I welcome the Minister of State, Deputy Mansergh. We all remember the shocking events of September 2008. During the boom the banking culture, as we have now discovered, was out of control. Money was thrown about like confetti at a wedding as financial institutions focused above all else on expanding their loan books. I recall speaking to a couple some years ago who had sought a mortgage of €150,000 to build a house. The financial institution they approached told them this would be insufficient and that they should borrow more. When they insisted that they did not wish to borrow more than that sum they were advised that since they were getting married they should borrow more to cover wedding and honeymoon expenses and that the money for a new car could also be thrown in. Fortunately, this couple were not tempted by the officer and borrowed only the €150,000 they had sought. They are surely grateful now for their decision.
I hold no brief for any banker who behaved irresponsibly. I am appalled and disgusted by what was done, but I am confident that some of those who behaved in this manner will face the full rigours of the law in time. I am also appalled and disgusted by the lack of effort on the part of the former Financial Regulator. This was a man who seemed to sit on his hands; he saw nothing, he heard nothing and he certainly did nothing in terms of regulating the financial industry. That is not acceptable. The new regulator is perceived to be doing his job. We on all sides of the House respect his independence and the public seems to approve of his performance. I had the opportunity to meet him recently in regard to the Quinn Insurance situation. While he did not tell me what I wanted to hear, I appreciated his frankness and independence. He seems to be doing a very thorough job.
Better regulation is essential. Banks cannot be allowed ever again to behave in such an irresponsible manner. Before the boom we had a tradition where customers in local branches knew their bank managers and could speak to them about their financial situation. When they applied for a loan they could be confident the manager's decision would be based on customers' banking history and their ability to meet repayments and other financial obligations into the future. The financial situation of each individual was taken into consideration before a decision was made. Unfortunately, that power was taken away from the local bank manager and replaced by decision makers in head office, faceless officials who were not acquainted with applicants' personal circumstances and did not properly take into consideration their ability to make repayments. They did not have the best interests of customers at heart and that was a retrograde step.
We must learn from the mistakes of the past. None of wants to be here in ten years discussing similar episodes and recounting similar tales. Banks have a duty to act responsibly and we all, as taxpayers, expect them to be responsible. That is a legitimate expectation. It is of paramount importance to us all that their activities are supervised. If we do not have a properly functioning and regulated banking system, the State cannot function in an effective manner. A flow of funds and trade credit is the lifeblood of an economy. The Government has put capital requirements in place, set by the Financial Regulator, to ensure these mistakes are not repeated.
We have all been hearing that the Government has bailed out the banks. I am sick, sore and tired of listening to that phrase. We did not bail out the banks — we bailed out the economy. If we had not invested money in the banks, they would have gone under. That was not an option. We need a healthy functioning banking system for a healthy functioning economy, and we are attempting to achieve that. It cannot come quickly enough, but unfortunately such things cannot happen overnight.
Every Irish citizen who has money on deposit has a legitimate expectation and a right to feel that their deposits are safe. If we had not put the bank guarantee system in place, many ordinary people who had worked hard and been careful with their money would have lost their savings. We could not have allowed that to happen.
A tale has been doing the rounds about a person who put their card in the bank machine, which told them there were insufficient funds. The person wondered whether they or the bank had insufficient funds. We could not countenance something like that happening in this country.
Business people who run small, medium and large businesses are seriously concerned about getting credit and the lack of credit flow. It is the lifeblood of those businesses and without it, many will go under. I am not advocating the return of reckless lending practices. However, where a business has a good trade and credit history, and is considered to be viable in the future, credit should be made available. If we are to get out of recession, those businesses are crucial to our recovery. We must give them the tools to allow them to carry on with their day-to-day activities.
I welcome the fact that the credit review process is in place. People who feel that they were unfairly treated — who were refused credit or had it withdrawn — can request a review of and a determination on the bank's decision.
I welcome the new powers in the Bill to ensure the fitness and probity of nominees to key positions. That is hugely important. The public, and we as public representatives, demand that it happens. We have witnessed the results of irresponsible and incompetent behaviour by those at the top in our financial institutions. It must never happen again. The new powers will restore confidence in the management of our institutions, which is necessary on the domestic and the international fronts.
Before the financial crisis, we thought our regulatory structures were effective and appropriate. How wrong we were. The public is dismayed and disgusted by what went on, and I share those sentiments. I am convinced that when the investigative work is complete, there will be prosecutions. Those who were responsible, and who were reckless, will face the full rigours of the law. I look forward to that day. I hold no court or brief for anyone who has done wrong or behaved in that manner. They should have their day in court, and explain and face the consequences of their actions — or in some cases, inaction.
I welcome the accountability provisions for the Central Bank. It will be required to submit a strategic plan to the Oireachtas once every three years, through the Minister for Finance. That will specify the bank's objectives and how it plans to achieve them. The Central Bank will be asked to present an annual statement to outline its internal audit function. We should welcome those changes.
I agree with the Minister for Finance, Deputy Brian Lenihan, that the Bill is urgent and essential. It will enshrine in law the new structures that are necessary to ensure we have a properly regulated banking system. I commend the Minister for Finance on his resolute determination to ensure there is confidence in our banking system at home and abroad, and I commend the Bill to the House.