, the Garda Representative Association claimed some gardaí could not pay their mortgages. While not every garda, teacher, nurse or doctor is in such a position, there is small group who paid €300,000 or €400,000 for their houses because that was the going rate and it was sanctioned by the lenders. Deputy Finian McGrath spoke of the responsibilities of Oireachtas Members. Those having problems with large mortgage repayments must be helped.

In south Tipperary I know a family, who have had a redundancy and a pay cut, and who, to keep up with their repayments, would have to put nearly all their income into their mortgage while forgetting about paying for day-to-day living. Families in such positions should have their mortgages extended. It is just not good enough to say the banks are not repossessing homes.

The banking crisis affects every individual. We need to look after the small and vulnerable people who cannot sleep with the worry over their mortgages and repossession. They need advice and support. Legislation, tied to the Central Bank Reform Bill, must be introduced to help and protect homeowners in such circumstances. This is a small nation which has prospered much in the past 100 years. A roof over one's head must be made a basic requirement for everyone.

Small businesses need to be supported too. Some claim the only way to work our way out of our current economic problems is through creating jobs. Instead, we need to protect the existing jobs we have before we look at creating new jobs. Walking down the main street of any town, one will see a large number of empty retail units. This is not good for the economy. Those with ideas on how to keep such businesses open should be used to support them.

I cannot stress the importance of the local bank manager in assisting small and medium-sized enterprises. In the review taking place, a special section should be devoted to giving decision-making powers back to local bank managers. People have spoken about the importance of the credit union, a point with which I wholeheartedly agree. Fortunately, when bank credit has dried up, the credit unions have assisted many people with loans. The role of the credit union should never be underestimated and we must help them in any way we can.

Out of all of this banking crisis with the fears and frustrations experienced by people, we need to give hope. People are concerned about the future. We need to send out a signal of hope and the availability of credit is one way of doing so. Young people, those finishing their degrees, building a home, choosing to work in either the public or private sector need hope for the future. They need to know there will be money available to fund education, the health services and other economic activities.

Only yesterday, I was informed by my local hospital manager about the number of young qualified health personnel who will leave the country to work elsewhere. Some hospitals, as a result, will have to go on short time. So much of our society, not just economic activity, is taken up by the banking crisis. We must send out a message of hope to our young people so that they will see Ireland as a good place in which to work, live, build a house and rear a family. They should be able to do what our generation did. We were a lucky generation born in relatively good times, receiving a good education and having a good standard of living. We had hope and believed this country was a good place in which to live.

This message needs to given to our young people like the young lady I came across the other day. After college, she has spent the past 12 months looking for a job but to no avail. She is now thinking of emigrating to Australia. This lack of hope has to be changed. The Government and Opposition needs to bring hope back to the country. We need to be more proud of what we have done.

Everyone will condemn some of the shenanigans that went on in the banks and say they should never have happened. The regulators must, however, wake up to the new banking position of centralising all decision-making. The bankers must get up off their cushy soft seats to come up with more proposals for better banking. They must stop this move towards globalisation, making everything big and sending it to the top. Banking must be brought back to local communities with decision-making processes resting with local bank managers. Ireland will be much better if we change our attitude and not make everything big. Making the health service big turned what was once a good health service into a disaster.

The same applies to the banking sector. We made it big. We gave all the responsibility to the regulator and let the banks off. We brought in all this regulation but it was not implemented. The small fellows on the ground lost their importance and their role.

I am pleased to have my say on what should happen to our country in terms of our banks. For all our sakes, and the sakes of generations to come, it is important to ensure the right measures are taken. In politics the Government puts forward its proposals and the Opposition gives its view but I believe a genuine attempt was made in this House to do what is best for the country. Any comments made by those of us on this side of the House were made sincerely. Likewise, the Government but at the end of the day we want to do what is good for the citizens of Ireland and their future. I am pleased to give my view on what must happen but we must move away from the days of passing the buck to the authorities at head office and bring responsibility down to local level. That would have a positive impact on future issues in this country.

This is an important Bill. I agree with everything said by my colleague, Deputy Tom Hayes.

For the past two Sundays a journalist by the name of Eamon Quinn has been writing in the Sunday Tribune about an application which is before the courts. I understand it is an application from a Mr. Seán FitzPatrick to have a hearing in camera in regard to the way he would deal with his creditors. Every citizen of this country, whether it be Seán FitzPatrick or myself, has the right to make whatever application he or she wishes to make before the courts provided the courts agree with it but the key point is that an application from somebody whose house or property is being repossessed and who may be in significant financial difficulties is usually made in public in open court. There is total transparency and accountability in terms of what happens in the court.

The key issue in this case is that——

Deputy, it is always a matter for the judge to decide whether the hearing will be held in camera or in public.

I agree with that, and I am sorry the Acting Chairman thinks I might not have said that. In case the Acting Chairman or somebody else thinks I meant anything different I will clearly state what I said at the beginning. Every citizen, whether it be Seán FitzPatrick, the Acting Chairman, me or anybody else is entitled to make an application on any issue before the courts and it is entirely up to the judge to decide the outcome. If the judge agrees with the application the person has won their case and if he does not, they have lost.

If I am in financial difficulties and my creditors apply to the High Court to take possession of my home or to get a lien on my properties or my wealth, that is usually done in the courts in full public view and everybody, whether it be the press or a Member of the Oireachtas who might be sitting in the press gallery, can listen to the proceedings, which is good and proper.

If the application for an in camera hearing is made, equally, that is right and proper. I am not being critical of that but what I am saying clearly is that we need transparency and accountability regarding any deal done by Mr. FitzPatrick with his creditors, who would be Anglo Irish Bank, to which I believe he owes the princely sum of between approximately €60 million and €70 million, which is a significant amount of money.

I asked the Taoiseach in this Chamber this morning, and I repeat now, to ensure we had full transparency and accountability regarding the terms and conditions of any deal reached with Seán FitzPatrick by Anglo Irish Bank and any other State-related entity. I asked for that because I understand that any deal done, whether in camera or in public, must be signed off by the Government and Anglo Irish Bank, which is the major creditor in this case.

The down side of such a deal, if it is not fully transparent and accountable, will be that we will not know what the assets are and the way they are being divided up. The public has an entitlement to know what is going on. I have every reason to expect that such dealings will be in public and that in regard to ministerial consent, if it is needed, the public would have full knowledge of what is going on because they are entitled to know that.

Mr. FitzPatrick and people like him have put the country in the most appalling condition. They have put the taxpayer in debt, which will affect not just this generation but probably the next. Some months ago the Taoiseach, Deputy Cowen, said that this is the first time young people will be worse off than the previous generation. The country is facing a serious crisis and what we want is accountability and transparency regarding any deals to which Government gives its consent.

The days of the golden circle have long gone when Mr. FitzPatrick and the other people would attend the functions in the Galway tent with Fianna Fáil. It is the golden circle that brought us to this stage in our society and collapsing around us are the old ideas and ways which have been shown to be rotten to the core, as the banking system has been found to be.

I refer to people like Eugene McErlean, who worked in Allied Irish Banks and who went to the then Financial Regulator some years ago with a complaint about over-charging and was not listened to. Eugene McErlean was the group internal auditor for Allied Irish Bank and he was unhappy with the overcharging going on in his bank. When his bosses refused to listen to him and continued with the over-charging, which was estimated to be in the region of €30 million at that time, he wrote to the then regulator and the regulator did nothing about it.

Mr. McErlean was then forced to try the legal route. He also tried the Freedom of Information Act route, which did not apply. He was put to the pin of his collar but insisted on pushing his case to the very end. When he met with Senator Shane Ross and myself we brought him before the Oireachtas committee and the then chairman, Deputy Michael Moynihan, was very helpful. We had a full and frank debate. Subsequently, when the then chief executive of Allied Irish Banks came before that committee he exonerated Mr. McErlean and restored his good name but it was a bitter, dreadful fight involving one man against a system that was rotten to the core.

Eugene McErlean has remained unemployed as a banker for the past six or seven years and the only reason for that is because he stood up to the system. He said it was rotten. He spoke to his bosses in the bank. He spoke to the then Financial Regulator and nothing happened.

We need people like Eugene McErlean running our banks, advising our bank boards and getting involved in our financial affairs. It is people like Eugene McErlean who fought the system, still suffer as a result of the system and have not worked in banking since because they have been blacklisted, even by current banks. That is not acceptable. It is that mindset which was endemic at the upper levels in our banks, our regulatory regime and our political parties, and particularly in Fianna Fáil, that has brought us to the sorry mess in which we now find ourselves.

I am sure our parents, if they had a bank account, may have owed a few pennies, as many did when trying to rear large families in years gone by. On the Chord Road in Drogheda where I lived one would see every Friday a decent man, the bank porter, on the instructions of his bank manager, walk up the street in his uniform and put a letter into the letter-box of whatever poor unfortunate happened to owe the bank a few bob. The whole street would know that Johnny Murphy was in trouble with the bank because the bank porter had delivered a letter to his home. Everybody knew that the bank porter was only doing his job and that he was a decent and honourable man. There was at that time an attitude in the banks towards ordinary people. They were treated as unworthy and beneath the local golden circle. At that time, people worked hard to rear their families, obviously with the help of many banks. The psychology of the relationship between the ordinary person and banking class was I believe, from the banks' point of view, haughty, unhelpful and discriminatory. I am glad this has changed. I regret what had to happen before many of these bankers were booted out, although some of them remain within our system. There continues to exist the belief that it is often who one knows rather than the validity of one's case that gets one what one wants at a particular time.

I agree with Deputy Tom Hayes on the need for credit, the creation of employment and the need to ensure that people who are seeking moneys to run a good business, as are many people, get the support to which they are entitled. This morning I received a telephone call from an individual who has a good business idea but whose business is not sustainable without a loan from the bank. The banks are not providing credit and thus another opportunity to sustain or create employment will be lost. As shown some years ago in the American economy, at the core of job creation will be small businesses who, if supported, will bring about significant multiples of employment right across the country. The creation of four, five or 20 jobs here and there adds up and will make a significant difference in terms of the creation of employment. The key point is that the creation of employment requires the backing of sensible people with good ideas. If small businesses are not supported we will not get the recovery we so badly need. Every Member of the Oireachtas knows of scores of people in their communities who are in extreme situations because they are not getting finance. To allow businesses to close or to not assist them in the creation of new jobs is, unfortunately, becoming the order of the day.

Another issue that arises under our current banking system is the number of people receiving letters in regard to mortgage interest rate increases. Again, ordinary people are suffering. Not alone are they suffering as a result of mortgage interest rate increases but they are suffering job loss, reduced income and may be in negative equity. The expectation that upwards of 300,000 homeowners will be in negative equity by the end of this year is an appalling vista for us to contemplate. Members may have read yesterday about what is happening in Greece, about the increased cost of Irish debt and about, as referred to this morning by Deputy Kenny, the fact that the Irish Government holds a significant number of bonds in relation to Greek investments in our banks that may never be repaid, all of which are serious issues of concern.

The actions of this Government and the Administration in place for 18 of the past 20 years have led this country to this appalling abyss. Its policy, actions, closeness, involvement and participation in the golden circle in the banks and with the Seán FitzPatricks have brought about a significant change of public opinion. People are extremely angry about what has happened. I acknowledge the change in the office of the Financial Regulator. This Bill brings about significant financial reforms which are to be welcomed. It contains many good provisions. However, until there is a change of Government we will not have clarity of thinking or get the changes that are ultimately and totally necessary. There remain serious issues of concern to be addressed. The bubble in terms of home ownership and in respect of the banks has burst. People are losing their jobs and nothing seems to change under current Government policy. The Government is not considering changing the economy through job creation. The Fine Gael spokesperson in this area, Deputy Coveney, has put forward a rigorously thought out and costed programme in regard to job creation. Until we focus on and invest in job creation we will have but more of the same.

This Government is failing abysmally in its duty of care towards the unemployed. As Members of the Oireachtas, we all know of families whose members must emigrate. Young people who cannot get employment in this country are travelling the long and distant road to places such as Canada and Australia for work. Another issue of concern is people who have returned from abroad. I am sure many of my colleagues have received representations on the issue of habitual residency and returned emigrants, many of whom may have gone away for one, two or three years and who, having lost their employment abroad and returned to Ireland are being treated like pariahs because they are not considered habitually resident here. The fact that they can prove they are unemployed and have lost their jobs does not necessarily entitle them to social welfare benefit here. This significant issue needs to be addressed. The habitual residence clause in respect of returned emigrants is being applied disproportionately against applicants. I am receiving evidence of this every day. Perhaps the Minister for Social and Family Affairs, Deputy Ó Cuív, will address this issue when he has time in the near future.

I reiterate that what we want from his Government is transparency and accountability in terms of any dealings or deal reached by it with Mr. Seán FitzPatrick. We need to be assured that in consenting to any such deal the Government will treat Mr. FitzPatrick like any other citizen of this country, the only difference being that he happens to be one of the people responsible for destroying the economy of the country. We are entitled to know what is going on in respect of his affairs, in particular given it is to the Government, through Anglo Irish Bank, he owes this money.

Fine Gael opposed the Second Reading of this Bill because it is not rooted in any proper investigation of what has gone wrong and no serious attempt has been made to hold key players accountable for the errors committed, both of which are necessary to determine whether this Bill is an appropriate response. Also, it infers that the most urgent reform is to change the architecture of the existing regulatory bodies but there is no verifiable evidence that such architecture was in any significant way responsible for the shortcomings and failure of the regulatory system. It preserves the system of appointment of directors to the new Central Bank commission exclusively by the Government with no proper scrutiny by the Oireachtas or any other external body. It does not give the new commission the necessary bank resolution powers to put failed banks safely into managed administration in cases where that approach may be the most appropriate policy.

I listened to several speakers, including Deputy Seymour Crawford. I agree with his comments to the effect that we had a framework in place. There is no doubt the banks could have been regulated within the existing framework, but they were not because it was not encouraged in every way possible by the political structure in the country. The banks were encouraged in this way by others as well.

People were encouraged to come to Ireland to invest in such places as the International Financial Services Centre because of light touch regulation. I heard as much in New York, Silicon Valley and throughout the world. The reason they were advised to come to Ireland was because they could do more or less what they wished. The view was there was little regulation and no one would bother with them. More than anyone else, the political establishment promoted that ethic and perception.

I recall the previous Taoiseach speaking at the Irish Banking Federation some four or five years ago. The event was recorded on television and I watched it on RTE. I recall hearing the then Taoiseach praising the banks for their contribution to the economy. His view was that the banks were responsible for our economic progress in this country and that is on the record.

We should balance our overall observations of what took place in this country. Some maintain there was a systemic failure but it was as much a failure of this House — and we may only speak for this House — and especially of the Government during the period when things went wrong. I refer to the bankers that are being maligned on all sides of the House, including the Government side. Certain people promoted Ireland based on light touch regulation.

Several people must take responsibility for the failures. Rightly, certain people have been identified and scapegoated. However, others were involved and were complicit in this matter and such people gave others every possible encouragement. At times, these people made critical phone calls in respect of vast amounts of money being made available to people for various projects. We know for a fact that calls were made by people working in establishments such as Anglo Irish Bank. We are all aware of people in that institution. Calls came from the highest echelons of politics in this country to pay out major money in cases where proper feasibility studies were not carried out or business plans were not presented. That was the reality and the way the system worked. Everyone knew each other.

I will not refer to the great method used in the west of Ireland. However, such people met in other places, not only that particular place every July in the west of Ireland. It was commonplace. I do not play much golf but I play a little and I attended some high profile events. It was very easy to see what was taking place. Very cosy friendships existed between politicians in very prominent positions and bankers, builders and others. They had a great time for several years and that was the reality. Several very good books have been written on the issue. I refer to Senator Shane Ross, who wrote a very good book and to David Murphy who wrote Banksters, which I took on holidays last summer. That was one of the first of such books published. The issue has been well analysed but it remains to be analysed further and a major story remains to be told.

We are trying to get a message to the international business community that we are in some way dealing with our problems. This evening we are dealing with regulation, which is welcome. Hopefully, this legislation will improve the process. The new regulator is sending out the right signals. However, we have not been saying that there was regulation in place but that it was not being implemented because it was not encouraged. We are sending out the message to bond markets everywhere that we are dealing with the problems. For example, we have dealt with our budget and many people have suffered as a result. However, we are dealing with it because we have a banking crisis. People are suffering in this country because of what happened in our banking system.

I was in America for St. Patrick's Day. I paid my own way and I had my reasons for being over there. The Mayor of Chicago and the Governor and Mayor of New York all referred to Ireland and maintained they were pleased that the Government was facing up to the challenge of the banking collapse. That was great and I was not inclined to say to any of their officials that it is not that simple. If that is the perception which exists, then it is good for the country. However, that perception is very shaky if people examine what is behind it. The New York Times newspaper referred to the Irish banking system as a wild west system of banking. It identified that we were going the wrong way about it and that what we were doing in Ireland was not sustainable before any other observers, even those here.

Nevertheless the message is getting out to the bond markets that we are addressing these issues. To some extent we are so doing and if the message keeps down the interest rate we pay for borrowing, that is good. Last week, it was approximately 4.7% for ten year bonds. As a result of what took place in Greece, I understand it has now gone up to in excess of 5%. Bonds in the eurozone were always regarded as investment bonds. They were seen as a good investment for international buyers. Now, Greek bonds are regarded as junk. When Greece is dealt with and on the floor, where will they turn next? Which country will be next to come under scrutiny? It could be Portugal or Spain but it could be Ireland as well. This is something about which we must be very concerned.

Irish Government debt as a percentage of GDP is less than that of Greece at the moment. However, the capital that has been allocated to AIB, Bank of Ireland, Anglo Irish Bank, the Irish Nationwide Building Society and EBS in addition to the capital required to fund NAMA is not part of Government debt. Last week, the European Commission stated that the €4 billion committed to NAMA must be regarded as debt and this has increased our debt to GDP ratio. When everything is added up we will have a serious problem. At the moment, the money is considered an investment and thus recoverable. However, if it is not recoverable, then it will be added to our debt. This has the potential to increase Irish debt as a percentage of GDP to levels greater than those of Greece. Such an occurrence would turn the spotlight back on Ireland in a major way. The cost of our borrowing would increase substantially. In such circumstances, Ireland would have to turn to Europe, just as Greece is doing at present.

Another measure of the debt levels of a country is its budget deficit as a percentage of GDP. According to figures announced by the EU last week, Ireland's budget deficit as a percentage of GDP is increasing faster than previously expected and has now reached 14.3%. This is higher than the Greek budget deficit, which is 13.6%. This relates to the fact that the investment of €4 billion in Anglo Irish Bank is now recorded as a debt. It goes back to Anglo Irish Bank all the time. We have a major problem convincing the people from whom we borrow money that we have a sustainable banking system and that this country is on a sound and sustainable financial footing. I accept that our recent export figures were good. If one examines the very good surplus we have produced, however, one will find that much of it is coming from the pharmaceutical industry rather than from home-grown or indigenous industries. Certain issues are raised when those figures are analysed.

A number of speakers have referred to the consequences of personal debt. Some of them thanked the library and research service of the Oireachtas, which has produced a very good document on this issue. I think it became available yesterday. I will refer briefly to some of the interesting figures contained in the document. It states that household debt in Ireland, including mortgage debt, currently stands at €147 billion. All of us are concerned about the potential social consequences of such levels of over-indebtedness, including repossessions, family break-ups, health difficulties, depression and, in some cases, suicide. It is a major issue. The research document identifies the reasons for our over-indebtedness. It states:

In 1995, Ireland had a household debt (including mortgages) to disposable income ratio of 48. By 2008 [just 13 years on], this had risen to a ratio of 176, an increase of almost 270%. This rise is much higher than for four other countries (Spain, UK, Canada and France) where similar comparative data sets exist.

That is quite worrying. The document continues:

The rapid rise in debt can be linked to changes in access to and use of credit. Over the last decade, financial institutions were increasingly willing to lend, even to those who traditionally found it hard to access mainstream credit. Credit was also generally more affordable as interest rates were lower.

It is clear that the financial institutions gave money to anybody with any type of job, even if the applicant had been in the job for only a year or two. Not only did they provide money for a mortgage, but they also threw in some money for a car for good luck. People bought expensive houses and top of the range cars. I accept that this approach helped the car, house and building industries, which were going well at the time. Many cars were bought with money that was meant for mortgages. I know of some such cases.

Reference has been made to competition in the market. When I spoke during the NAMA debate, I mentioned that when competition came into the market, all it did was put pressure on Bank of Ireland and AIB to compete in the market. The more loans one provided, the bigger the commission one received. That was the incentive. People lost all the discipline they had. I know people who were refused loans by Bank of Ireland or AIB, but got what they wanted from Anglo Irish Bank within two hours. They went back to AIB and Bank of Ireland, which had refused them at the beginning, and started again. Those banks forgot the discipline and standards they had and relented to the pressure. That is what got us into the mess we are in. I would like to quote another statistic that is mentioned in the Oireachtas document. It states, "in 1995, the ratio of household debt to disposable income in Ireland stood at 48% (for every €48 borrowed, €100 was being earned); this is in sharp contrast with 2010 where €176 was owed for every €100 earned". That increase could not continue. The collapse had to come.

Many Deputies have spoken about the current availability of credit. I would like to set out my experience with the banks with which I am familiar. There has been an improvement in mortgage lending in recent times. The regulator is having an impact. Under the previous regime, if a commercial or agricultural business was refused credit the bank did not have to give a reason. Now one can appeal and be told why one was refused, at least. That is of benefit to those who have been refused. Good cases are generally being supported at present. The banks will never go back to the reckless lending they were doing.

People will not get money if they do not have a good business plan that stands up. Regardless of what we say in this Chamber, it will not happen. We hope the Government will not need to give any more money to Bank of Ireland. I understand that approximately €8 billion will have to be given to AIB. In the future, the banks will not provide money unless it is in support of plans that stand up. People will have more opportunities if buoyancy returns to the economy. As things stand, however, there will not be a massive flow of money from the banks. The banks are being forced to deal with their deposit loan ratios. Banks generally lend approximately €1.50 for every €1 on deposit. It is intended to reduce that figure to €1.25. That will restrict the level of credit that will be available to people.

It is obvious that this Bill is very important. Fine Gael has some concerns about it. We are aware that the regulation that existed was not enforced. In the words of Professor Patrick Honohan, although bank regulation in Ireland was compliant with international standards, it "was complacent and permissive" and placed too much reliance on the internal risk models deployed by the regulated entities. People like Professor Honohan, who is now in a good position to do something about it, accept that the system was not working. It was not working because there was no direction or pressure on regulation to work in this country. That is the bottom line and that direction did not come from this Chamber or from the Government.

I am delighted to take this opportunity to speak on the Central Bank Reform Bill. Millions of words have been spoken since that fateful night two years ago when the guarantee had to be given to the banks. It forms part of what I want to say. Irrespective of what is said in here, on any side of the House, there are questions to which every Irish person I know of across the country still has not got an answer. How could this disaster happen? Why did it happen? Who was responsible for it? Despite all the things we hear about and the various seminars and reports, nobody has answered those questions to the satisfaction of the Irish public. That is one of the reasons there is so much anger. There are some people in the rarefied atmosphere of Leinster House who must pack their ears with cotton wool when they go outside the gate. The anger across the country at what was allowed to happen to our banking structure is like a forest fire.

I do not say this lightly, but our banking failure must be the most abominable disaster to be inflicted on four million Irish people since the Famine. That is some statement. Even during the time of the economic war and all the records of history, I do not believe anything as serious as this was ever inflicted on the Irish people. Nobody seems to know how it arrived or how we will get out of it.

The problem with our small, but very proud, nation is that nobody is clear on the actual path on which we are to travel to ensure that we, as a nation, will have the freedom to do what we were used to doing. This is a very serious matter. I have been in the House a long time and have seen all kinds of disasters. Unless a multiplicity of things happen in Ireland and across the world we will have a very serious situation. Like everybody else I hope and pray that the green shoots about which we hear will one day become more than shoots and that the economy will work its way out of its difficulties.

In tandem with everything I think we should be doing, about which I will speak in a moment, I wish to refer to the night in September 2008. Many people want to know about the pressure which was put on the Government and on Minister for Finance by the banking fraternity — there is no point in going over it again here today because it has been spoken about a thousand times — as a result of the midnight run to the Department of Finance. If the Taoiseach, the Minister for Finance, Deputy Lenihan, and the Government knew on that night what they now know would they have acted in the same way? That is the important question to be asked.

I have no doubt the guarantee which was given for ordinary investors and depositors was one of the reasons there was cross-party support for the measure. It was an extreme measure to have to take but one could see its significance. The question for everybody is, whether on that night, based on the information, if any, which was available, Anglo Irish Bank should have been included in the guarantee. In the days following that decision, I put a question during the debate in this House to the Minister for Finance. He said he thought, based on the best available advice which he had at the time, that it appeared there was a smell of €16 billion in loans. We all know what that means.

That is a long way from what has happened. The figure given was for all banks; it is on the Official Report for anybody who wants to read it. It was only a guesstimate but it was wildly off the mark. It brings me back to the question of why nobody was able to identify how great was the black hole in Anglo Irish Bank for a year and a half. That takes some doing when one considers that the Minister for Finance came in here a couple of months ago and said he thought the figure was €12 billion. Lo and behold, a very short time later there was another €10 billion added to it. We are talking in huge figures for a small bank.

There is more of a paper trail at a bingo game in bingo halls anywhere in Ireland than there was in that bank. It was pure pocket stuff; there was no paper trail. That is why I could never understand why, when the Government decided to set up a banking inquiry, it finished on the night the guarantee was given. Everybody wanted to understand the reasoning behind why the guarantee had to be given and why the bankers were not there on that night or six months before that. What was the cause of everything that happen at that time?

Let us get some perspective on the €22 billion — we no longer talk about millions; it is now billions — which has gone into a hole and has vanished. The Minister of State knows as well as I do that there are projects which have been invested in that have showed a very poor return. In other words, a project might take 20 or 30 years to repay an investment. However, one will get it eventually and one would have something physical in its place which would be good for someone. The Government has pumped €22 billion down a hole for which no return is expected, and expects people who are taking the cuts to take this sitting down.

The banking institutions in this country were so influential, persuasive and bullying that no matter who was the regulator, no one was more powerful than the chief executives of the various banks and the chairpersons of the various boards. They went out of control; I have no problem saying that outside the House. There were no controls on them. They got it into their heads that because the economy was rising at such a high rate, they were gods around which everything rotated. Many times over the years I heard people say that I should not criticise the banks because to do so would tarnish the image of Ireland abroad, stop our ability to raise loans on the international money markets and, in general, that I was a very bad Irishman to criticise the banking establishment.

That is right.

I heard it a thousand times over the years.

The landlords.

I do not want to get a lecture from any of the banking institutions in the future. I am very impressed with the new regulator, Mr. Elderfield. I hope as the years go by that the golden circle will not try to get to him. I do not think it will as legislation surrounds him, his office and Professor Honohan. At the end of the day, at least manners will be put on the financial institutions for the sake of everybody.

Banking facilities and institutions are hugely important in a developed economy, which cannot operate without them. I only hope in the new scenario with all the checks and balances provided for in the legislation that inordinate profits will be no more, greed will be flushed out of the system and we will experience a return to normal, decent, sensible banking. The banking system I want will look after people who have good ideas to employ themselves and others and businesses that must rely on reasonable bank overdrafts and that have projects, which are likely to be successful.

During the last election campaign it was the belief of Government economists and everybody associated them that the growth rate would be 4.4% in 2007. I am not an economist but with such a growth rate, a government can do many things with an economy. Three months after the election, the growth rate was almost zero and now we are experiencing negative growth rates of 5% and 10% and that is our big problem. It is only our hope that we have the ability to come back and that we all work towards that. People often refer to green shoots. I was delighted that Mr. Connellan of Dublin Port said on television last night that there had been a 24% increase in exports through the port, although that is coming from a low ebb compared with 2006, for instance. This is a useful signal but given the overhang of billions of euro that must be paid by the people, the green shoots would want to be oak trees today. That indicates how much of an increase in business is needed.

There is no question that there was a golden circle. The bankers believed they could do what they liked and they had no bosses, whether they were regulators, Ministers or taoisigh. Against that background, the people who got us in the mess we are in will never be able to get us out, irrespective of what they do, because they will not have the goodwill of the people to pick themselves up, dust themselves down and do what the Americans are doing. The Americans believe they were badly let down but at least somebody is trying to help them now and they are trying to row in. Confidence means that if one thinks something will work out and one works towards it, nine times out of ten it will work out. The negativity surrounding our county is something to behold. I have never witnessed anything like it. While new appointments have been made to regulatory offices and to the boards of banks, I do not believe, no matter how well meaning the Minister is, the Government that caused this has the ability to deliver the final onslaught to lift the economy to where it is entitled to go and will go as time moves on.

When the funding goes, everything goes. The Minister of State, Deputy Mansergh, was in the Chamber earlier. I refer to the effect of financial mismanagement on everybody down the line. He drove through east Galway recently to have a look at the aftermath of the flooding prior to Christmas. Naturally, after six months, everyone expected the Government to help those who were hurt most. A man in Ardrahan, County Galway, has two houses, both of which were flooded. He has been told no remedial action can be taken to ensure this does not happen again. The insurance company that covered him will no longer do so and the Minister of State is reported to have told him yesterday that he will be not be relocated. In other words, he has to stay where he is. I refer to this because if we were living in better times, every Minister would try to do what is necessary. If the economy has reached a point where a man, his wife and a few young children are condemned to living on a flood plain, having been granted planning permission by Galway County Council, that will give the House an idea of how bad is everything.

I refer to house repossessions. I do not have good news for the banks on this either because there is a perception that the banks have sympathy for people who are unable to meet their repayments. It is beginning to flow around the country that the banks will take it handy if people go in and talk to officials. I guarantee the Minister of State that if the banks were able to sell their houses, they would be auctioned tomorrow morning. The only reason the banks will not repossess houses is they have too many properties that they cannot sell anywhere. I expect the Government to have a big say on this issue. It looks as if the number of people in trouble with their mortgages is increasing every month and almost 500,000 householders will find it difficult to meet their repayments if interest rates increase as we have been told they will. That is when misery will be experienced by the vast majority of young couples throughout the State.

However it is organised and whatever deal is done with the banks, NAMA and everybody else along the line, the Government must not put people out of their houses. The houses will be repossessed but they cannot be sold on the market. Worse still, 80,000 families are on local authority housing lists. The number was never higher than this week. There is not a penny available to build a house for them. Given that so many houses are vacant, surely somebody has the imagination to ensure some houses could be reallocated to those who do not have a house.

I always expect people to pay what is humanly possible because I do not want a free ride for anyone. We have no free lunches in this country but where couples are doing their level best to pay and continue to do so, how dare the banks or any Government put them out of their homes. That is an outrageous thought. That is why I have serious problems with NAMA. It is the law of land, irrespective of whether we like it, but I would not like to have a vote in favour of NAMA on my curriculum vitae like Green Party and Independent Members. I would not like to face the electorate at the next election on the basis that I voted in favour of the agency. I hope it will be successful but too many things are wrong with it. I am terribly afraid that we will see many more house repossessions over the next 12 months. Whatever else the Government parties do, they must not put people out on the road.

I wish to continue where Deputy Connaughton finished, namely, on house repossessions. He is correct that the Health Service Executive is already feeling the pressure in terms of mortgage protection and assisting those with mortgages. It is really only a case of keeping the wolf from the door. I agree with Deputy Connaughton. The banks are off-loading their bad debts to NAMA. When they go through their books and find a house they could possibly sell, they will do so. They will take houses off people.

I wish to say two things to the Government tonight. A scheme must be introduced to protect people who are under pressure — those who have lost their jobs through no fault of their own, people who always paid their debts, mortgages and other loans. I refer to those people who paid over the odds to the banks and the builders because the property market was being fuelled by the Government which allowed the builders and investors to buy into the market. The Government did nothing about that.

The Government is currently paying €500 million for rent allowance. There are enough geniuses in the Department of Finance, or rather there are not, because if there were we would not have found ourselves in the current mess. However, enough people are working in the Civil Service to devise a scheme that would allow for the use of the properties taken over by NAMA so that we would not be still paying €500 million next year for rent allowance. Why should the State pay twice, once to pay NAMA for the builders' properties and again to pay people to stay in properties that might be going well for them? The Government must find a way to make those properties available to the State for council houses and rent allowance purposes. Deputy Connaughton is correct; 80,000 people are currently on the waiting list for council houses. I hope the Government is considering a mechanism whereby local authorities can take over housing estates that are finished or half-finished because the taxpayer has already paid for them through NAMA. I do not want to hear from the Government, the Civil Service or the banks that this cannot be done. Of course it can be done. We own that property now. The property that was put into NAMA in the past two weeks is the best of the worst. The banks picked the best of the worst. Unlike the song, the worst is yet to come.

I spoke to a man the other day whom I know well. I will be careful as I do not wish to identify him. A number of years ago he was in a small job, like myself, when all of a sudden he became a developer. Then he became a super-developer. He told me he had property worth €520 million. He told me that he would be lucky to get €240 million or €250 million for it now. That is his valuation. I would say the banks have a valuation of €100 million on it, if it is even worth that in the current climate. A few years ago he had very little yet he was able to go to the banks and borrow what he liked. They kept throwing out money to him. Was there no accountability at all in the banks? Was nobody taking responsibility? Was everyone full of greed? Everyone was getting paid. Everyone was getting the tip-off. Everyone was getting looked after. However, there was no substance to what they were doing.

I wish to return to what is happening currently with the State's law enforcement agencies. What are they doing and when do we expect to see action on the corrupt bankers? All previous speakers have referred to the anger that exists. I know anger will not get one anywhere, but it will burst somewhere, either outside of this House or some other place. People just have enough. The danger now is that people who are working and who have mortgages will come under increasing pressure because, as the regulator indicated last week, interest rates will increase. I say to the Minister, to the regulator and to the banks that people are just about able to pay their loans at the moment. They are just about able to keep the ship going. People in good jobs must remember that others are on the breadline.

Young people who come to my office are under severe pressure. They have young families and big mortgages and they are trying to keep the ship going. Both husbands and wives work. I can understand why public sector workers are angry about the cuts imposed on them. Those young people have commitments and mortgages. They are under pressure. There is one thing about not getting a pay increase; at least one never bargained for that money and one never had it to spend but it is difficult if one had bargained for it and committed it to a mortgage or to the education of one's children or if it was earmarked for something in the future and it is taken away. The banks and building societies are putting on pressure. Local authorities are to introduce water charges and increase rates for people in business and on young couples trying to make a living. The price of oil has gone up, as has the cost of diesel and petrol. People are under pressure. They are under siege and they are sick and tired of it.

I have some questions for the Minister to which I hope he will respond. When do we expect to see prosecutions for the gangsters that told lies to the Minister, the Government and the people? That is the only way to describe them. When will they be behind bars? I say to the officials, the Minister and the Government, there must be law for everyone in the country, not law for the poor. This morning I was trying to sort out a case for a person on low income who was caught using red diesel. That person broke the law and received a penalty of €2,000. If the fine is not paid the person will be sent to prison. A garda contacted me yesterday about a fine. I say to the Judiciary that it would be better to put people in prison than to impose big fines on them. A lady contacted me yesterday whose husband got caught for having no insurance, not for the first time, who received a fine of €900. The person is on social welfare and cannot live as it is. I say to the judges that they should put people in prison and not have mothers and fathers trying to raise money they do not have. The Judiciary should be more careful about how they fine people given that the gangsters in the banks are still being protected and looked after. They are abroad in their holiday villas, tanning themselves in the sun. We see their pictures in the newspapers yet nothing is happening to them.

The Judiciary should not attack the poor; they should start at the top. Of course there are two laws in this country. A man said to me one time that whether one is a supporter of Fianna Fáil, Fine Gael, the Labour Party or Sinn Féin, if one is rich one will be protected. We should always remember that. That is what is happening now. We are not allowed to criticise the banks or the bankers. I reiterate what I said on the first day of the crisis, namely, where was the regulator and the Central Bank? Did anyone in the public service lose his or her job for not doing his or her job? The answer is "No". Will anyone lose his or her job? The answer to that is "No". What will happen to them? We will give them a big, fat pension. We will say, "Here's the pension, good luck and thanks very much for getting this country into the mess you have got it into." That is what happened in this country. We gave people big, fat pensions and we let them out the door. No one lost his or her job. That is why people are angry and sick and tired of what is going on in this country. People are looking for hope and vision.

I say to the Minister and to the Government, Anglo Irish Bank is dead. It should be closed down once and for all because before this is all over we will have put up to €60 billion into that bank and we will still have to do the same job. Anglo Irish Bank should be closed down. People's savings and the good loans that it has must be protected but we should forget about everything else. Allied Irish Banks, AIB, should be also closed down because it was no better. It behaved in the same way. The only bank that showed a bit of respectability — it is not my bank so I do not mind praising it — is the Bank of Ireland. It was complaining for years that it could not compete with the interest rates offered by AIB and Anglo Irish Bank and the manner in which loans were given out. At least Bank of Ireland is not in too bad a shape. It is time we closed down the other two banks. Perhaps we should nationalise the Bank of Ireland and have it as the only bank in the country. We should try to bring in a few banks from abroad to do business in this country because what is happening now is that every single penny we have and every single penny we are borrowing is to keep the banks alive. Ultimately, there is a major risk that this objective will not be realised. If so, it will bring down this country and its economy.

Anglo Irish Bank should be closed down. In this regard, I do not care what is said by anybody, be he a former leader of Fine Gael or anybody else, because that bank cannot be saved. It will not be saved and all we are doing is putting good money after bad. I want to see the bank go down immediately and I mean that. I hope it happens and that the Minister now realises that what Fine Gael was saying from the very beginning about having a good bank and bad bank was right. Anglo Irish Bank is a disgrace.

Businesses are doing their best and there are people who are prepared to take a chance even in these bad times. Three or four billion euro was made available recently for the banks to encourage people to get back into business. Last week, Deputy Michael Noonan made one of the best speeches I have heard in this House for a long time. It concerned the banks, their behaviour and the lies they told the Government and everybody else. I read the speech two or three times and compliment the Deputy thereon because it was excellent. It should be circulated because the Deputy got it right.

If the Government does not do something to make money available to small businesses, the country will fold. The only hope we have of getting out of this recession is to operate from the bottom up, that is, from the level of small businesses. Small businesses always comprised the backbone of this economy and they must be encouraged and supported in every way possible to keep them in business.

I heard from people at Christmas that they could not buy stock because they could not obtain loans from the bank. In the past, they were always able to obtain loans with which to buy stock. They used to sell their stock at Christmas and repay their loans. This year they had great difficulty obtaining loans. The banks are putting unreasonable pressure on the people who always repaid loans. If this country is to get out of the recession, we must start thinking outside the box again. The Government has got it wrong regarding how it is supporting the banks. By the time the Government is out of office, thus giving another Government a chance to tackle the problems differently, the country will be in disarray.

The people will not accept the medicine from the Government. The philosophy of Deputy Harney and the Progressive Democrats was to let the banks and businesses run the country and forget about regulation. High-flying Charlie, former Minister for Finance Mr. Charlie McCreevy, had the same philosophy of letting the builders and investors run their own show without regulation. By God, we have learned that regulation is needed. We need regulation that works and not regulation for the small men.

The night I saw the former Financial Regulator — no disrespect to him — being interviewed on RTE by, I believe, Miriam O'Callaghan, who would have tied him up in knots in two seconds, I said it was no wonder the country was in its present state. The following week we gave the former Financial Regulator a big handshake, thanked him very much for bringing the country to where it is and let him out the door instead on holding him to account. If it had happened in America, he would now be in jail along with the Central Bank——

The Deputy cannot make that assertion.

I do not want to make an assertion but I will——

I ask the Deputy to withdraw the assertion.

Which assertion?

That the man should be in jail.

I withdraw it. Maybe he should be dealt with — I will put it that way. Even though I still feel strongly that he should be in jail, I withdraw my remark. I hope the day will come on which he will be brought to justice in some way to account for himself. There is no accountability at present.

The lady who does not pay her fine for not paying her television licence will end up in jail and there will be nobody in the House to say we need protection for her. There is no protection for such a woman but there is protection for the big fellow. The banks have run the country into the ground, not once or twice but three or four times. By God, we have let them away with it.

I hope the Acting Chairman, Deputy Wall, will be Ceann Comhairle soon because we need a change and new faces in the House. We need a new Government, new thinking and accountability. There is no accountability in this country. The agencies we put in place and for which we paid a lot of taxpayers' money failed the people and the banks were a disgrace.

I hope I will not have to withdraw my next remark: until I see a few of these fellows in jail, I will not be happy. A few of them have to go to jail to show the people what happened in the tent at the Galway races and other race meetings and what happened behind closed doors. The people must know that responsible individuals will pay a price for putting this country in hock. The latter have let down the people. People who died for this country would turn in their graves today and ask what they died for if they knew they left gangsters behind them that could run the country into the ground.

I welcome the opportunity to speak on this Bill, which introduces a three-stage legislative programme to create a new fully integrated structure for financial regulation.

Since Good Friday, most public representatives from the Border area have been working on a cross-Border, cross-party and cross-community basis to try to save up to 5,000 jobs that are threatened on foot of the problems faced by QUINN Insurance. We have met the workers, the administrators, the Financial Regulator, the Governor of the Central Bank and the Minister for Finance. I remember being in the lovely office on the seventh floor of the Central Bank on the Tuesday following Easter Monday and noted there was a lovely view over Dublin. We sat around a lovely table and met Mr. Matthew Elderfield, Mr. Pat Honohan and others. It struck me that it was in that room, with its view over the city, that the former Financial Regulator and Governor of the Central Bank were asleep at the wheel. They must have felt great at one stage that we were building up a huge bubble and a head of steam. Everyone was clapping one another on the back saying "Well done" but the people who were paying the price were those people in the houses they could see in north Dublin city extending into Meath. Those residents are the people who are now paying the price for the lack of action. At the meeting, which I attended with colleagues from my party, Sinn Féin, Fianna Fáil and the Labour Party, I said to Mr. Elderfield and Mr. Honohan that it was a pity they were not in place five years ago. If they had been, the light-touch regulation would not have happened.

I have no doubt but that Mr. Neary and others were put into a position of trust and influence not because of their experience but because they had been in the Department of Finance for a long time. We all know what happened; over the years, it was a case of jobs for the boys. If one was in the Department of Finance, it was one's turn to be appointed to a certain position, regardless of one's ability. One deferred to a Government that was in office for 12 years and did not ask the hard questions. When one was put into a position of power, one did not bite the hand that fed one. If the Minister for Finance, who made the appointments, said, "Let it move on, do not worry about it", one accepted that. One knew who appointed one. One was appointed not on merit but perhaps because of political affiliations or, more important, because it was one's turn to be appointed. That is how everything has worked in this country since the foundation of the State.

Deputy Ring is correct that, since the foundation of the State, we had two laws in this country, one of which involved light-touch regulation, an Irish solution to an Irish problem. If there was child abuse, the offending priest was moved and one was told not to worry and that the problem would be sorted out. However, most of the people of the country who would have made a difference here were in Kilburn or Cricklewood in the United Kingdom or in New York working on the building sites. That is what happened because the brightest and the best were disgusted at the two-tier system in this country that we pretend we have got rid of. At least when the British were here they did things on merit. Any Irish navy person in the UK could confirm that he was never asked about where he came from, his political affiliations or his family. If he did the job right he earned respect.

Unfortunately people could not change the system in Ireland. How could they when they were resident in the UK, Germany, Australia or New York and could not come home to vote? That is why we had the culture we had over the years. Thankfully — while I might fall out with Matthew Elderfield, he is impartial — we now have two people in place who will make a difference. There is a difficulty in that we are trying hard to save jobs. This is all about jobs. We have very tight regulation now, and that is good, but we must look at how to save the jobs of 5,000 Quinn employees around the country.

This recession started with jobs and it will end with jobs. We saw the former chief executive of Irish Nationwide getting €1 million and the way people such as this can walk around as if they have done the country a service. Irish Nationwide and Anglo Irish Bank were there for a reason. If one went into Government Buildings and wanted a favour, a little phone call to Michael or Seanie and a walk around the corner to St. Stephen's Green and one was sorted out. That situation came about not from one's ability to pay but rather who one knew. Let us be honest about that.

If people intend to protest outside the Oireachtas, they should not waste their time outside Leinster House, because that is not where the power lies. The power is not with Opposition Deputies or Senators. The power is in Government Buildings and that is where they should go to protest. They could even forget about Government Buildings altogether and take a walk around the corner to Anglo Irish Bank, because those were the people running the country. They were running it from the Galway tent to include their little cronies and all those in a position of power around the country, and that has to stop.

If Fine Gael gets into Government I believe it will stop. I take my politics seriously. When I was elected to the county council in 1999 I was on the VEC. People used to ask me what politicians were doing on interview boards for teachers and so on. I did not believe they should be on interview boards, but the only time I saw political interference within the system was where two inspectors were putting in one of their own; it is a small country. Now we are back to the same situation where we have to go to the United Kingdom to bring in two regulators to regulate our affairs, because we simply cannot be trusted. We have lost the vocation of honesty and decency in doing the right thing.

I welcome what has happened as regards Anglo Irish Bank. I believe it was a rotten bank, as was Irish Nationwide and AIB to a lesser extent. These set a precedent in reckless lending that the other banks followed and there are people who were caught up in the frenzy. I am one of them. I was involved in business and we employed six or seven people. There was easier money to be made, seemingly, outside the core business if one invested in property, stocks or whatever, which everybody was doing apparently. I recall the IFA meeting Department officials in Dublin and talking about exporting and arguing that agriculture was the backbone of the country. In the event, they were told agriculture was dead and the place to be now was financial services.

We all fell into it because the people at the top decided that was the way to go, but it was too incestuous. Now we all know what financial services are and we have to start looking again at industries such as Seán Quinn's group which is selling insurance in the UK, providing jobs in Fermanagh, Cavan, Leitrim, Meath etc. We have to protect those people. We also have to protect Irish farmers. If economic effort is to be export led, we have a brilliant workforce, people whose lives have revolved around working 16 and 17 hours a day seven days a week, for whom there is now no margin. We now have to move to exporting and getting a return. Let us forget about the old bubble, selling houses to one another, and financial services. We have to return to core business. I have to consider setting up the business again, because there is now no such thing as an easy euro.

Bertie, Charlie McCreevy et al espoused the view that there were easier ways to make a few euro and everyone fell for it because it was the thing to do. I heard about the “soft landing” a hundred times before the last election and then there was the former Taoiseach’s absurd comment to the effect that anybody who questioned what was going on should commit suicide, effectively. It just showed how out of touch they were, but unfortunately Deputy Bertie Ahern will get his pension. He will still get paid but not so the people who followed his reckless leadership. We have 450,000 out of work, young people who cannot afford their mortgages and civil servants who, rightly, are very angry because they have been doing the work. They believe they have been undermined in what they have done as well.

Regarding Ministers' pensions, it is about time clarity, commonsense and cop-on came into the equation. How could one get a pension from a job while still working for the Government? This was absurd, but it just shows there was a gravy train and it was there for everyone. Then there was the episode of the 700 civil servants which showed there was one rule for one group of public sector workers and another for the rest. That is not the way to run a democracy. I am sure that most of the politicians who got those pensions did not know what was actually happening. Be assured, however, that the civil servants who drew up the legislation knew the score.

A Deputy's salary is aligned to that of a principal officer. A survey was done, presumably by principal officers, about three years ago, which asked how hard Deputies were working. I did not know about it, although we got a 5% or 6% increase. The survey said, in effect, that Deputies were working very hard, about 80 hours a week, doing this and that, and they got an increase. Those in Opposition did not know about it, but be assured Bertie knew about it. The Deputies got the increase, but so too did the principal officers because everyone was on the gravy train.

I believe there are people getting pensions for the jobs they did who are still working for the State, perhaps on a contract basis. This all has to be looked into, but thankfully the pressure was brought to bear on the former Ministers who were getting pensions and they at least have to give them up. That is right, it is leadership and it was what the public demanded.

The credit unions have kept businesses going around this country, because there is no money in the banks. The banks are not lending, despite their statements that they are open for business. The banks are not open for business, and have not been for two years. Jobs are going by the wayside. I want to pay tribute to the credit unions. They did not get caught up in the madness and now they are bailing out many people who need money to pay for mortgages or put food on the table. They were not supposed to, but they helped out businesses up to two years ago when things got tight. It is a voluntary service and the Financial Regulator should examine ways to enhance the credit union model around the country.

Let us think about the workers in AIB, Bank of Ireland and so on, who have gone through an extremely tough time. People come in, angry because they do not have money to pay to the banks, and they are on the front line. These are ordinary men and women. The banks gave them shares as a productivity incentive, but those shares are worth nothing. They have loans with the banks and they have wives, husbands and families. They are finding it difficult to survive. These people could not believe that those who took over Anglo Irish Bank received a pay increase. They are doing a job for the country — they should be happy to have jobs — and yet they got an increase a few weeks ago. There was anger not only among the public — as was right — but also among those working for the main banks, who felt that although they were doing the same job, those working for Anglo Irish Bank were protected by the Government. They had nice Civil Service jobs, and now they were to get a little bit extra for working hard.

We are in an emergency. It is not about working an extra hour or two in overtime. That is over. There are people in the private sector who are clinging on to their jobs. The days of people working an extra two hours for overtime pay are over. The country cannot afford to pay it. We must now wear the green jersey and get ourselves out of this mess.

We are where we are, as everyone says. AIB, Bank of Ireland and so on are in NAMA and we should support them. These banks need money and there is a lot of money out there. There are unions and industries that have money, and many people have deposit accounts. I am asking them to put their money into these banks so it can be put back into the Irish economy.

Ulster Bank, Rabobank, National Irish Bank and so on came here when times were good and are now pulling out of the country. They are folding up their tents and pulling out, and they are putting serious pressure on many struggling account holders. All they want to do is to pull out. National Irish Bank had seven banks out of eight and a 60% market share in my own rural area; it now has one bank, and next year it hopes to move to a cashless bank. It sees the Irish economy and it wants to get out. I ask people not to put their money in these banks. I have said this many times. People should not deposit their money in these banks as they will leave the country. They must wear the green jersey and put their money into the banks that are being supported by NAMA, whether I like it or not.

Businesses are under serious pressure and some will not survive. If we are to get out of this situation, it starts with jobs and it ends with jobs. I wish Matthew Elderfield and Patrick Honohan well. When they look out from the seventh floor of the Central Bank on a lovely evening such as this, they have a job to do. I ask them to consider what they can do to protect jobs. When a person is working, he or she can contribute to the State. Unfortunately, there are 450,000 people out there who have no means of contributing to the State, and the State is finding it difficult to support those people. One's heart goes out to them. I ask the Financial Regulator and the Governor of the Central Bank to temper what they are doing — that is, cleaning up the banking sector and ensuring the regulations are enacted — with efforts to protect jobs, although I realise they must be impartial. This is what we must do if we are to get out of the recession.

As I said, there were two countries before, but I would like to think there will be a united Ireland. I am not talking just about borders but about jobs. People should get jobs based on their ability and merit. The games that went on — the nods and winks, the favouring of those in the Galway tent, going around the corner to Seanie in St. Stephen's Green or up the canal to Michael — are over. This is where they have got us. Unfortunately, the people who participated in these things will not be arrested, despite the 450,000 or 1 million people who were caught up in the frenzy that was set up by this Government; rather, they will be protected. I would like to see a new Ireland that is open to all, without nods and winks, cliques or gombeenism. That is over.

I will not say I welcome the opportunity to speak on this Bill, because it is disappointing that such a Bill is required. The reason we need this Bill is the actions of the people opposite, who were not doing their jobs. I always thought the Financial Regulator would be in constant contact with the Minister for Finance. Maybe the regulator was in contact with the Minister, but the Minister — now the Taoiseach — buried his head in the sand, as he has done since he took over the leadership of the Fianna Fáil Party. He feels that if he ignores what is happening, it may some day go away. Speaker after speaker has mentioned the CEOs and chairpersons of Anglo Irish Bank and Irish Nationwide Building Society. They cannot be too far wrong when the same message is being repeated.

On 13 October 2009, while speaking in the House, I called Mr. Fingleton a gangster, and I received correspondence in this regard. The brass neck displayed by Mr. Fingleton in asking me to withdraw my statement amazed me. I have not withdrawn it and I will not do so, or be forced to do so, because I believe in my heart and soul that that is what he is. There are other people also, including Mr. FitzPatrick.

Deputy Ring said that some of these people should be jailed. In America, people were handcuffed and removed from the banks, put in the backs of police cars and put in jail. However, because the people about whom we are talking are friends of the Members opposite — that is, Fianna Fáil — they are not being jailed. If the Green Party Members were sitting behind me now, as they were between 2002 and 2007, clever Trevor and poor gormless John would be jumping around the place over what has happened. However, because they are in their cosy cartel, with their State cars, they have decided to shut their mouths. It is a case of "Hear no evil, see no evil." It is disappointing that the members of a party that I thought had morals have absolutely nothing. They stand for nothing, and people outside the House know this.

I will turn now to the former Financial Regulator, Mr. Neary. When Willie McAteer told Mr. Neary——

As it is 7 p.m., I ask the Deputy to finish.

May I finish this sentence?

No. It is after 7 p.m. and we must follow the order of the day.

I will continue the next day, because what I have to say is very interesting. Perhaps the Minister of State, Deputy Andrews, does not want to hear it.

The Minister of State has nothing to do with it. It is the order of the day and we must adhere to it.

Debate adjourned.