I welcome the opportunity to contribute to this debate. I fully support the amendment of the Fine Gael finance spokesman, Deputy Richard Bruton. The legislation is being introduced prematurely. The investigation into what went wrong with the banking system is ongoing. The reports by the Governor of the Central Bank and the two wise men into the reasons for the crash and the fiasco in our banking system have not yet been produced. We have had no report on, or inquiry into, what went wrong in the banking system even though the man on the street knows a certain amount about what took place. Nobody has been held accountable for what happened in the banks. The banks were completely reckless, particularly by giving 100% mortgages and by increasing credit limits on credit cards on a six-monthly basis. This was very unfair and wrong.
The Government was complicit regarding what went wrong, yet no politician has put up his hand to accept responsibility for the decisions made. There were critics, including economists, who flagged much of what was to come down the tracks. Organisations such as the IMF and OECD published reports continuously outlining the overheating in the Irish property market and banking sector, yet the property market was talked up consistently. We were consistently told that the fundamentals were sound in the property market and that home owners were to make purchases at current prices or else miss the boat and not get an opportunity to purchase a property again.
Bankers were not held accountable for what went wrong. Certain bankers, who are still working for Irish financial institutions, were complicit in what went wrong and were present when some of the bad and reckless decisions were made by those institutions, yet they are being rewarded handsomely with very high salaries and profit sharing schemes. Despite this, the ordinary worker is paying obscene tax and is being hammered from every direction by the Government.
Bank auditors were asleep at the job, particularly in regard to certain transactions in Anglo Irish Bank and Irish Life and Permanent at year-end. It was very poor form for auditors to miss the key transactions and not report them. There is an onus on them to do so. They have failed shareholders, particularly by signing off on accounts year after year without having seen some of the transactions and without flying the red flag to show creative accountancy was taking place or that the banks were not functioning as they should.
The relationship between the political establishment, the Financial Regulator, the Governor of the Central Bank and the Minister for Finance was too cosy. The Bill seeks to change this relationship but it is being introduced prematurely before a full investigation has been carried out. We have not yet heard what happened.
I acknowledge the improvements that have taken place under the new Governor of the Central Bank, Professor Hohohan. He is doing a terrific job. The new Financial Regulator, Mr. Elderfield, who has clearly put his own stamp on the job, is very independent and is not for turning. He has brought new realism to the Office of the Financial Regulator. People are not happy with what happened with Quinn Insurance but the regulator has ensured there will not be as many problems in the insurance industry as might have arisen.
There is no evidence to state the existing regulatory bodies were responsible for what went wrong in Ireland. The Government is glad to make a scapegoat of the former regulator and the Governor of the Central Bank and make them ultimately responsible for the fiascos that occurred. By doing so, the Government is only trying to save its own skin. No responsibility is being taken at all.
The former regulator was definitely at fault, yet he is being paid a handsome pension and is enjoying all the trimmings associated with his former position. It is very poor that nothing has happened in this regard.
It is clear that responsibility must be shared. The Government allowed the banking crisis to happen and never shouted "Stop" at any stage over the years. It never sought to cool down the overheating property market because it was hooked on all the stamp duty receipts that were consistently coming into the Exchequer.
The procedure for the appointment by the Minister for Finance of the new directors to the Central Bank commission is very flawed. The Minister will have exclusive responsibility to appoint directors. The Joint Committee on Finance and the Public Service should have a vetting responsibility to ensure directors appointed have the necessary expertise. The Oireachtas should be comfortable, on a cross-party basis, that the people being appointed are the right people to do the job. Deputy Bruton and other front-bench spokespersons have been consistent in their criticism of the appointments procedure. The Oireachtas should have a more central role in overseeing the appointment of new directors to new bodies or existing quangos.
The Committee on Finance and the Public Service should have an opportunity to question potential appointees. There ought to be accountability and transparency in making appointments. Politics has failed people and we need a new form of politics. More scrutiny and probing of potential appointees would bring more comfort to the people. Merely appointing individuals without scrutiny amounts, in certain instances, to cronyism and is very wrong.
The new Bill does not give the commission bank resolution powers to put failed banks into administration. This point has been made throughout the debate. It is crucial that no bank in difficulty be allowed to continue. It should be possible to wind a bank down without jeopardising the future of the country and its finances. There is nothing in the Bill to prevent a recurrence of the events that saw one or two banks of systemic importance bring down the national economy. History must not be allowed to repeat itself and this needs to be written into the legislation. The Irish do not have the stomach to deal again with a collapse like the one that occurred. People are rightly angry over what went on in this country.
The Minister is not adopting a hands-on approach to interest rates and is allowing the banks to increase modestly their interest rates every so often. He has recapitalised the banks and they should, therefore, have enough funding without trying to extract more from home owners through punitive interest rates.
The banks are making the case that the cost of funding is more expensive on the international markets because of what has gone on in this country. It is clear that home owners cannot consistently absorb all these extra costs on a continual basis. The only way interest rates will go is up, possibly over time. It is unfair that first home owners will again be asked to pick up the tab for the problems in our banking industry.
The timing of the recent wage increases given to the staff of Anglo Irish Bank was lousy. The decision to allow ordinary workers to get increases clearly damaged the credibility of the banking sector. The increases were probably justified, as they may have been due to the workers in question over a number of years. However, the wage increases sent out the wrong signal at a time when other workers are having to tighten their belts. Public servants, in particular, are facing extreme difficulties as they try to make their mortgage repayments and pay their bills on a weekly and monthly basis.
I would like to speak about the insurance industry. The banking system has dominated the political agenda over the past two years. Insurers have been resilient throughout this period of financial instability. The insurance sector merits much more representation in the Bill. The appointment of six or eight directors to the Central Bank commission is provided for on page 47 of the Bill, which refers to accountants, bankers, economists and lawyers but does not make reference to the insurance industry. The sheer size of this country's insurance industry means that it should be represented. That is a clear omission in the Bill.
A distinction needs to be drawn between the insurance industry and the banking industry. One cannot subject both industries to the same amount of regulation. It is clear that the insurance industry, with the exception of a single company, has not let down the financial sector. It has always operated correctly. Its business model, its operations and the risks it poses are very different. That should be accounted for clearly in this legislation. The Bill also requires separate divisions to be established within banks to deal with banking and insurance. That should be stated as well.
On the question of the accountability of the new Central Bank commission to the Oireachtas, a proposal for yearly reporting has been made. It would be better and more timely for Members of the Oireachtas to receive reports every three or six months. If we are to convince people that things are changing and to improve regulation in this country, it is clearly insufficient to provide for accounts to be produced on a yearly basis. It does not give confidence to people.
Most Deputies have received representations from the credit union movement, which is unhappy that the Bill does not distinguish between banks, building societies and credit unions. The regulation of the credit union sector has not failed — it is purely the banking sector that has failed. The excessive regulation of the credit unions poses a serious threat to the movement and may lead to a decrease in the number of volunteers. Every Member of this House has received a representation to that effect. Perhaps the Minister for Finance will reconsider this aspect of the matter.
The investment of €22 billion in Anglo Irish Bank is a topical issue at the moment. It is in the news most days of the week. The Fine Gael position on the matter is crystal clear — we are looking for an immediate wind-down of the bank, which cannot continue the way it is going. A great deal of money has been invested in Irish Nationwide, AIB and Bank of Ireland. People are angry about the light touch regulation that took place in this country. The Taoiseach, who was the previous Minister of Finance, and certain parties within the banking sector, such as the auditors of banks, have to be accountable for what has gone on. We will probably never hear the full truth about the level of reporting between the Financial Regulator, the Governor of the Central Bank, the previous Minister for Finance and the previous Government. I am sure a certain element of truth will come out during the investigations.
It is premature to introduce this legislation before the results of the banking inquiry have been released. A certain element of the Bill makes sense. We are not 100% sure that it was the regulatory system that let us down. Perhaps individual people in certain positions were unqualified and should not have been in those positions. The Irish people are angry about what has gone on in the banking sector and about the money that is being absorbed here. They cannot understand that schools are being closed and the home help hours of those who need help are being reduced, at a time when a great deal of money is going into the banking sector. I will leave it at that.