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Dáil Éireann debate -
Wednesday, 6 Apr 2011

Vol. 729 No. 3

Bank Reorganisation: Statements (Resumed)

I congratulate the Leas-Cheann Comhairle on his appointment and I wish him the best of luck. I welcome the opportunity to speak on this issue, which has dominated political discussion in the Parliament and outside for the past two and a half years. An examination of the stress tests and the results of same show the deep difficulties which the Irish banking system is in and underline the essence of what the last Government attempted to ensure we provided capital for banks, to restructure the banks and to try to get them lending to small and medium sized businesses and that they would begin to lend to the broader economy again. Out of interest and not to belittle the seriousness of this discussion, I consulted the websites of the various parties and their manifestos prior to the election. I tried to gel the two manifestos together to establish whether they added up to the announcement of the Minister, Deputy Noonan, with regard to the reorganisation of the banks and the recapitalisation. Unfortunately, when laid on top of one another they did not really add up. The previous programme for Government and the manifestos had strident language on the burning of bondholders. There were to be pyres outside Dublin Castle on which bankers and bondholders would be thrown. Unfortunately, the reality has come home to roost given the serious difficulties facing the Irish banking system. At least most political parties are now having rational debate in the Dáil on how we address the problems and how we try to recapitalise, restructure and reorganise the banks to ensure credit is available to the broader economy.

One issue of concern which has been raised on several occasions and which the stress tests highlight is the fragility of the property market. If it does not begin to churn soon we will have another difficulty with the banks and they will require further recapitalisation. If we do not find the bottom of the market and get people purchasing homes and get a real value for property this situation will continue to impair the balance sheets. Will the Minister for Finance recommend that people should go out and purchase homes now? Does he believe, as the Governor of the Central Bank stated recently, that there could be a further fall in property values? Such language discourages people from purchasing homes. I make the point because it is critical that people are careful when speaking in the House. People may not appreciate the importance of their voices in this House. When I was a Minister of State with responsibility for trade, commentary in this House travelled and was listened to throughout the world. The viewpoints of various political parties were discussed. This had an impact on people's view of Ireland and the safety of investing in Ireland. People should be conscious of this when they comment. The views of parties in this House are taken on board when people make decisions on investments either in banks, State assets or commercial, foreign direct investment.

Last week the Minister for Finance came to the House on foot of the announcement of the stress test results and used some rather emotive language. He compared 30 September 2008 to one of the bleakest days in Ireland's history since the Civil War. Since then, I have read Professor Honohan's report into the banking guarantee. Professor Honohan, the Governor of the Central Bank, stated clearly that the bank guarantee was of critical importance, that were there no guarantee, the banking system would have imploded and that it would have had catastrophic effects on the broader economy. He suggested that it was hard to quantify but that it would have added to further damaging of the economy. He further suggested that without the bank guarantee, Irish banks would have collapsed overnight bringing our economy with them. Banks would have run out of money and people would have been unable to access their salaries and savings. This was confirmed by the Governor who went on to state:

Closure of all, or a large part, of the banking system would have entailed a catastrophic immediate and sustained economy-wide disruption involving very significant, albeit extremely difficult to quantify, social costs reflecting, in particular, the fundamental function of the payments system in a modern economy. These costs would have been broad-based in terms of income, employment and the destruction of the value of the economic assets and would have been on top of the recessionary downturn which has actually occurred.

This was the commentary of Professor Honohan in his report into the bank guarantee.

It leads me to pose the question that if the Minister for Finance believes 30 September was the blackest day since the Civil War, does he have confidence in the Governor of the Central Bank? Their views are very much at variance.

It is ridiculous.

This is critically important at this time.

We dealt with this before. He was not in favour of a blanket guarantee, as the Deputy knows. He is the guy who rang "Morning Ireland" to show up the Deputy's lies.

I am just making the point whether at this important juncture in trying to address the very serious financial crisis still facing the country——

Fianna Fáil's mess.

——they do or do not have a different view from that of the Governor of the Central Bank in the context of the bank guarantee. If one did not watch the monitor and only listened to the speech made by the Minister, Deputy Noonan last week, one would have thought that it was the former Minister, Deputy Brian Lenihan, following on. The bank policies being pursued by this Government and the announcement last week are in step and in line with what was being pursued by the previous Government.

They are not at all in line.

Deputy Kelleher will find that out soon enough.

The only part of the Minister's speech that was different was when the Fine Gael scriptwriters got to it——

There was no thought for Willy there when he was so upset about the bank guarantee.

——after the finance officials wrote it and threw in the emotive language about the Civil War.

That Deputy did not do anything about it.

That is the problem. Deputy Kelleher is still living in a bubble.

The kernel of the issue is that if we do not have a functioning banking system — and we should be honest that much of the commentary in this House for the past two years when I was on the other side of the House was commentary to the effect that we should burn the bondholders and that the country was banjaxed, which undermined what the Government was trying to achieve——

They said not a red cent would be given.

Deputy Kelleher should wake up.

It took the Deputy's party 15 years to do it.

I can assure Deputies——

The Deputy has upset me again.

——that in this House at least we will be responsible in trying to deal with the issue. One need only read the commentary. The comment "not another red cent" was made only in the past few weeks by Members who are now Cabinet Ministers. They suggested that there would be unilateral burning of bondholders.

The Deputy's Government burned the taxpayers of the country for the next 30 years.

Even the Taoiseach, as late as two weeks ago, was still of the view that if he could cuddle up next to Chancellor Merkel that he still might get some burden sharing. We now know that was dishonest at the very least in the context of the campaign prior to the election by Fine Gael and Labour. They knew full well then that there was no chance of our still receiving liquidity from the Central Bank and at the same time burning bondholders. It is simply something that was not countenanced by the ECB. Quite clearly, the Minister for Finance has been told that to enact the policies that were being pursued prior to the general election.

On the issue of mortgages and the challenges facing mortgage holders, we all know there is a sovereign crisis, a banking crisis and an individual debt crisis. This will be a real challenge in the context of the years ahead as the ECB begins to ramp up interest rates. Something that all political parties in this House will have to come to some arrangement on is how we deal with the issue of impairment of mortgage loans. That is the real collateral damage out of this issue of banks lending recklessly in recent years. That is one area on which there must be considerable debate. At present the only thing saving many people from further default is that interest rates are so low, but that is not sustainable in the medium term. There will be an increase in the ECB rate.

The other issue about which I was disappointed and which we need to discuss further is the establishment of a strategic investment bank. I have read through the legislative programme for the summer session 2011 and I cannot find it listed. It includes a betting tax measure, a Central Bank supervision enforcement Bill, a finance Bill, a fiscal responsibility Bill, a Ministers and secretaries (amendment) Bill and a public service pensions Bill but is there a vehicle for the establishment of a strategic investment bank?

It is set out in the last two lines of that document.

It just crept in there, did it?

It was there all along.

It is not there.

The Deputy must have rubbed it out.

The Deputy should go back to his colouring book

It must have fallen off. Is legislation required to establishment a strategic investment bank in or has it fallen off the programme for Government?

I feel sorry for the Member opposite. He and his colleagues having laboured so long with the reins of power in their hands, he has suddenly had a Damascus-like conversion and he is looking across at where he used to be seated and asking himself, why are things not like they were? I am beginning to be concerned that perhaps he is hallucinatory. Perhaps more than one Member opposite has been growing certain vegetables in the garden or elsewhere. I am truly amazed that anybody that represented the Government for the past 15 years, including up to the last four weeks of its term in office, could have the neck to come into the House and make the kind of sweeping statements we have heard from the Deputy in recent times. It took the Deputy's party 15 years to bury the country up to its ears in debt and not only the country but the banking institutions, the mortgage holders, and those in trade and industry, with the consequent loss of jobs. The country has been sunk up to its ears.

There was an interesting television programme last night which gave a fair evaluation of the sequence of events. Many of the participants contributed and it was very enlightening, although the analysis was retrospective. Some who thought this crisis would happen ten years ago were scoffed at and where do we find ourselves now? This is the reality.

We are in deep trouble. We are now between a rock and a hard place and all the rhetoric in the world will not change that. It will be down to ourselves, our resilience, determination, capabilities and our seriousness as a population as to whether we will be able to survive this crisis. It will not be easy. There is no sense in asking why the Government is not doing more about it? The Government was handed this chalice, which it will deal with.

The Minister's speech this morning and the banking strategy recently announced will set the cornerstone and foundation for what has to be done. I know full well that the people sitting opposite may well say that they could not do it. They could not do it because the credibility of this country in the international arena had vanished. Four years ago a diplomatic initiative should have been undertaken. The former Government should have gone to various member state parliaments and explained to the people what was happening here so that they would know that this country was about to take steps that would restore public confidence and international confidence, regenerate the economy and create jobs, but that was not done. All that has happened is that we have been allowed to dwindle and swing in the wind, as it were, to such an extent that nobody throughout Europe likes us any more as a nation. That is an appalling development, but that is the way it is.

We can talk about burning bondholders as much as we like but there will need to be recognition among our European colleagues that at some stage when we show that we can do it ourselves, we expect to be helped along the way as well. If anybody thinks that will change, it will not. Many of us, when we were on the opposite side of the House, said that changes would have to be made, that they would be difficult but there would need to be recognition among those from whom we are now about to borrow that we cannot do it all in one fell swoop.

There is no good talking about Iceland and saying what the people did there or what the Greeks did. We are here and we are in a different situation. Our banking system has to function again at all costs. If it does not work, then all the salaries of all the Members will disappear just as information is lost when a PC crashes. In the same way, the wages and salaries of every civil and public servant in the country will disappear overnight unless we restore confidence in the banking system and produce something so that commentators internationally recognise that we mean what we are at.

If we take the other route and say we are not to pay back the bondholders what we borrowed from them already and that we want more money off them next week, that sounds good, but it does not work. There is no sense in what the previous Government said — that it told us this beforehand. It did not tell us in time. The time to deal with all this was 2002 and 2003. That is when the issue should have been dealt with.

It was also when the appropriate measures should have been taken and when successive Ministers for Finance should have put in place the kind of restrictions that would have stopped the economy from overheating. However, this was not done. Anyone who stated that it should have been done was scoffed at.

I am a humble Member of the House who has no influence whatsoever.

The Deputy should not undersell himself.

I have no intention of doing so. I recall standing on the opposite side of the Chamber on one occasion during that period and speaking about what was likely to happen. On the following day, there was a full page article in one of the newspapers in which I was accused of trying to scare people. A handful of other individuals also spoke out and asked that action be taken. However, we were informed that nothing could be done because the European Central Bank controls interest rates. That is rubbish.

Interest rates are not the only means one can use to control inflation. That is a fact which is now known by everyone in this country, the UK, France and Germany. There are simple credit mechanisms which are used to control inflation, on a selective basis, in many countries throughout the world. Such mechanisms have been used in the past on several occasions. There are those who say — I refer here to the eurosceptics, who have also played in a role in what has occurred — that our future is not in the eurozone. These people also state that if we had not been in the eurozone, then we would not occupy the position in which we currently find ourselves. That is also rubbish. If we had not been able to borrow money from the ECB, from where would we be borrowing it at present? Would we be borrowing on the markets and repaying our debts at a rate of 8%, 9% or perhaps more? Would we be able to survive in such circumstances? The simple answer is "No".

An Opposition Member referred to low interest rates. There is no question that such interest rates provide a great boost in the context of job creation. In an ideal world, it is great to have low interest rates. At present, however, people are continually talking up interest rates and referring to the dangers of these rates increasing. We know what will happen if interest rates rise. We cannot afford an increase in interest rates either now or in the foreseeable future. Low interest rates provide cheap money to those involved in job creation and in the area of investment. There must, however, be controls in place which are designed to ensure that this money is not spent for frivolous purposes as was the case during the past 12 years. I will not discuss the matter further at this point. Suffice it to say that mistakes were made. Any attempt to control either the rate of inflation or a country's economy by using interest rates on their own will not work. This has been tried in the past and has not been successful.

Several Members referred to the need for a solution. Everyone is aware that such a solution will not be arrived at overnight. We all know that we are going to be obliged to work hard to achieve a solution and that in all likelihood we will still be here in five years time working towards it. If we put our shoulders to the wheel, what we are attempting will work. I refer here to everyone in the country — regardless of whatever level of society he or she occupies or whatever job he or she holds — playing his or her part. We will be obliged to work harder, for longer and for less money.

Some of the newer Members do not realise that Deputies have already taken fairly substantial wage cuts and that there are more to come. I do not have a difficulty with that. However, wage cuts must be imposed across the board. Once one begins taking from one sector and not taking from another, further imbalances are created. The Government is doing everything that can be done. It is attempting to retain front line services while taking the necessary steps to ensure that our long-term economic and political sovereignty will be secured. That is a tall order.

I have often compared what is occurring in Ireland now to what happened in the United States in the 1920s and 1930s. During the period in question, there was no overnight recovery for the US economy. There were no simple answers. Numerous attempts were made to put matters right before that economy was restored to its former position. There are those who suggest that the Second World War came to the rescue in this regard. Perhaps some individuals are stupid enough to believe that. It was not the advent of war which saved the United States; it was, rather, leadership, inspiration and dedication. The then president of that country succeeded in convincing his people that they had more to gain by following the gospel he was preaching as opposed to following those being preached in Europe at that time. There is a dramatic contrast between the consequences this had for the US and Europe.

We cannot afford to turn upon each other. Society must remain constant, supportive, cohesive and united. If society turns upon itself, then we will not move forward. If we each target that sector which we dislike most, we will end up with a divided society. With division comes defeat and this will lead to our going nowhere. As low as it is now, our stock will be even lower if that comes to pass.

The recent stress tests carried out by the Central Bank and others on the instruction of the Government will serve a good purpose provided this is the last occasion on which they are used. There are those on the opposite side of the House who state that we do not know if there will be a need for further stress tests. Of course we do not know whether such a need will arise, particularly on the basis of the performance of the previous Administration. Real stress tests were not carried out in the past. We did not get to the bottom of the hole in our banking system and were not, therefore, in a position to know where we were going.

Let us suppose a decision was taken to stop providing support to the banking system. What would be the position if those in government had stated that the banks had been provided with €30 billion or so and that was enough? We would have been obliged to return to the relevant lenders on a monthly basis in search of more money. In doing so, however, we would have informed them that we would not be repaying the loans we had already received but that we wanted more money in any event. I do not know what the new Members of the House think about that strange scenario. I have never known such a strategy — I call it the "cop-out strategy" — to work. In the real world, we must be serious when it comes to our responsibilities.

The Government could have decided to wait for a further three or four years until the economy and our financial system imploded in the hope that someone would come along and save us. It will not happen that way. We must dig our way out of the morass in which we find ourselves. We must pull ourselves up by our bootstraps and march on. We must do it ourselves because assistance will not be forthcoming from elsewhere.

Reference was made to Professor Honohan's report. I accept that in his report the current Governor of the Central Bank stated that the banking system had to be provided with support in 2008. However, he also stated that there were a number of alternatives. Following the putting in place of the bank guarantee on 29 September 2008, I recall not being able to understand why a furore had not arisen with regard to the actions of the then Governor of the Central Bank, the then Secretary General of the Department of Finance and the Financial Regulator. I am not an economist, and neither am I a soothsayer or a fortune teller. However, from the practical knowledge I have gained as a result of being a Member of the House, it was obvious to me that such a furore should have arisen. Lo and behold, last night's television programme has proven me to be right. There is no doubt that the then Government should have sought the information which should, as a matter of course, have been made available to it at the time. The previous Administration should have asked whether we could afford what was happening and whether the boom would last. It should also have sought information regarding why the boom might continue or why it might cease.

Many people have stated that the private banks should have been allowed to fail. If this had been done, there would have been major repercussions. First, the level of job losses would have been massive. There are those who will say that such job losses have already occurred. That is true but there would have been even more and they would have occurred overnight. This would have given rise to a major financial collapse. The then Government found itself between a rock and a hard place. We know that it did not face a simple choice. However, an in-depth assessment should have been carried out long before the extension of the bank guarantee in order to discover what could have been done to avert what has happened.

I hope we will never again find ourselves in a position such as that which we currently occupy. It should never again be the case that a particular development in society be allowed to proceed unchecked just because people are of the view that they are having a great time and that it will never end. We hope that will never happen again. If it does, we will be finished and it will take all the resources of the entire population and every positive thinking Member of this House to recover our composure, dignity, standing in the international arena and economic sovereignty. If we do not put the wagons in a circle and fight our way out in a cohesive way there will be much more serious consequences. I do not wish to apportion blame to the previous Government. It is long past the time for that. The decisions should have been taken in 2002 and 2003. Because the decisions were not taken in time, the medicine is much more severe.

What will happen to mortgage holders who are in arrears? It is three years since I first raised this matter in the House. At that time it was alleged that only approximately 25 people in the country were in that situation. The Government said not to worry about that kind of thing. I cannot understand how we were told that. I took it upon myself to go to the Commercial Court to find out what was going on. It was clear that arrears were accumulating at an appalling rate and that there was no hope of the poor unfortunate people recovering. In many households there were two earners, both of whom had been forced to go out to work to pay for the mortgage. What often happened was this. When they both lost their jobs the bank called them in and offered to help. If they were in negative equity the bank cosied along with them until they were deep in debt to the bank for the rest of their lives. I watched a television programme about this last night. A person from the corporate sector was interviewed and described such situations. If debtors had fallen into difficulty and there was very little loss to the lending institution, the lending institution would repossess the house and sell it, because it was covered in any event. This is crazy stuff.

Was nothing done to reassure the banking system and explain to banks that we would help them out, and even bail them out, but that they would also have to help the country out of its difficulty? Unfortunately, no condition was put on the original guarantee of 29 September 2008. Some such indication should have been given to banks at that time. However, we can do nothing about that now. We have spent the good money. The commitment has been made. When I speak of "we" I mean those acting on behalf of the people at the time.

As we move on from here, we can take inspiration from those who have gone before us and survived. This is the biggest difficulty we have ever had, but we will deal with it together and with the support of our European colleagues. If we do not have the support of our European colleagues, if we poke our fingers in each other's eyes and if our European colleagues fail to recognise that we have a serious problem but that we are capable of solving it ourselves they will be poking a finger in their own eyes. There is no advantage to be gained by destroying the cohesion of the European community or by exploiting the destruction of that cohesion.

From here on, we must concentrate on the economy. I recall former US President Bill Clinton's slogan, "It's the economy, stupid". I hope we will do that.

With the permission of the House I will share my time with Deputy Mary Lou McDonald.

The horror felt by the Irish people following this week's publication of the banks' long awaited stress tests seems to have passed over the heads of the Government. Fianna Fáil's ruinous plan to shove nearly half the nation's GDP into the vaults of the nation's failed banks has now been accepted by the Fine Gael and Labour Party coalition as the only game in town. They lied to the people in the run-up to the election. Fine Gael and Labour know it. They won an endorsement from the electorate on the grounds that they would renegotiate the terms of the deal with the EU and the IMF and would insist on bondholders sharing the burden of the deficit. Little more than a month after the election, it is clear that they completely and deliberately misled the people.

Fine Gael champions the virtue of being honest with the people. We hear it at every turn. The Government will tell the people how it really is. What did we get from the recent European summit? Was retention of the 12.5% corporation tax not already secured in the protocol to the second Lisbon treaty? Presumably, the people are not expected to remember that.

The policies pursued by Fianna Fáil and endorsed in the EU-IMF bailout are to be relentlessly pursued, but all done under the cover of a series of bluffing games, media opportunities and dashes off to Brussels. Minister for Foreign Affairs, Deputy Gilmore, announced his plans to tour European capitals, sweeten up our European partners and present to them the new face of Irish politics. There may be new faces but they are the same old policies. Locking the stable door after the horse has bolted is what comes to mind.

The economic policies being followed by the Fine Gael-Labour Government amount to little more than further deregulation of labour markets, wage cuts, tax increases and reductions in Government spending. While these crippling measures are being pursued, the Government's recent stress tests exposed further bad news. We are on our fifth attempt to stabilise the banks. Put simply, we are just biding our time until we hit eventual default, which is the taboo word. We are told it is not an option and cannot and will not become a reality, even though outside the windows of Europe the rest of the world is telling us that default is clearly on the horizon. In Ireland today, German and French banks hold only €10 billion of our sovereign debt yet they hold €74.5 billion of Irish bank debt. Need we ask ourselves why both countries are so adamant that the Irish cannot and must not contemplate default.

The Government has committed the people to borrowing billions of euro from the EU and IMF at extortionate interest rates in order to pay back the monstrous debts incurred by insolvent banks. European institutions, including the European Trade Union Institute, ETUI, the European Trade Union Confederation, ETUC, and the International Labour Organisation, ILO, are all critical of this path. These institutions believe Ireland does not have a competitiveness problem and does not need to reduce Irish workers' wages. It is Germany, the country now calling the shots on our economic crisis, that needs to look at how it contributed to the Europe-wide debt problems. In real terms, Germany's wages increased no more than 1% since 2000. If Germany increased its own workers' wages rather than demanding that peripheral countries, such as Ireland, decrease theirs, it would go a long way towards rebalancing the European wage scale. Germany's low wage and low tax policies created the erroneous perception that Ireland is uncompetitive within the labour market. The ETUI, the ETUC and the ILO believe that to engage in years of austerity in the absence of co-ordinated public investment plans from Europe can only depress the Irish economy further. The focus has to be on growth and jobs. This is not a case of transferring welfare payments from the rich countries of Europe to the poor, as is now believed by the average German taxpayer, or of Ireland passing the begging bowl and asking for handouts. It is about solidarity between the core countries of Europe and those on the periphery. Only today, the former Taoiseach and leader of Fine Gael, Mr. John Bruton, pointed this out.

Elite policy makers across the EU are responsible for the eurozone debt crisis. Ireland's problem is a European problem, and reflects a structural imbalance between the core and the periphery. The 1.8 million Irish taxpayers cannot afford to pay the creditors of private European banks who lent recklessly to Irish banks, accumulating more than €150 billion in debt. Global wages increased on average by 22% in the period from 2000 to 2009 while in the United States and in Europe wages only increased by 5% during that period. Labour productivity, on the other hand, increased by 11%. In other words, wages increased only half as fast as productivity. It is obvious the biggest beneficiaries to rapid growth, productivity and profits, were the employers yet it is wage earners who are being asked to carry the burden for the reckless behaviour of those in financial capital markets. Those who benefited from the cheap money boom are the people in the top 10% of income distribution yet they are being asked to contribute nothing towards solving their own mess. One could not make it up.

The first thing that strikes me about this debate is the title of it which is a master stroke in euphemism. The choice of "Statements on Bank Reorganisation" is a very self-conscious choice of words by the Government, not least because statements on this, the fifth banking bailout, would read rather less attractively. The Government's primary assertion is that it has adopted a new approach but this does not stand up to any scrutiny. The €24 billion of taxpayers' money in recapitalisation now sunk into the banks bares the lie in that regard.

No money gone into the banks.

The Government also claims that this is the final deal and the final figure. It makes much of the robust stress tests carried out but what the Government does not say is that, for instance, on one of the key indicators of that stress test — the level of unemployment — we are just a shade off the worst case scenario as envisaged. I hope this is the final tab and I hope these are the final figures. However, we sound a note of caution because we have been here before. We have been told before that there would be no more billions required, yet the reality was far from that.

The Government claims consolidating the banking sector — a move which is widely acknowledged as being necessary and long overdue, and in dividing out core from non-core elements — will result in an end to the domestic credit crunch and will cause credit to flow to families and to business. At best, the jury is out on this. If the Government were truthful, I think it would concede that only time will tell whether this happens. I remind the House that on this score we have been here before. We had endless statements and assertions from the previous Administration that the actions it had taken in propping up the banks would result in credit flows but that did not happen.

The Government claims that it has now guaranteed liquidity from the ECB for the banks. However, what it will not address is its failure to secure that liquidity flow on a medium or long-term basis. That money is still given on a short-term basis. Earlier the Minister for Finance, Deputy Noonan, recited all the positive commentary, as he saw it, from the international community in respect of the Government's measures. He studiously avoided saying that this failure to achieve that medium term facility from the ECB has caused at least anxiety on the international market. It is a case of business as usual in terms of burden sharing because it is not going to happen, or so the Government says and particularly in respect of the €36 billion of unguaranteed debt. The reason it will not happen, we are told, is because Europe simply will not countenance it.

In the course of this debate and others, there has been a very crude depiction of the concept of burden sharing and the demands made around it, this at a time when the mechanisms to achieve fair and balanced burden sharing are not only long established but are also entirely economically rational and reasonable. This is so much so that even the EU in the new economic stability mechanism, the new permanent bail-out facility, explicitly recognises that there will be burden sharing and default. The EU is not so frightened of the term as some on the Government benches. The EU set out the benchmarks, the measures, that would be used to guide such default, which are, proportionality, transparency and fairness. Those are as good criteria as any that might be used.

This State now finds itself in a position where the European authorities with, if not the connivance of the Government then certainly its agreement, will not, we are told, give us a hearing in respect of a restructuring of private bank debt. However, they tell us from the other side of their mouths that come 2013, they will ably assist us in the course of perhaps a sovereign default. That is how this is shaping up. Rather than discounting people's legitimate and well-grounded worries that our burden of debt is now at the point of unsustainability, the Government benches would be better placed to act in the national interest and to put that demand and argument front and centre in our dealings with the European authorities and partners.

In this respect I note that the humble Deputy Durkan is no longer in the Chamber but I am struck by his almost evangelical appeals to all of us. He tells us that no one in Europe likes us any more. Perhaps he expected winces of disappointment from the Opposition. I remind Government Deputies that this is not a case of who is the most popular kid in the class at EU level but rather this is a matter of defending national interests. When it comes to the heads of European institutions, be it Barroso or Trichet and when it comes to defending the interests of member states, be it Mr. Sarkozy or Angela Merkel, they all operate on the entirely rational basis of protecting their interests. Therein lies the explanation for the resistance to a rational, organised sharing of the burden of bank debt which would have an implication for the core European countries. They dismiss that while on the other hand, with the agreement of our Government, they set up the very apparatus which can in time facilitate sovereign default, which is a much more serious scenario for all of us.

In the course of this debate Government voices asserted — as if we did not know already — that there is now an indivisibility between the banks and the State, between banking debt and State debt. People on the street know this. This is the reason the situation is so serious. The Minister for Finance, Deputy Noonan, can make the argument that the bond yields have now slipped below 10%. He set this out to the House as a piece of good news. The bond yields are hovering above 9% and this means the markets know full well, as rational, hard-nosed entities, that this State cannot sustain the burden of debt we have continually taken on. The people on the street also know it.

The Government has played its card that it inherited this situation, which I acknowledge. However, it is now in charge and it must make the decisions. It had the chance to shift gear, to change direction——

We did not vote for the guarantee, unlike Sinn Féin.

——and to carry out the promises it made to the people in the course of the general election campaign. It blew it. Perhaps it was more comfortable for it to stay in the established groove of Fianna Fáil policy.

Sinn Féin voted in favour of the bank guarantee.

Whatever their rationale is for acting as they have, Fine Gael and the Labour Party have made a mistake.

There is little sense in the Fine Gael Party or, with respect, the Labour Party throwing shapes about the bank guarantee, as they did in the past two years. They should save the hot air because when the real test came and they were faced with changing tack and taking the correct decisions, they buckled.

Sinn Féin supported the guarantee.

The party's fingerprints are on it.

Fine Gael and the Labour Party are in government and responsibility rests with them. When the illogicality and full consequences of their position of taking on the bank debt and discounting burden sharing come to light, they should not point the finger at the Fianna Fáil Party because it is no longer in charge. As an Opposition Deputy, I do not want to spend the next year or more listening to haranguing, harassment and finger-pointing by members of the Government or the previous Administration because they are all on the same policy track.

I wish to share time with Deputies Michael McCarthy, Colm Keaveney and Derek Nolan.

I welcome the opportunity to speak on the recent announcement of bank reorganisation by the Minister for Finance on behalf of the Government. It is widely acknowledged in this House and beyond that the Government inherited the most appalling economic mess from the previous Administration.

Never before have the actions of so few hurt so many and at such a huge cost. While many of the decisions that need to be taken in the coming months and years are unpalatable, they are absolutely necessary for the survival of the economy, our society and the State. We need a fully functioning banking system for the economy to operate and a constant credit flow to support the small and medium enterprise sector in protecting and helping to grow employment.

We must acknowledge that many citizens feel lost in this debate because we spend more time discussing banking strategies and investing in failing institutions than we do on discussing families and investing in people. Those of us in the political sphere have spoken of little else but banking in recent years. The survival of the banking system is linked most definitely to the survival of our society and the State.

As I stated, the language of the banking debate has been, at best, unfortunate and, at worst, demeaning and dehumanising. Individuals have been reduced to economic units. The cost of unemployment has been calculated in terms of loss to the Exchequer in VAT receipts and the strain of social welfare payments. People need work, employers need credit from banks and banks need to be in a position to supply credit and support families who have justifiable aspirations for themselves and those they love.

For the past 11 years I have been working in the shadow of the International Financial Services Centre in the heart of the constituency of the former Taoiseach, Mr. Bertie Ahern. We saw at first hand the reckless political posturing and unquestioning culture that arose during the era of the Celtic tiger. Society at the time took the view that high level bankers and developers were risk takers and winners, while those who questioned the sustainability of their practices or the political ideology that underpinned them were regarded as whingers and moaners.

While the reckless practices of those based in the IFSC and elsewhere went unregulated, those who lived in its shadow or other parts of my constituency of Dublin North Central were much more likely to see the inside of a prison. Poverty seems to be the only real crime in this country as it is the only one we are prepared to punish in any meaningful way. If this crisis passes us by without jail time being served by those responsible, that is, those who lied, falsified and clearly and blatantly broke the law, the very security of our republic will be at stake. How can anyone, whether a parent, teacher or community leader, convince a child that he or she lives in a fair and just society when the only ones who are seen to serve time in prison are those society has failed from day one? It is a challenge for everyone in the House to ensure justice is seen to be done.

We often talk about crime and anti-social behaviour. The banking and fiscal crisis has unleashed the most incredible anti-social consequences on too many families up and down this land. The need to recapitalise the banking system is a direct result of the anti-social behaviour of the Fianna Fáil Party in government, in particular, its decision to implement a blanket bank guarantee in September 2008. The Labour Party was the only party to oppose the guarantee.

While it will take time to repair the damage of the 14 years in which Fianna Fáil held power, in only three weeks the new Government has taken control of the banking system. We have not hidden away the extent of the damage and have, for the first time since the crisis began, been brutally honest with the people. The stress tests are the most rigorous ever carried out on the banking system. For this reason, it is likely that we have gleaned an accurate picture of the true cost of Fianna Fáil's anti-social behaviour.

The banking system will be restructured. It will have two core pillar banks which will be constructed around the real needs of the economy. The banks will be divested of their weakest parts — their non-core functions — over time and the fire sale losses which the European Central Bank had previously demanded will be avoided. The new banking system will be an engine of economic growth by providing €12 billion of additional credit for businesses and households every year. A clear-out of bank boards will focus on anyone who was a board member before 2008.

The stress test requirement will be €21 billion plus €3 billion in contingency funding. This figure will be reduced, however, by requiring banks to sell off assets and seek private investment, as well as through the imposition of burden sharing on subordinated bondholders. This approach marks a clear break with the blank cheque policy of the past.

We must have a functioning banking system, which means we must recapitalise the core of the system, albeit at a high cost. The proposed restructuring of the banks allows the country to move forward. We are in recovery and the restructuring is part of a recovery process. As a society, we need to know that we will never allow this to happen again.

I am pleased to contribute to this significant debate on the reorganisation of the banking sector at a time when concerns about the structures and day-to-day operations of the State's financial institutions are at an all-time high. We do not need to discuss the matter in specific detail and I propose to keep my contribution as positive and proactive as possible. To use a well worn cliché, we are where we are and know who got us into the current mess. It is now time to engage in constructive, informed and bipartisan dialogue on how best to proceed with recalibrating the banking system.

The reorganisation of the banking system should include three main planks, namely, strict governance and monitoring of how our financial institutions are run, comprehensive reviews of remuneration policies for existing and former bank executives and measures to address the problem of homeowners being at the mercy of banks' escalating fees.

The landmark report of the Governor of the Central Bank, Professor Patrick Honohan, on the causes of the banking crisis determined that there had been a comprehensive failure of bank management and direction and that the major responsibility for the crisis lay with the directors and senior management of the banks. While some progressive steps have been taken, one of the main planks of banking reorganisation must be to root out those individuals who not only ignored the banking crisis but fuelled and aggravated it by failing to exercise adequate prudential supervision or pursue sound policies.

The state authorities in Iceland are taking to task those individuals who caused the collapse of one of the country's largest banks. Bankers' homes were raided, the country's central bank was placed under investigation and, as recently as last month, seven Icelandic banking officials were arrested in London as part of the investigation. We need this type of rigorous and aggressive investigation of the banking system.

While many of the main architects of the economic crisis, including those associated with the Irish Nationwide Building Society and Anglo Irish Bank, may have left the banking system, they are not out of pocket, unlike thousands of distressed families who are in negative equity and many more who are battling to pay mortgages. One of the enduring sagas of recent times was the sight of one former executive clinging desperately to his €1 million bonus from the Irish Nationwide Building Society which was paid out weeks after the blanket guarantee had been introduced. While the then Minister of Finance capped the salaries of banking chiefs at €500,000 last year, the basic salary, bonus and pension levels of chief executives, chairmen and board members in the State's banks and financial houses are in most cases excessive when compared to those of individuals of similar rank in the banks of our global counterparts.

At a time when we are meant to be showing solidarity with the people of this country and undertaking a new chapter of honesty and fairness, it is disgusting and stomach-churning to see former high-ranking officials still enjoying the high life. Where is the quid pro quo for families in negative equity or young graduates who must emigrate to find gainful employment? Where is the quid pro quo for what has been done for the banking institutions, given that thousands of unemployed people are facing an economic crisis?

It is particularly galling to see taxpayers being hit by banking fees. Many homeowners are at the mercy of banking institutions. Tomorrow the ECB is expected to increase interest rates by 0.5%, which will cause further distress and hardship on homeowners with tracker mortgages. Taxpayers are being twisted yet again. In a single day in February, both Ulster Bank and Permanent TSB increased rates for variable rate mortgage holders. Permanent TSB has made four separate increases since August 2009.

I am glad the issue of bank reorganisation is on the agenda and that decisions have been taken to try to get it right. An earlier speaker asked about the strategic investment bank, which is in the programme for Government and remains a key priority. I have a brief history lesson for the Opposition parties. Denial is not just a river in Egypt. Sinn Féin has selective amnesia in denying it supported the blanket guarantee.

The Deputy is like a broken record.

When Deputy Pearse Doherty was donning his green jersey, the other Sinn Féin Deputies raced through the Tá lobbies to support the most severe, right-wing, ideological Government in the history of the State. They were in great company.

On the subject of denial, I wish to bring to the attention of the House the European funding systems that exist concerning the delivery of critically important services. As regards how we are surviving today, it would be wrong to deny that European funding — from the ECB, the Central Bank and other euro-area central banks — has been a central source of funding for the Irish banking system since wholesale financial markets have effectively been closed to us. This support has been crucial for our survival. The funding is provided by the ECB at an interest rate of 1%. Last Thursday, the ECB announced that funding would continue even if there was a downgrade by the rating agencies. I welcome that support, which reassures markets about the Irish banks' funding position. That commentary was made against a backdrop of a radical restructuring of the banking sector announced by the Government last week. The Government has laid down a marker to protect deposits and ensure that the flow of credit to consumers and businesses will commence imminently.

Last week's announcement will result in a smaller banking sector, which is fit for purpose. Doubtless it will present a challenge but we intend to ensure it is sustainable and less dependent on State support. All these actions are being taken so that Irish banks will be viable and can fund themselves without continued support from the State or the ECB.

The Minister for Finance will travel to Budapest this week to attend an informal meeting of Ecofin Ministers. Among other matters, the meeting will take stock of recent economic and financial stability developments here. I hope the Minister will take this opportunity to brief his European counterparts on these important developments, including last week's announcements on bank restructuring. The Government must continue its approach towards building support among its EU partners for the steps it is taking in this regard, including interest rates being charged by European institutions.

Certain parties are trying to ignore the Government's approach towards ensuring that €12 billion per annum in new lending will be made available for each of the next three years. The Central Bank estimates that only €11 billion to €16 billion will be required by small and medium enterprises in the course of those three years.

I welcome the Minister's announcement that the Credit Review Office will be enabled to build credit in the economy. SMEs will have effective access to funds that are being put into banks, thus getting people back to work and keeping high-street Ireland open for business. We should examine the role of the Credit Review Office. The credit reviewer, Mr. John Trethowan, has said that the potential of a borrower to appeal to the CRO against the treatment of credit decisions, "has, in itself, had a positive influence on the behaviour of these two banking institutions", that is, AIB and Bank of Ireland.

It is difficult to accept ideologically that we must put €24 billion into the banks' coffers, but to borrow a phrase used by other speakers, "We are where we are". The most important thing is to get the flow of credit going in Ireland, in order to secure support for small and medium enterprises. They are prepared to take risks but banks should also be prepared to take risks by funding such businesses. Banks should be prepared to put their shoulders to the wheel for people who are trying to create jobs in the economy. This is critically important for areas that have been devastated by unemployment.

I look forward to hearing the Minister explain how he will verify that the Credit Review Office will ensure the delivery of that €12 billion per annum over the next three years, in order to deliver resources to the local economy.

I have listened with interest to the debate, which has been good on both sides of the House. I wish to pick up on one point, however. Deputy Kelleher cautioned Deputies against speaking in such a way that may spook the markets and upset people. The last thing we should do in this House, however, is restrict what we say. We must be honest at all times and be prepared to speak of the worst consequences. It is only by debating in an informed and transparent fashion that we will get good decision making.

This is an unusual political scenario and, as someone who is new to the House, I did not think it would be on the cards so soon. We are talking about a bank restructuring plan and this debate is about the future of the banking sector, how many banks there will be, as well as staffing levels and capital requirements. These points were not addressed in the contributions from Sinn Féin Members, but we need to discuss what kind of banking sector we want. We must discern what it is possible to achieve and which banks will survive.

In recent years, Fianna Fáil took half measures on everything. The consensus of the House is that this attitude needs to change. The Government intends to take decisive action on the future structures of the banking sector, as well as minimising taxpayers' losses. The banking landscape has been completely torched. It is like a scorched earth policy whereby many banks have gone under. The capital has been debased and while there are skeletons of some banks which are still operating, they are not functioning in any healthy shape or form. Something needed to be done and not purely from a banking viewpoint. From a business and personal finance perspective there is a major sense of confusion over the future of the banks. We all have constituents who telephone us with concerns as to whether their money in the bank is safe, their loans are in order or their mortgage and property deeds are safe. We need to put an end to this and create a banking system and structure that is free from the unease which clearly exists at present.

There will be two State banks — the pillar banks, as they are called — centred on Allied Irish Banks and Bank of Ireland. These two banks will be in competition with each other, which is an important aspect of the process as we do not want to return to a duopoly. We are lucky that some foreign State banks, such as Rabobank, are operating here and will help to provide competition in this area. It should be realised that the structure has changed dramatically. Bank of Scotland, Anglo Irish Bank and Irish Nationwide are gone, so there is a need for this restructuring to happen sooner rather than later.

I would pick up Deputy McDonald on her comments at Question Time this morning and earlier in this debate that €24 billion has again been put into the banks. That is not the case. An announcement was made last week of the capital requirements of those banks, not how much money was put in.

So the Government is not putting it in.

As the Government has indicated, €6 billion of that amount will come from subordinated debt holders, so, if one was to be honest, one would already say "€18 billion" in one's public contributions. Some of that capital requirement will be met by the selling of assets from those institutions and the Government is still in negotiations with its European partners to find another way of addressing those capital requirements.

You are putting it all into Anglo.

Order, please. Deputies should speak through the Chair.

The Government stated there would be no burning of senior bondholders in the pillar banks, which is what is on record. We expect those banks to have an international reputation to enable them to go back out in the near future into the markets to raise capital, which will be very difficult if just months or years previously they have burned many investors. It will simply not work that way — that is not how business or banking works.

I hate the expression "we are where we are". We need to use different expressions such as "we are where we are for a reason". The reason is that the State, back in September 2008, approved a banking guarantee which linked the sovereign debts of this country to the banking debt. However, there was a consensus on that. Sinn Féin cannot walk away from that or change the record. As its finance spokesperson said at the time, "this Bill is in the national interest".

To conclude, there is scope for a much greater depth of change in the banking system in terms of corporate governance, corporate social responsibility and the skillset of the people who work in the banks. I hope this will occur as part of the reorganisation.

I wish to share time with Deputies Thomas Pringle, Richard Boyd Barrett and Seamus Healy.

Is that agreed? Agreed.

I would pick up Deputy Nolan on his last point as the issue of paying back the senior bondholders is so serious and emotional, and causing so much damage. This is how business and banking work. Debtors and lenders to businesses take write-downs all the time and businesses continue to function. Senior bondholders take write-downs all the time and they continue to lend to countries and banks. I raise this point as it is a very dangerous assertion for us to make that this never happens.

The Deputy should direct his remarks to the Chair rather than having an across-the-floor discussion with Members.

I beg your pardon, a Cheann Comhairle. I am new to this.

That is why I am telling you.

The Deputy is learning fast.

The Minister for Finance earlier laid out three stated objectives of the banking sector reform, namely, "to restore confidence in the banking system and in the economy of the country ... to recapitalise and restructure the banks and ... to restore credit to the economy in order that growth will rebound and jobs can be recreated". I put it to the House that there is really only one objective, the third, which is to restore credit and create jobs. Restoring confidence in the banking system through recapitalisation is simply an enabler of the ultimate goal which the Government has laid down. If we evaluate the Government's proposal according to that objective, namely, to get money flowing into the economy to create jobs, then it makes a lot of sense. We stuff money into the banks, we pay back all of their debts and, inevitably, over time, they will begin to lend money. Furthermore, we should have a group of people in the Department of Finance who force them to do so. That will work.

I put it to the House that there are three objectives to banking sector reform, two of which are being missed. The first, as the Government said and with which I agree, is to get adequate funding flowing to viable businesses as soon as possible. The second, which the Government does not address, is to minimise the current and future exposure of the Irish people to the bad debts of the banks, which is at the heart of the senior and subordinated bonds. The third is to ensure that Ireland can borrow as cheaply as possible on the sovereign debt markets to address our ongoing budget deficit. If we evaluate the Government's proposal against these three objectives, while there some good ideas, unfortunately, it falls short. Therefore, I would like to suggest some policy options to the Government.

On the first objective, which is to get money flowing, I welcome the sell-off of non-core assets to generate cash. It is a good idea and it must be done in a timely manner. I welcome the winding down of the banks with the result we will end up with the two pillar banks and, hopefully, this will mean more competition in the market. What is not included is the question of addressing some of the remaining bank liabilities, mainly the commercial debt, mortgage debt and developer debt which has not gone into NAMA. There are two obvious options in this regard, namely, to move these off balance sheet into a NAMA-type structure or to take out some large-scale insurance policies. I encourage the Government to consider both options in order to increase confidence.

One of the issues which concerns me is that the Government will be setting lending targets for the banks. We learned from the Minister that the Central Bank has estimated that between €11 billion and €16 billion will be required but that the Government target is €30 billion, and that the officials within the Department of Finance will target specific sectors. While I hope this works, it causes me great concern. We know the banks in Ireland were not very good at making lending decisions in the past few years and, similarly, the previous Government and the Civil Service fell asleep at the wheel. I am very concerned about the Government taking such an active role in lending decisions, which could lead to further poor lending decisions which bring us back to where we are now.

The second objective concerns minimising the current and future exposure of the Irish people. What the Government is doing is deleveraging the banks and making them smaller, which I welcome. What is not included, obviously, is the senior debt and all of the subordinated debt — we must remember we are not writing off all of the subordinated debt and we are still paying several billion euro of that. While I will not rehash all of that now as it has been much discussed in the past two days, it is a concern and a major failing of Government policy. Also not included is a specific failure regime so that, given this circumstance in the future, banks can fail. I hope to see Government policy on this in the future.

The third objective is that this policy makes it possible for Ireland to borrow on the markets so we are not subject to the IMF-EU-ECB conditions, as we currently are. By not pushing back on the bondholders, over the next three years we will move to a probable default, which the markets have already priced in and which economists here and abroad are suggesting will probably happen, while the EU appears to be gearing up for a multilateral restructure. The problem is that by the time this happens, all of the private banking debt will have been nationalised, which is of great concern.

To conclude, while I welcome some of these measures which move the banking system in the right direction, I am very concerned about other measures. My views on the senior bondholders have been expressed previously in the House. I hope the Government will consider some of the proposals laid out here.

The Minister's restructuring plan and the provision of an additional €24 billion in capitalisation for the banks are intended to solve the problems of our banking sector once and for all. The plan includes a deleveraging of €57 billion of assets in the next three years which, with the addition of €24 billion in capital from the State, is designed to free up credit of some €12 billion a year for lending to small businesses and mortgage applicants. The big question is whether the plan will work.

We are told the provision of an additional €24 billion represents the end of the banking problem. Everybody on the Government side has their fingers crossed and is hoping that is the case. Yesterday, however, a Government Member, Deputy Mathews, stated his belief that the losses in the banks would amount to €90 to €95 billion, well above the €70 billion already provided by the State. We are getting to the point where the cost of the debt will be unsustainable, if it is not already.

In the first quarter of this year, according to Exchequer returns, the interest payable on the national debt was €1.4 billion. A €70 billion recapitalisation would increase that interest to €4.2 billion. If the final figure reaches €90 to €95 billion, the interest payable will approach €6 billion. The way in which the Government proposes to meet those payments is by cutting a further €3 billion of public expenditure annually for the next three years, yet €3 billion is less than the annual interest bill based on a final capitalisation figure of €70 billion. In the years to come the cycle will continue, with reductions in the number of public sector workers, a driving down of private sector wages and more people succumbing to loan and mortgage defaults. Then the banks will come back seeking further capitalisation because of the losses arising from increasing defaults. We will be back in the House hearing that further capitalisation is required.

The Minister stated that selling assets in a rush, where the world knows they must be sold to provide banks with immediate cash, is never the way to maximise sale prices. How can one describe the sale of €57 billion in assets in the next two to three years as other than selling in a rush? Anybody who is interested in these assets knows they can simply wait six months until they are put on the market. The value will never be realised and the projected price of €57 billion may end up being much less than that, which in turn will lead to requests for further recapitalisation.

The Minister observed that Standard & Poor's has described our outlook as stable and has taken a positive view of the latest recapitalisation. He also said that Moody's sees it as a credit-positive move. He forgot to mention Moody's observation that the recapitalisation is good for the banks but bad for the sovereign. In the coming years we will see an increasing burden being placed on sovereign debt and the increasing socialisation of bank debt. There will inevitably be further requests to this House for recapitalisation unless the Government accepts the inevitable and opts for an alternative policy which puts the people first instead of the banks.

The Minister made an amazing suggestion yesterday that the Government's banking policy was a success because Bank of Ireland's share price had risen in the aftermath of its announcement. What planet is the Minister living on that he thinks rising share prices in Bank of Ireland mean anything to the majority of people in this country who are suffering brutal costs, have lost their jobs and are struggling to make ends meet? That view is absolutely extraordinary but it is also indicative of the mindset of the Government and the twisted priorities it seems to have inherited from its predecessor.

The Minister also said that the objective of the bank restructuring proposal was to recapitalise the banks in order to restore credit to the economy. That was the justification for providing an additional €24 billion to bail out the banks, bringing the total recapitalisation cost to €70 billion. This excludes the €25 billion for NAMA, which brings us close to €100 billion. I ask again what world the Minister is living in. The €46 billion already provided has not resulted in credit flowing into the economy. What makes the Government think the provision of a further €24 billion will have that effect? It is clear that the priority of the banks is to make profits and to restore their balance sheets. They do not give a hoot about the economy or jobs. That is not what they are there for. They are there to make profits and they do not consider it profitable to invest in the economy according to social need or the requirements of citizens.

Nor will this plan work in the future no matter how good the balance sheets of the banks, because the other side of the coin is the IMF and EU demands for austerity and cutbacks which are savaging the incomes of ordinary people. The banks are not lending because there is no demand in the economy as a consequence of the savage cuts in incomes. People do not have money to spend and the businesses in which they formerly spent money are going out of business. Why would the banks, recapitalised or not, lend money to those businesses? They will not do so because they are in the business of making profits and they are not fools. Seeking to restore demand into the economy and at the same time imposing austerity on ordinary people means we are moving in opposite directions at once.

The Minister also heralds the shrinking of the banking system down to two pillars and suggests this is an indication of the success of the new policy. It is not new policy; it is exactly what the former Minister, Deputy Lenihan, said he would do, at the diktat of the EU and IMF. The only likely result of that will be major job losses for ordinary bank workers. It is certainly not a new departure and it offers no great hope for people that the issues arising from this crisis will be resolved.

The madness goes beyond that. As part of this radical restructuring we are selling off the profitable portions of the banks. We are putting €24 billion into zombie banks in order to pay off bondholders while the profitable arms such as Irish Life, which made profits of €160 million last year and employs 1,000 people, are sold off. Why do we not retain the profitable sections which are generating revenue that could assist the finances of the State?

The alternative is to repudiate the bad gambling debts of bondholders and bankers. We are in debt because we have put on the shoulders of ordinary people the gambling debts of private financial institutions at the behest of the EU and IMF, which are seeking to protect their banks. Why are we protecting their banks at the cost of ordinary people in this country? Let us repudiate those debts. Instead of using the National Pensions Reserve Fund to bail out the banks we should use it for its intended purpose, as a rainy day fund to assist when the economy is in trouble by investing in jobs programmes, restoring demand in the economy, creating employment and reviving economic activity. Let us have a State banking system that does not take responsibility for private gambling debts. Such a bank would be viable and able to access credit on the international markets. It is the madness of taking on the private gambling debts of bankers and speculators that is sinking our economy. It is a tragedy that this Government is continuing down the same insane path as the last Government.

The previous Fianna Fáil-Green Party Government, and now the Fine Gael-Labour Party Government, would have us believe that the EU and IMF are good samaritans helping out a neighbour in trouble. Nothing could be further from the truth. The Irish taxpayer is being forced to bail out bankers, particularly German, French and British bankers, who have gambled recklessly and lost but who now seek an each-way bet on their losses. They have got such an each-way bet on their losses from both the previous and the present Government. They want the Irish taxpayer to pay for those losses, which is exactly the position of the previous Government and is what has been announced in recent days by the present Government. If this continues, we will be obliged to pay back to the EU-IMF a minimum of €5 billion this year and a minimum of €9 billion in 2014. This is a completely unsustainable position which, if it continues, will ensure that families, the country and the economy will be destroyed.

Although what Members have heard regarding this banking bailout is a continuation of the policies of the previous Government, it also constitutes the breaking of, and reneging on, election promises. Throughout the election campaign we were told that Fine Gael and the Labour Party would sort out the banks, that there would not be another cent for them and that it would be Labour's way or Frankfurt's way. However, as many of us predicted during the election campaign, the Labour Party in particular has performed a U-turn on the issue. The poor middle-income and low-income earners are to be made pay the senior bondholders and taxpayers' money is being used to recapitalise the banks. Huge amounts of Irish taxpayers' money are being poured into the black hole of the banks, which is an outrage that constitutes a betrayal of Labour Party voters and of working people in general.

I understand that a jobs budget or a mini-budget or both will be introduced soon and I call on the Labour Party to insist that the additional total of €24 billion to be provided to these banks be recovered from the super-rich in Irish society by way of an assets tax. The top 6% in Irish society, that is, the super-rich, have assets in excess of €250 billion and a 10% levy on those assets during this emergency would recover the €24 billion, with €1 billion to spare. Perhaps the latter might be put towards the restoration of the Christmas bonus that was taken from the poor in recent years. Is there any chance of the Labour Party hitting the rich, rather than the poor?

The Deputy has dealt with the Labour Party.

I am appalled by the fact that the Irish people have been led into subordination to Britain, Germany and France, as well as the bankers and speculators of these countries, through the EU-IMF deal. I am appalled by the loss, through this deal, of sovereignty and independence. This is a real national, economic and social emergency and I believe the guarantee should be revoked and that small investors, including credit unions, should be compensated. To those who argue this is a risky strategy, my response is that no strategy is without risk as a result of the activities of the previous Government. Moreover, the most risky strategy of all would be to continue on the path followed first by the Fianna Fáil-Green Party Government and now by the Fine Gael-Labour Party Government. This path comprises robbing the people to pay off the debts of private banks and developers. This will end in a catastrophic default and a devastated country, as many commentators now admit.

I call on Deputy Mitchell, who I understand wishes to share time.

I wish to share time with Deputies Tom Hayes and John Paul Phelan, if that is all right.

The economic crisis has been described in various ways, such as being catastrophic, disastrous and appalling. No superlative really adequately describes the enormity of what has happened to us or the public rage at what people now must ensure for the next number of years for sins they for the most part certainly had no part in committing. Like everyone else, I rage at what we now must do but it is the price of bankruptcy, which unfortunately is the state we are in. I believe, however, that the process of negotiating the bailout deal will continue. It did not conclude at last week's summit but will go on and will continue to be negotiated and renegotiated. I welcome the news that the EU now discerns that it may not be wise to negotiate with an outgoing Government and has decided not to enter negotiations with the outgoing Government in Portugal until after the next election, should a bailout of any sort be required.

I spoke last night about the treatment of bondholders and generally and while I had not intended to repeat this today, while listening to this morning's debate I noted that one speaker spoke about the treatment of bondholders. In my mind, there is a world of difference between debt restructuring and burden sharing on the one hand and defaulting on the other. One speaker this morning stated that he was not afraid of the word "default" or of using that word. It is a great luxury not to be afraid of that word because it is a luxury that is not afforded to the vast majority of people in Ireland. Anyone who has a job that depends on the Irish economy, who is dependent on a State pension or salary or is in receipt of social welfare does not have that luxury. Anyone who is dependent on having access to their savings in the banks, however meagre they may be, does not have that luxury. It is arrogant to state that one is not afraid of the word "default" because one should be afraid of it.

As part of the renegotiation, I favour a move by the ECB to medium-term money. There is no doubt but that being subjected to emergency or overnight money makes it extremely difficult for the banks. It is almost impossible for a bank that is dependent on going to the lender of last resort on an emergency or virtually nightly basis to attract any investors, as it simply does not inspire confidence. However, I welcome the commitment from the ECB and recognise that it will make it much easier for Ireland to move away from that position. It has not really been appreciated that the ECB has committed literally to giving an unconditional promise of money on demand to Irish banks. It has a given an open-ended commitment to a full allotment of whatever the banks need. This is a huge concession and is by no means the norm. Central banks normally retain the discretion to have the variable rate of allotment of funds to banks in need of emergency funding because it is, after all, the manner in which the ECB controls the money supply. It is how it exercises its control over the money supply in the eurozone and to renounce that ability by giving our banks an open-ended commitment appears to be extremely generous, although it has not been widely recognised as being so generous. In the longer run, however, this probably is unsustainable from the ECB's perspective, which makes me think that it ultimately will switch to some kind of medium-term finance. As far as I am concerned, the sooner that is negotiated the better, because Ireland definitely needs access to cheap finance.

Much also has been said about the stress testing and its severity. The stress testing has been severe and this means that money is required upfront to recapitalise the banks. Moreover, it is true that the worst-case scenario was envisaged and that this has cost implications for Ireland. However, I believe this is essential because ever since September 2008, the worst case scenario always has materialised after every announcement. Even though Members were told of false dawns, that we were turning the corner and so on, almost within months there always has been a further announcement of the need for further financing for the banks. This has been extremely debilitating for public confidence and has had a huge impact on Ireland's reputation and credibility at home and abroad, as well as an enormous impact on the banks' ability to get back into business. In effect, there were three wasted years, the result of which is that we must overcapitalise our banks and provide a buffer against almost every eventuality, no matter how onerous this might be.

Some of the cost will be offset by dealing with subordinated bondholders at a level they might not prefer. It will also be offset by the sale of assets. I welcome the Minister's decision that there will be no fire sale of assets and that the banks will be given time to deleverage. What will be sold are the good loans, as they will command the best price, but the last thing we want to do is sell them at a price that is penal to us. We want to maximise their value. The ECB's open-ended commitment to provide short-term money gives us some time to maximise the value of those assets.

I welcome the new bank structures, which give clarity to the final shape of the banks. Irrespective of whether the two pillar banks are owned wholly or partially by the State — Bank of Ireland hopes it will retain some of its independence — they will largely be controlled by the State, so they will not be independent. Rather, they will be two banks with one owner, which is a monopoly by any standard, and monopolies are never in the best interests of the citizen. Even when their motives are benign, they do not produce the best deal for the citizen. The Minister recognised this when he referred to non-State banks providing the necessary competition. I hope this will be the case, although we have seen the flight of foreign banks from the country in recent years. Whether they come back or those in Ireland remain depends on growth in economic activity. It also depends on the conditions applied to those banks. For example, if non-State banks are required to carry the same capital ratios as the pillar banks, they are less likely to remain or to enter the market. If they are not subject to the same requirements and are allowed more lax capital definitions, they have an unfair advantage over the pillar banks. I hope the Minister will clarify this point.

Significant vigilance is required to ensure a competitive banking sector that serves the needs of the citizens and not the banks. I remember the bad old days when there were few banks and opening hours, fees and charges were all dictated by the needs of the banks and not the citizens they were meant to serve. The new architecture is an artificial construct. In such circumstances, allowing normal market forces to operate is difficult. The sector needs to be watched. Discussing a lack of competition is ironic, given the fact that intense competition caused the problem. However, that competition had no regulation.

I realise I only have one minute remaining. The property market is largely at the root of our problems. There is a natural inclination to punish that industry. We must be rational in how we deal with it, as not every buyer, seller, developer or investor did bad things. From our perspective, the bottom line is that, if the loans are not repaid, the banks suffer, and if the banks suffer, we suffer because we are the banks. While we need significant vigilance to ensure the property market does not create a new bubble, it is also essential that we not prevent the property market's recovery, thereby causing further problems for ourselves and the banks that are now synonymous with us.

I welcome the opportunity to say a few words on the important topic of the banking system and to express the needs and concerns of ordinary people. It is mild to describe people as being outraged about events in the banking sector. They are at a loss to know what the end game will be. While members of the Opposition shout at the Government and one another, every Deputy must be fair and open, tell the truth and say whether something is possible. We hear much about burning bondholders. There is no better line for any politician, as he or she would be in every newspaper, on every television and radio programme, receive publicity everywhere and romp home in the next election. However, the reality is that burning bondholders is not good. What is good for the people is the important issue.

Think back to the difficult days of the 1980s. I was involved in farming at that time and saw many farmers getting into deep trouble. Those who reneged on the banks got deeper into trouble whereas those who negotiated with their banks reached a resolution on a way out. This is a small example of what we should tell people the country should do. I am not an expert in banking, but I know how to run a small business or small farm. Our country is no different, in that one should renegotiate and speak with people. Every Deputy must agree that we cannot burn the bondholders and that we should renegotiate with the people who gave us the money. As a country, we will then begin to dig ourselves out of this sizeable difficulty. We will create jobs and an environment in which the many young people leaving our shores every week for Australia, Canada, New York, London or wherever via Dublin Airport, Shannon Airport or Cork Airport can find work at home. In the coming weeks, an important jobs budget will be before the House. We will be sending a signal that we are serious about our business.

We must stop discussing the burning of bondholders. It cannot happen. It is mighty for headlines and newspapers, but it cannot and will not happen. I hope it does not happen. If it does, our country will never get another bob. This is a solid fact. People need to be more honest and straightforward about the matter.

The Deputy must have been in Damascus.

Now that the election is over.

The Deputy has one minute remaining.

I have only started.

Let him keep going.

In the time he has been speaking, he has been to Damascus and back.

Deputies, please.

I wish to address another issue. In the banking developments of recent years, the power and influence of local bank managers was lost. No one knew what was occurring in the community better than the local bank manager or the officials in the local office. In any bank reorganisation, I ask that we revert to such a situation. At branch level 20 or 30 years ago, people knew which members of the community could genuinely create jobs and were prepared to take risks. When my father and grandfather went to the banks to get money to do their business, they went to their local man. Since they trusted him, they repaid the bank even in difficult times. Has my time concluded?

I would love to speak for longer, so I am sorry.

I am glad to have the opportunity to speak about bank restructuring. I listened to most of the debate this morning and I want to raise a couple of issues. This is a very serious discussion and I share much of the sentiment shared by Members on all sides of the House. There is a sense of disgust which the general public and Members have that the State has been forced into a position of restructuring our banks and potentially place significant liability on the shoulders of ordinary taxpayers for some of the reckless practices which have been ongoing for a number of years in the banking sector in this country.

One could laugh at some of the contributions and particularly that of a former Minister, Deputy O'Dea. He spoke this morning about his disappointment in the announcement from the Minister for Finance, Deputy Noonan, about the two pillar banks and how we would have no competition in the banking sector in this country as a result of the Government's actions. The lack of competition is a direct result of the policies which the Deputy and his friends in the Government pursued for 14 years. We have been forced into a position where the new Government must step into the breach to restructure our banking system and potentially place enormous liabilities on the shoulders of ordinary taxpayers.

In my area Fianna Fáil Deputies are posing the question of having a referendum on the bailout. That issue was not discussed at the time of the last election and it was certainly not raised by any of them during their time in Government and over the past three years in particular. Most of the Minister's announcement last Thursday concerned an effort to restore confidence in the Irish economy and the banking sector in particular. The notion of a referendum at this juncture would destroy such confidence.

Deputy Boyd Barrett has left the Chamber but spoke earlier about the Minister's comments on Bank of Ireland share prices. The Minister was not referring to people who had invested in Bank of Ireland shares but he was using the issue, as anybody would, as a measure of the confidence of the market in what the Government announced last Thursday. Some confidence has become apparent as a result of last week's announcement. Deputy Boyd Barrett should speak to the person who was beside him, Deputy Wallace, as he argued that there was no demand in the economy for credit. There is much demand for credit and anybody with dealings with business people knows there is a significant demand, with many viable businesses not receiving that credit. That is what the restructuring is aimed at.

Deputy McDonald said earlier that there was no change in direction but a clear change was announced by the Minister for Finance, Deputy Noonan, last week. This package is all about restructuring our banking system and having a plan as to how the system will work in future. It is the first time we have had such a plan and the Fianna Fáil-led Government did not even manage to produce that much. There is also an effort to give people a sense of the scale of the problem and the Government having a handle on how big are the difficulties in our banking sector.

I will speak from a personal perspective at this stage as this is my first contribution in the Dáil. Many of my friends, including people I went to school and college with, as well as those I have known all my life, are suffering most from what has gone on in banking circles in the country for the past ten years. These are the people living in Canada, Australia, Britain and other parts of the world because of decisions made in this country, especially those relating to the property bubble. I am content that the Minister, with his announcement last week, is making a genuine effort on behalf of the Government to get to grips with the difficulties in the banking sector and to put a final figure on the resolution to this difficulty.

At the outset I congratulate Deputy Jan O'Sullivan on her new appointment as she is a colleague from Limerick. I wish her well and there is no better person for the job. I also congratulate Deputy John Perry, who has just departed the Chamber, on his appointment.

I am grateful for the opportunity to partake in today's discussion on banking and we have had many debates over the past few years on the topic. This is the first time we have spoken to the topic on this side of the House. It struck me last week while listening to the Minister, Deputy Noonan, that his policy is a clear continuation of the previous Government's actions in dealing with the country's banking problems. The Minister is correct as the previous Government's policies in dealing with the problem were correct. It attempted to approach the issue in the best possible manner and took the best advice available at that point in time. The advice was held up by independent people no more eminent than Professor Honohan.

In that regard I was not surprised to see in the detail of last week's statement that the policy was one of continuation. I regret the politics played over the past number of years with regard to the banking issue, especially as we approached the election. We did not hear from the Minister last week with regard to burden sharing or burning bondholders but we heard about recapitalisation. That is correct. During the election, all we heard from Fine Gael and Labour was that there would be a burning of bondholders and no further recapitalisation.

Fine Gael and Labour are now in Government and must take real-life decisions. When the parties were on this side of the House they took the populist route and we should take the opportunity to point this out. I am not saying that I disagree with the parties' actions but I should point out the inconsistency. They led people to believe that they would approach the issue in a completely different fashion by burning bondholders and not recapitalising banks.

That is not quite true.

It is a fact that is on the record. It was Labour's way or Frankfurt's way and not another cent would be given to the banks. All the quotes are there and have been repeated throughout the debate ad nauseam.

I gave the real-world figures two years ago.

The Deputy is deliberately misquoting.

The term "burning bondholders" was raised by the previous speaker, and rightly so. We made the point a number of times in the past number of years regarding the burning of bondholders that these people may also be Irish citizens. Credit unions, for example, are bondholders.

Shareholders are also citizens.

I believe I am in possession. During the election period we attended meetings arranged by the Irish League of Credit Unions. Its members spoke very cogently and strongly about the burning of bondholders. I received correspondence today from a credit union, where it is argued that credit unions invested their reserves in deposits and bonds of Irish banks, losing 14% in funds as a result of haircuts applied to a number of junior bonds in Irish banks. It is pointed out that in the current discussion of further burden sharing, it should be remembered that not all bondholders are well-heeled speculative investors. That is a significant point. Credit unions are bondholders and they include hard-working citizens around the country. We must keep everything in context.

The bank guarantee scheme was also mentioned and it is worth reminding Members that Fine Gael supported the introduction of the scheme.

The Minister, Deputy Noonan, stated, rightly, that part of the entire project of continuing to recapitalise our banks is to keep our money transmission systems and everyday trade and commerce working and ATMs functioning. That was said also by Deputy Brian Lenihan when he was Minister for Finance. Both clearly said as much, the Minister last Thursday. The purpose of the bank guarantee scheme was, in the main, to protect depositors who were like the credit unions throughout the country. There were billions of euro on deposit in this country. If we had allowed the banks to collapse that night in September 2008 there would be a different situation to tackle today. From that point of view this was a decision taken at a certain point to try to rectify the situation. It was upheld subsequently by Professor Honohan who conducted an in-depth analysis into it. We must continue to remind ourselves about the background of the people who examined the situation independently at the time and came to an adjudication.

The Minister's statement also reaffirmed the State's commitment to the EU-IMF programme for funding. When my party was on the Government side of the House we received all manner of accusations in that regard, "economic treason" and the like. The Government is in that space now but we will not go down that road. We will be consistent and responsible in our role in Opposition——

The Deputy's party put us in that space. It signed up for it.

——and will not level those kinds of charges at the Government.

Mention was made also of the stress testing. We have been in this place before; we thought we had arrived at the final figure, the bottom, in the previous round of stress testing. Professor Honohan testified to that at the time. The new round of stress tests was carried out by Black Rock Consulting and I hope we have finally arrived at the bottom figure. However, we have not received any political certainty in this respect. The Taoiseach, Deputy Kenny, stated, in regard to the stress testing, "We do believe the stress tests stand up. I only hope this is final scale of it". We need certainty because banking is built on certainty and confidence. The House now has plenty of experts in banking who will testify to the need for certainty and confidence.

I refer to the notion of the two pillar banks. I agree there must a complete restructuring of the number of banks because the State was oversupplied in this regard. Having two main Irish-owned players will be a good move. Deputy Lenihan clearly indicated during his tenure as Minister for Finance that was the direction in which we were moving. I would not describe it, therefore, as radical but as necessary. However, it must translate into a flow of credit into the real economy.

In regard to the restructuring of the banks, I am very concerned by the absence of any real statement as to how this will affect the people working in the banks of whom there are many, throughout the country and in my constituency, County Limerick. Allied Irish Banks has 270 branches with 12,000 employees; Bank of Ireland has 254 branches. Between them the banks have 26,000 employees, people who live in our communities, whom we represent, and who contribute to our local economies. They heard the announcement last week that many of them potentially face a bleak future. We need to have a degree of certainty. The trade unions have written to the Minister——

Is Deputy Collins sharing time? If so, there is one minute left.

Thank you. These people need to hear from the Government what their future is, as employees of the two banks which will move into virtual State ownership. It is very important they be drivers of industry and commerce across all our towns and villages throughout the country. They and their families are owed a degree of certainty, and the Government must make a statement on the matter.

As part of restructuring, in recent years there has been a clearing out of many of the directors at board and senior management levels and this must continue. We must consider the public interest directors who have been in place for a number of years. Many are former Members of this House. The Government must look closely at this issue. These are people earning six-figure salaries fulfilling their roles as directors on the bank boards who are also in receipt of State pensions for their time in the Oireachtas and in ministerial functions. We must look at the role of public interest directors in that regard.

Deputy Ó Cuív has just over nine minutes.

Go raibh míle maith agat. Tá áthas orm go bhfuil deis agam cúpla focal eile a rá ar an ábhar seo — bhí deis agam aréir ach tá go leor rudaí eile a d'fhéadfainn a rá.

One matter disappoints me slightly. In politics I have always taken the view that if I agree with something, no matter who says or does it, I will admit it. I have also taken the view that if I am proved wrong in something I should be big enough to accept I am wrong. Therefore, I am somewhat disappointed that it seems to be politics as normal with regard to the Government. However, it would not be right for us to play this game back no matter how tempting it is. It would be very easy for us to stand here and say we told you so, there were not the handy easy answers we were told about before the election. I reiterate what I stated last night, if the Government does the right thing now that it has the full facts I will support it in so doing. I hope some day the Government will admit that when it got into the hot seat and was faced with the complexity of the problems it actually found out then that what the previous Administration had been doing was the only real choice.

It was interesting to hear about the stress tests last week. One would think they had suddenly come out of the air in the past three weeks because of the new Government. We set them in train some time ago, having done previous stress tests. To a certain extent, a stress test is somewhat like digging a bog. One will only know when one gets to the solid ground when one hits the rock. We are not quite sure whether we are at solid ground yet but one thing is certain — until one reaches the solid area one cannot build the house. We cannot re-grow the banks until we find out where the bottom line is.

However, unlike the bog where one knows when one hits the solid ground, the problem with stress tests is that in themselves they create stress. They can affect the price of property on the market. This can in turn affect the performance of the economy, which in turn can affect the outcome of the stress test, or rather, whether the stress test proves in time to be the ultimate stress test, by giving the most conservative view. In that regard reality will be a little better than the test.

There was much talk about burning the bondholders. My colleague spoke of something I have been saying for a very long time. He quoted the letter from the credit unions and pointed to an issue I have mentioned repeatedly, namely, there is a great amount of ordinary people's money in bonds and financial instruments and one cannot separate it from the rich people's money. There is a large amount in pension funds, insurance and credit funds. If anybody can tell me there is a handy way to segregate all of that, separating out who to hit, I would love to hear how to do it. Nobody has yet told me how one can ensure, when hitting financial instruments, one hits only those belonging to rich people, not those belonging to the ordinary punters.

There is another way of approaching the problem. We had started to go down that road before Christmas, namely, to look at the source of funding and see whether Irish money could replace the borrowed money. However, to get that funding one must assure people, in this case Irish people, that sovereign bonds will not be reneged upon. I refer to the legislation I introduced to the House before Christmas in which we sought to encourage pension funds to invest in Irish sovereign bonds that would give a very good yield to those funds, far superior to that available in German bonds, and would also give money from Ireland to the Exchequer on very long-term loans of up to 35 years. No pension fund in Ireland will invest in a bond it does not think will be secure into the future. We looked and found that of €20 billion in Irish pension funds, 95% of the bonds in which they had invested were German, with practically no money in Irish bonds. That is an export of €20 billion from this country. There is another €40 billion in equities. It is not attractive for pension funds at the moment to invest in the German bonds because the rate is too low and if a person wants a good return on the pension, the tradition has been to put it into equities and then into bonds. The Irish sovereign bonds, as long as there is an absolute guarantee the bonds will not be reneged upon, give a much better return, in excess of 6%. The advantage of that was that it was attractive for some of the money now in equities to transfer into bonds. There was an ability through this to attract up to €7 billion of pension funds over time that is currently outside the county into Irish Exchequer funds issued by the NTMA. That would replace that amount of foreign borrowing. It is a simple formula. The beauty is that if there is a high rate of interest, it is being paid by the investor to himself, because the taxpayer is paying it to the taxpayer when it is being paid into Irish private pension funds.

It also deals with another problem facing society, that has not been debated here very often, but which is affected by everything that has happened in the banks and the markets: the difficulty faced by pension funds, both defined and non-defined, in resolving the huge issues they face since the collapse of the market. That is often ignored by those who are absolutely cavalier about people's money and bonds. They forget it is not that simple and that it will have an effect on people's lives in all sorts of ways.

Is the Minister continuing to pursue the policy we were pursuing on these sovereign bonds? I understood these bonds were to be publicly issued by the NTMA in the early part of this year and it is a no-brainer that we could all agree upon.

I believe in patriotism. Perhaps I am naive and old fashioned in that but we must be honest; the other problem that drove the IMF in here was the fact that Irish people, corporate and private, were taking money out of banks in this country and putting it into the sterling area. There has been a huge withdrawal of money from our banks. We were and are totally dependent on the ECB putting money into our banks to fill the black hole that has arisen as a result. We would not have been as dependent, and the IMF issue would not have arisen, if there had not been a flight of capital. It is hard to control the large corporate bodies but we could decide as a people, and it is incumbent on everyone in this House, to create a confidence in our future so that money flows back into the economy. Flight of capital used to be a preoccupation of the left, which was always on about nationalising banks in the 1970s and 1980s. They used to say Allied Irish Banks would invest money in Ireland and Bank of Ireland would invest it abroad and they were always calling for the circle to be closed and the money to be kept in the country.

No matter how painful it might be for this side of the House, we must support the Government in view of the way we were treated. I do not think we were treated fairly because for many of the decisions there were no viable alternatives. No matter how tempting it is, however, I do not think it is in the national interest to play that game back and I do not intend to do so. It is much more important to look at the interests of the Irish people, which are to encourage people by creating certainty and confidence in the banks and to bring that money back.

The management of the banks is another issue. There are many things where I still see no alternative if I had to do them again. We were probably too careful, because we always hear the argument about market confidence and corporate knowledge. We were too slow and careful to move against senior management and directors in the banks. We paid too much heed to the market, even when the market had no confidence in them because of what they had done. Looking back, there is a lot of hurt felt by Irish people that a group of people could bring us to this ruination and seem to be able to walk away or retain their jobs and large amounts of money.

It has become a habit for broad swathes of the population to disclaim any responsibility for what happened. There were many bank managers who, for the sake of commission, when a young person applied for a loan for a house, would tell him that he had not asked for enough money and to take a car as part of the 30 year loan. The young person was not warned, as any proper business should do, that he should never take a car on a 30 year loan because no car will ever last 30 years. Those bank managers are as guilty as anyone else for tempting young people with money for the sake of commission.

This is a big topic where it could take a lot of time to go through the chronology of events to describe the story of why we are here today and in this state. Deputy Niall Collins suggested the Government Members do not live in the real world. The only reason I am here today is because I was in the real world two years ago and I prepared figures and facts, along with some other people, that showed what was happening and the establishment, including the Government, the Administration, the professions and the banks, did not want to hear about it. The biggest property and credit bubble that had ever been seen exploded and it was up to everyone to admit to the scale of the losses but they refused to do so. The Government and the establishment decided in a panic to give the guarantee. It was illogical to include in that guarantee bond investors because they were never going to be able to run on the banks because they had scheduled redemption times. Only depositors could cause a run on the banks. It was reasonable, therefore, to guarantee deposits but perhaps unreasonable to guarantee all the bonds. The Government did it for a period of almost two years.

In the immediate aftermath it then decided the NAMA project would be a way to separate the bad loans from the six banks and to deal with them while leaving the remaining banks without those bad assets to provide credit and liquidity to the economy because the bonds that would buy the bad loans could be used as collateral at the ECB to provide the liquidity and credit the country needed.

However, those involved did not use their heads, although they could have, because the Americans had considered a similar project called the toxic asset purchase plan. Following five or six weeks of laboratory bench testing, the Americans realised it would not work for many practical and other measurable reasons. They decided, with egg on their faces, not to proceed down the road of a plan which, our Government informed us through a public relations and propaganda machine, was the only show in town and which would do what it said it would do. This was despite the views of many people, including myself, who could demonstrate that the six balance sheets of the banks presented on a combined basis showed that in the period of six months from the beginning of the guarantee, effectively from the end of 2008 through to June 2009, notwithstanding the State guarantee over all deposits, including deposits paying premium rates, a total amounting to €32 billion left the country. This was because people did not believe there was a sound capital base for the banks, sufficient to absorb losses that would have to be written down.

The NAMA project had the temerity to try to persuade us that €23 billion of losses would be the total amount throughout all six banks and that this was the figure needed to absorb losses in the meltdown following the collapse. From where do I get the €23 billion? A total of €77 billion of loans were to be bought for €54 billion. This implied €23 billion of losses would have to be recognised. However, NAMA went further and stated that losses would not even amount to €23 billion because it would make a profit of €5 billion over ten years such that the net loss would amount to only €18 billion. That was absurd, even at that stage. However, it suited the possibility of keeping out of majority State control the two major banks and it left open the question of what to do with Anglo Irish Bank and Irish Nationwide.

This brings us through to March 2010. The NAMA project was proposed with a supplementary budget in April 2009. Luckily, the Dáil did not agree to provide an open cheque and agreed that NAMA would have to come back with the figures. The figures with which the Minister returned included one figure of €77 billion and another of €54 billion for loans to be bought from the five institutions out of six. That was announced on 16 September. The following Monday, I presented the combined balance sheets of the banks to show this project would not work. I also explained how the meltdown had occurred and that it was not because Lehman Brothers had gone bust but because the loan-to-deposit ratios in our banks had an average of in excess of 170% which is financial stupidity and carelessness.

In September it was insisted to everyone here, in the Seanad and even to the President, Mrs. McAleese, that the Bill must be enacted into law. Then began the slow admission, bit by bit, that loan losses would be greater than €23 billion. It reached the stage where, in March of last year, that is, this time last year, the prudential capital assessment review, PCAR, showed that Allied Irish Banks would require €7.4 billion and Bank of Ireland would require €3.5 billion in capital before the year-end to sustain losses. It was claimed that this would be sufficient for the banks to be totally refuelled and to be able to absorb losses. This was not the case because even on an overview basis of the portfolio, an examination of the loans which had been identified for transfer to NAMA and the application of a 40% level of loan write-offs, it was clear that AIB would need €10 billion and Bank of Ireland would need €6.5 billion before the year-end.

Despite presentations to the Joint Committee on Finance and the Public Service in the Leinster House 2000 building, conventional wisdom and the establishment said "No" and that they knew they got it right. However, it was not right. This brings us through to 30 September 2010. The revised measurement of estimated losses in the banking system were totted up to €50 billion. That was it; that was black Thursday. However, again it was not right because these estimates did not address the losses that will come down the tracks on mortgage lending. Based on the facts and figures at the time, a better estimate would have indicated that a total of €65 billion was needed on the NAMA type bonds throughout all banks and, for prudential reasons, perhaps a further €30 billion to absorb losses and to make provision against mortgage loans for the next number of years. This is from where the figure of €95 billion comes.

Deputy Pringle suggested there was a discrepancy between the figure announced last Thursday, a €70 billion capitalisation, and the figure of between €90 billion and €95 billion which I mentioned. However, there is no discrepancy; there is a reconciliation. The explanation is that the €70 billion is based on the €47 billion which has been invested by way of capital to date throughout the banks. This is not a figure from losses. When one adds to this the €24 billion referred to in the most recent announcement, a total of €70 billion arises. This is capitalisation and does not address the two moribund banks, Anglo Irish Bank and Irish Nationwide. In these banks the provision of losses to date is approximately €30 billion. There are bonds in these two remaining banks of up to €4 billion which could absorb any more losses and this is why the figure was parked to one side.

The achievement of last Thursday — it is an achievement — is that an announcement of a restructuring of the banking sector was made involving banks that are viable, that is to say, the two large banks as well as EBS. They will form a structure which will provide a framework for the starting point of the recovery and which is sufficient for a starting point. This is a picture which allows us to get a fix on the amount of loans in the six banks, at approximately €170 billion, mainly provided by the European Central Bank and the balance by our own Central Bank.

This figure includes emergency liquidity and it derives and has a provenance from the funding or the redemption of the senior bonds which were redeemed up to the end of last year. At the moment, the banks are funded by the capital which has gone in from the State, the ECB, Central Bank funding, senior bonds which have not yet been redeemed and deposits. Basically, these are the ingredients.

We should get the picture across to our counterparts in Europe. We are part of a bigger family and we are keen to be able to work constructively, to recover in this economy and not to distribute the losses unfairly to any party. Then, we present the fact that the losses are of the order of €95 billion. The amount of funding in place at the moment includes redemption of senior bonds up to the end of last year. To this extent, these bond investors have not contributed to or have not been presented with any of the losses to date. Therefore, what could be done and what is in prospect to do is to present to our counterparts in Europe the big, true, holistic picture and to consider restructuring of these loans in the banks on the basis that they may be partially written down, swapped for equity or whatever. This amounts to is the start of a negotiation and is not in conflict with the excellent work done by the Government and presented by the Minister for Finance. It is a clearer picture with more certainty of the engineered structure for the banking sector and the beginning of the way forward.

Mr. Trichet, Mr. Rehn or whoever in Europe may have stated that at the moment they take the view that there will not be restructuring, including a write down of bonds either from the remaining bondholders throughout all the banks or in some of the banks.

That is a discussion that can be re-presented.

There is no place for the intemperate language of burning bondholders. This is a professional presentation that should be done on a negotiated basis. When companies go into receivership or examinership and there are historical creditors that may remain future suppliers, everything is done on a negotiated and well understood basis, and that is still in prospect. I am confident that if the picture is presented in the right way and in the right language with firm presentation and persistence that the discussion can open because suppliers and creditors of either a business or a nation want to see the people with whom they engage survive and prosper. It is in everybody's interest. That is why I appeal to Members on all sides of the House to take this approach. It is the collegial and co-operative approach. It is the one that is based on facts. It takes the intemperance of language out of the picture and it shares the bill for something that has happened in a proper way or at least it addresses it and presents it in a proper way.

I remind some of the journalists abroad who might have said that while Ireland partied Europe worked, which is a comment I have heard made, that Europe and these institutions which invested in the bonds made a return on them and to date they have been fully redeemed bar only those that were subordinate bonds and were bought back in the market. The people who say that need to rethink what they say. I invite people to take a temperate and considered approach to all these things.

However, we will work forward. Ireland has a going concern basis. Exports are working well and in the domestic economy, now with the start of restructuring the banks and the load of the two main utility or pillar banks having been lightened, there will be the prospect of economically breathing again, but all of us must take a co-operative approach and one of laying out the full facts.

When it comes to measuring losses, it is not like taking a temperature. There is not a given such as 102° or 103° Fahrenheit; it is a well-judged estimate. The consulting firm Black Rock Solutions and Barclays Capital have models that look forward 12 years and they work back to what are capital requirements for the first three years. The other way is to admit the full scale of the losses and then to examine where that bill fairly rests and how to divide it. Then we need to examine what loans remain in the banking system, how can they be borne and if they are sustainable and, if not, like creditors in a restructuring of a company, we should write them to the reasonable level of starting point or try to reach agreement on that and move forward, as well as pricing it right for interest rate agreement.

We have got the right starting point. It is more certain as a starting point and it now depends on the mindset and preparedness to negotiate persistently, truthfully and in a balanced way. I am confident that like gravity the right financial solutions will be understood and the political will to put them in place will be achieved.

The next speaker is Deputy Ó Caoláin. I understand he is sharing time with Deputy Ellis.

I wish to share time with Deputy Ellis such that we will each have ten minutes.

On April Fool's Day 2011 people in this country woke up to the reality that the new Fine Gael-Labour coalition Government, elected on the basis that it promised real change, had just pledged to pour another €24 billion of our money down the banking black hole.

Many people no doubt had the feeling they were taken for fools when they voted for Fine Gael and Labour in the belief that things were indeed going to be different. They believed the blanket bank guarantee was going to be set aside. They believed senior bondholders were going to be made to share the burden. Many believed it was going to be Labour's way not Frankfurt's way. Some may even have believed that the Minister for Finance, Deputy Noonan, the bruiser from Limerick, was going to stand up for the people's interest and fight Ireland's corner with conviction and determination at EU level.

The promises of our winter of discontent have now melted like snow on a ditch. The parties that roared like lions during the general election campaign are now bleating like sheep. However, this is hardly surprising. For years the leaderships of Fine Gael and Labour have been the most submissive voices in this country when it comes to everything that emanates from the European Commission and from the European Union elite in their drive towards a superstate.

In every referendum they parroted the words dictated to them from Brussels and Strasbourg. They poured scorn on those of us who warned against the selling out of our sovereignty. They branded us as narrow nationalists, anti-Europeans, extremists and economic illiterates — a litany of names. However, it turns out that our warnings were not half harsh enough. This State has been delivered, bound hand and foot, to the European Central Bank and the International Monetary Fund. We are to be bled dry to pay back the monstrous debts incurred by insolvent banks. We are to be sacrificed in the hope of saving the euro. I say "the hope" because there is no guarantee that the euro will be saved or that the end of this economic crisis will not be the collapse of the euro.

Let it not be forgotten that Fine Gael and Labour are the parties that colluded with Fianna Fáil and the Greens in refusing to accept the verdict of the people in the referendum on Lisbon 1. They joined with the EU institutions in browbeating the Irish people in a second referendum. We in Sinn Féin stand by what we said then about Lisbon 2, and I want to read part of that. We said:

The cause of this recession is the drive to deregulate, privatise and cut direct taxation, that have been the hallmarks of governments in this country and across the world in the last number of decades.

They created an economy that was deeply unequal and incredibly vulnerable. Now that the bubble has burst the consequences of these inequalities and vulnerabilities are there for all to see. These right-wing policies have been exposed and totally discredited.

The fact is that the Lisbon Treaty was drafted by the same politicians who led the European economy into recession. It contains many of the right-wing economic policies that have caused the recession and that continue to prevent member state governments from responding effectively to the recession. It is the Treaty of Bertie Ahern and Charlie McCreevey, of Silvio Berlusconi, Jose Manuel Barroso and Nicolas Sarkozy.

Since 2004 the European Commission, under the stewardship of Portuguese conservative Jose Manuel Barosso, and ably supported by the European Court of Justice, has introduced proposal after proposal undermining sustainable economic growth, public services and workers' rights.

The Commission's singular focus on economic competitiveness has weakened the ability of member states to intervene strategically in the economy to promote economic growth, protect jobs, enhance environmental sustainability and provide universal public services.

Directive after directive has promoted the deregulation of markets in goods and services while other measures such as the rules on state aid and the Growth and Stability Pact have limited the scope for state intervention to strengthen the economy.

This is what Sinn Féin said in a document, Alternative Guide to Lisbon 2, published at that time.

The regressive policies that underpinned the Lisbon treaty helped to cause the economic recession. That is clear and obvious. Those same policies are dictating that the Irish people are to be punished for the greed and recklessness of bankers and financiers, many of them in France and Germany. The current situation in Ireland is similar to what we endured under landlord rule and the British regime in Dublin Castle. At that time the mass of the Irish people endured a bare subsistence in order to support a landlord class, many of the members of which were absentees. A huge proportion of the wealth of Ireland left the country in the form of rents. The ultimate result was mass starvation, eviction and emigration. Many of the hundreds of thousands who were forced to emigrate from our shores sent money to help their relatives back home in Ireland to pay rent and survive in their own land.

During the period to which I refer, the right of private capitalist property was counted more precious than the right to life. The situation today is not as extreme but the scenario is very similar. The so-called right of investors in corrupt banks counts for more than the livelihoods of the Irish people. Irish workers will be labouring for decades to pay the cost of a debt that they had absolutely no part in incurring. People will be impoverished for years to come so gamblers in the financial markets will not be obliged to pay the price of their speculation. Once again our children are being sent into exile and many of them will be sending home remittances to help support families and communities in this country which have been beggared by bad government and voracious financial interests.

All of this has come about as a result of the catastrophic failures of successive Governments during the past decade and because of the so-called solutions they concocted with their banking policy. They arrived at the site of a fire — in the form of the State's debt crisis — and trained their hoses on it. However, what emerged was not water but petrol. Petrol, in the form of the bank guarantee, has been poured on the flames and the conflagration threatens to consume what is left of the economy.

It is incredible that earlier in the debate the former Minister for Finance, Deputy Brian Lenihan, stated, "To be constantly demanding the dishonour of debt, as some Deputies do, is not good for this country, does not help its interest and is a form of economic treason." That is absolutely breathtaking coming from the former Minister who brought in the IMF and the ECB, who repeatedly poured good money after bad into the banks and who for years had faithfully supported the Governments which created the crisis in the first instance.

According to the former Minister, Deputy Brian Lenihan, we are guilty of economic treason because we demand that the entire burden of debt should not be borne by the Irish people, that our children and our children's children will not be left with the toxic legacy of Fianna Fáil and its friends — the bankers and developers — and international financial speculators. Is it not also economic treason to demand the restoration of the minimum wage? Perhaps in the former Minister's view of the world, that indeed might be the case.

The contrast between the manner in which the Government is prepared to continue with the disastrous bank bailout and that in which ordinary citizens are being treated could not be starker. Fine Gael and Labour are hardly a wet day in office and they have already gone back on their promises to make the bondholders pay and not to pour more good money into the black hole of the bank bailout. At the same time their commitments to offer some relief to the rest of us have either been shelved or placed on the long finger by promising reviews of various Fine Gael and Labour election proposals rather than actually proceeding to implement them. Normally one might ascribe this simply to cynicism on the part of parties which have achieved power and which now believe they can simply drop whatever commitments they made in order to win it. In fact we are dealing with something far worse and far more sinister in regard to the abandoned election promises of the current Government parties.

We have already seen that their promise to reverse the cut to the national minimum wage requires the approval of the IMF and the EU. It would appear also that they are bound by everything that is contained in the IMF-EU memorandum of understanding in respect of the banks. Hence, the reason we are discussing this issue today. Is it the case that the programme for Government is only valid in so far as it commits to implementing, to the letter and on schedule, the timetable of austerity measures and aspects of the bank bailout contained in the IMF-EU document?

We know that high-ranking members of Labour and Fine Gael were briefed by officials from the IMF, EU and ECB last November when the deal was put in place. It is interesting that a Labour official informed the media after its meeting that his party's representatives had been told, "Measures that would reduce the effectiveness of the plan would not be welcome". The Minister for Finance, Deputy Noonan, stated at the time that he and his colleagues had been given a comprehensive overview of what was in the memorandum of understanding and the measures required for its implementation.

Perhaps a Minister from either one or both parties might enlighten me as to whether this included their being informed that they would not be in a position to alter anything substantive in the memorandum. If so, did this include their being told that they could not reverse the cut to the national minimum wage? If the latter is the case, then judging by the programme mapped out by the IMF and the EU there is not much wriggle room. As a result, a great deal of what was contained in the election manifestos of Fine Gael and Labour will not only not be implemented because of the austerity plan, but they will not be allowed to implement the proposals they put forward even if they wanted to do so.

There is also the issue that if both parties which are currently in government knew that they would be bound by the memorandum of understanding, then the election campaign was something of a charade. I say this because much of it was fought on the basis of promises regarding the banks and the bondholders and reversing the cut to the minimum wage. Both parties knew they would be unable to fulfil these promises once they accepted, as they have done, the parameters of the bailout and the consequent austerity programme.

As already stated, the contrast between the speed with which the Government has moved to continue to save the toxic banks and to protect the bondholders and its shelving of promises made to beleaguered citizens could not be starker. In the programme for Government, the current Administration attacks the policy of "putting the interests of big developers and the banks ahead of people looking to purchase a home". The new Government also commits itself to assisting homeowners. However, in contrast with its actions in the context of pouring more money into the banks, all we get are promises to examine a number of options regarding how homeowners might be given some relief. One of these options includes a two-year moratorium on repossessions of family homes. That is something which, I am sure, everyone here would welcome. I will believe it when I see it, because in common with many of their election promises and their commitments in the programme for Government, actions are being replaced by reviews. They will review options to help mortgage holders and review the universal social charge. That is simply not good enough. The people struggling or unable to pay their mortgages, the people finding it more difficult to make ends meet because of the anti-social universal charge and the minimum wage workers who will be down at least €40 a week do not need reviews. They need actions that provide them with a chance to survive the onslaught on the ordinary people of this State unleashed on behalf of failed native bankers and speculators and anonymous international bondholders. These are people who we only know through their cats' paws like Sir Peter Sutherland, who has selflessly put himself forward as a neutral and disinterested advisor on how best to ensure that the protection racketeering branch of his company, Goldman Sachs, gets its pound of flesh.

According to the Government we have a moral obligation to pay back these people, beggar ourselves and destroy our economy in the process. Who exactly are these noble bondholders, to whom we owe so much? There is a list on the Internet which provides the names of 80 of those who someone last week described as "surely the luckiest gamblers on the face of the planet". Curiously, the mainstream media appear reluctant to publish the list, perhaps for fear of causing offence. According to the person who compiled the list, those companies that hold Anglo Irish bonds have combined assets under their control of almost €21 trillion. Their Anglo Irish bonds constitute a miserly €4 billion. That is around 0.02% of the value of the total assets under their management. They sound to me like people who might be better able to take a small loss than the cleaner on the minimum wage or the low-paid worker who has to pay the universal social charge. One of the senior Anglo bondholders is EFG Bank, based in Switzerland and 40% owned by Spiro Latsis, who is estimated to be worth around €9 billion.

Among them also are our old friends Goldman Sachs. I came across a few interesting descriptions of Goldman Sachs. Someone once described them as being like the fireman who starts the fire and then turns up to put the fire out but also ensures that the property burns to the ground. Rolling Stone magazine memorably and poetically described them as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”. A bit dramatic perhaps but when one considers the amount of financial and economic power wielded by Goldman Sachs and the fact that power is often wielded to the disadvantage of the citizens of the states in which it is embroiled, it is not altogether an unfair one. Those are some of the people who the Government and its predecessor have decided need to be looked after before their own citizens.

Having acted the hard men, threatening that it would be Labour's way or Frankfurt's way and promising that the senior bondholders would be told to take a running jump, they have quickly and meekly bent the knee. Even the crumb of a 1% interest rate cut has been put on the back burner and is now dependent on how well our IMF and EU masters decide we are shaping up under their austerity programme. Given all that and given the manner in which they have been happy to pick up the poisoned chalice of the bank bailout, perhaps it would have been more honest of them to have simply published the memorandum of understanding as the programme for Government rather than go through the charade of pretending that there is any way other than the EU's and IMF's as long as we continue to pick up the tab for these failed banks.

Deputy Ellis, you should not mention the name of an institution in the House.

Today's speech by the Minister for Finance, Deputy Michael Noonan, on the bank reorganisation was highly instructive as to how the Government seeks to judge the effect, successful or otherwise, of its policies. Deputy Noonan said that when the Government published its plan last week it had a number of objectives. They were to restore confidence in the banking system and in the economy, recapitalise and restructure the banks and restore credit to the economy so growth would rebound and jobs could be created. He went on to affirm that all three objectives are being fulfilled. Deputy Noonan relied on the activities and reactions of certain institutions to prove that confidence had been restored. Bank of Ireland shares rocketing was one and the price of Irish bonds being reduced to 10%, which is an incredibly high rate in any case, was another.

He then went on quote some of the rating agencies. He said Standard & Poor's had declared that the outlook is now stable and had removed Ireland from its credit watch. He further quoted the Fitch rating agency saying the stress test was an important step. Furthermore, the Minister quoted the huge investment bank, Morgan Stanley, which is now, apparently, advocating to its clients that they buy Irish debt. This is a sign of the bank's confidence, allegedly, in the Irish economy as a result of an announcement made by the Government on the future of Irish banking.

Who or what are these various agencies? These rating agencies and Morgan Stanley are all institutions that make up the financial markets. These are the same financial markets that plunged the world into a financial and economic crisis only four or five years ago. We should look closer at these institutions and their track records. What is the role of these rating agencies? For example, in the United States sub-prime scam and scandal, which resulted in a worldwide financial crisis, the role of these agencies was to become involved in the process of toxic debts. They assisted and advised on the packaging, repackaging and selling of toxic debts to other institutions around the world and advised the gambling banks, which wished to make a quick buck on these toxic assets, on how they could get good ratings. The rating agencies were far from objective observers or dispassionate judges. They themselves became players in the financial markets. Moody's, for example, made a $1 billion from the debt markets in 2005 and 2006. There is a huge conflict of interest. They, supposedly, sit out there above the maelstrom of the market and give objective assessments of countries and corporations and their financial viability while being involved in advising banks in relation to that and making massive fees as a result. A year ago, participants at the World Economic Forum conference in Rio de Janeiro, had something to say about this situation. The House will know that the World Economic Forum conference is not a gathering of socialists. In fact, the pre-eminent and major corporations and investment bankers, all the players in the financial markets, are the ones who attend. The following is a quote from Jim Goodnight, the founder and chief executive of SAS, a leading business analytic software provider:

The problem we had was the rating agencies like Moody's had been paid by the banks to rate these pieces of paper and the banks let it be known they would shop until they got the right rating.

Lord Levene, the chair of insurance giant Lloyds of London and therefore not a member of the Socialist Party, stated:

Enron was rated Triple A just weeks before it went bust, so why didn't we learn from that and do something? Their business model was strange [speaking of the rating agencies]. If you have a target rated, who pays for the rating? The target [meaning the bank] does. That's a conflict of interest and I'm surprised the G20 didn't deal with that.

The editor of the Canadian National Post magazine then commented:

Perhaps nothing has been done because the same regulators who missed the Enron and tech bubble missed this credit bubble. Perhaps nothing was been done because of the inordinate political and media clout (and co-ownership) enjoyed by credit-rating agencies such as Moody's, Standard and Poor's and others.

In my view, the picture is very clear and yet the Minister for Finance of this State quotes these players, these participants in major gambling enterprises, as witnesses to the sound policy adopted by the Irish Government. Morgan Stanley is also an investment bank that has been up to its neck in the sub-prime crisis crash and scandal in the United States. The Irish Government is prostrating itself in front of these players in the financial markets, in front of greed-driven institutions whose only agenda is the maximisation of corporate profit. The same institutions carry full responsibility for the financial crisis that led to a particularly acute manifestation in Ireland because of the addition of the insane property bubble and crash. What we have is, in fact, a dictatorship of the financial markets who dictate the policy to supposedly democratically elected governments. The markets are international gambling casinos, run by anti-social speculators, who target entire countries, undermining currencies, undermining anything to do with social solidarity, in order to try to make a massive speculative gain. It is in front of these institutions that the Minister for Finance of this State and his Government of Fine Gael and Labour, prostrate themselves in regard to trying to find a solution to the massive crisis in Irish banking and the Irish economy, as a result of the activities of these very speculators and of the financial markets.

The entire economic and political establishment, the Financial Regulator, the Governor of the Central Bank, the chairman of the European Central Bank, Monsieur Trichet and the President of the EU Commission, Mr. Barroso, are all without exception lining themselves up to do the bidding of the financial markets. I spent nearly two years in the European Parliament and I was lectured almost on a weekly basis about the great democratic institutions this represented, so good that they want to spread this model around the world. Yet the leaders of that institution stand up and do the bidding of the financial markets, in other words, unelected, unaccountable, faceless institutions, in search of a maximisation of private profit. Is there any other way to describe that except to call it a dictatorship? The power of these financial markets should be broken on a Europe-wide basis because the working class, not just in Ireland but also in Greece, Portugal, Spain and other countries, are their victims. We should bring these financial institutions and markets into public ownership on a Europe-wide basis and put them under the democratic control of society, of working people, of the real producers in society, of the taxpayers. In that way we can have a publicly owned financial system that is geared to the advancement of society, to social solidarity, to the creation of jobs, to investment in infrastructure and in sound economic development and sustainable and environmentally friendly economic development instead of the casino-type activities which are current.

Tá €24 billiún á chur isteach arís sna bainc sa tír seo. Anois, tá €70 billiún ag teacht as foinsí poiblí, ag teacht ó cháiníocóirí, agus ag dul isteach sna hinstitiúdaí seo. Ní haon ionadh go ndúirt Gobharnóir Bhanc Ceannais na hÉireann, an tUas Honohan, gurb é seo an tarrtháil is daoire i stair an domhain. Is iad gnáth-lucht oibre na tíre seo atá ag íoc go daor as. Tá €17.5 billiún as an gciste pinsin, mar shampla, ag dul isteach sna bainc. Ba cheart a chuimhneamh gur airgead é seo ó lucht oibre, cáiníocóirí a oibríonn go crua, atá á réabadh agus á chur i gcontúirt in ionad bheith ann, mar a bhí socraithe, mar ioncam seasta d'oibritheoirí tar éis a saol oibre a chríochnú. Cén fáth? Chun bainc mhóra sa Ghearmáin, sa Fhrainc agus sa Bhreatain a shabháilt ó dhrochfhiacha de bharr na spéacláireachta a bhí ar siúl acu i gcúrsaí tógála sa tír seo in éineacht leis na bainc anseo, le lucht tógála agus le lucht spéacláireachta na tíre seo.

Tá an Banc Ceannais Eorpach, an Seansaláir Merkel na Gearmáine agus an tUachtarán Sarkozy sa Fhrainc ag cosaint na mbanc mór Eorpach seo agus ag cur an ualaigh ar ghuaillí ghnáth-lucht oibre na tíre seo. Sin toradh tubaisteach pholasaí an Rialtais nua seo ag déanamh an rud ceannann céanna agus a rinne an sean-Rialtas. I gceann dhá nó trí bliana beidh fiacha——

Is there a problem with time?

No, the Deputy has five minutes if he needs it.

I thought the Acting Chairman was looking at me.

I understood there was to be a ten minute concluding contribution from the Government side. Is that not to be?

Apparently it was not included on the Order Paper and therefore, the Minister will have to conclude by 7 p.m. and Deputy Higgins has another few minutes. The Minister may carry over his time to another day.

It is hard to wrap up over two days but I will do my best.

Given that the Government is firmly in favour of longer sittings, perhaps the Minister will return to the House on Saturday or Sunday to complete his contribution.

I will probably work in my Department on Saturday and Sunday in any case.

I, too, will work on Saturday and Sunday. I know how hard many public representatives work.

Lig dom leanúint ar aghaidh mar sin, a Chathaoirligh. I gceann dhá nó trí bliana beidh fiacha náisúnta de €220 billiún ag an tír seo. Beidh íocaíochtaí úis suas le €10 bhilliún faoi 2013. Má cuirtear san áireamh go mbeidh caiteachas ar oideachas na tíre — idir bhunoideachas, meánoideachas agus an tríú leibhéal — ag €9.2 bhilliún an bhliain seo, is féidir a fheiscint chomh tubaisteach is atá an scéal seo. Tá sé do-dhéanta. Dá mba rud é go ndéanfaí sclábhaithe amach is amach de lucht oibre na tíre seo ní fhéadfaí na fiacha seo a aisíoc. Dá bhrí sin, ní féidir iad a aisíoc agus beidh géarchéim millteanach mór i gceann cúpla nó trí bliana.

Cén fáth go bhfuil an Rialtas ag cur ár ndaoine trín fhulaingt oll-mhór seo i dtreo's go gcríochnódh sé i ngéarchéim ar aon nós? Ní cheart pingin rua a íoc le lucht spéacláireachta. Ba cheart na billiúin sin a chur isteach in infheistíocht infrastruchtúra chun na mílte post a chruthú, chun an lucht oibre a chur ar ais ag obair, chun saibhreas a chruthú agus chun teacht as an ngéarchéim eacnamaíochta uafásach atá ann i láthair na huaire.

Ba cheart ath structúrú a dhéanamh ar na bainc, ach trí na bainc a thabhairt in úinéireacht phoiblí agus faoi stiúradh daonlathach ins an tslí is go bhféadfaí creidmheas a thabhairt do dhaoine féin-fhostaithe, do fhiontair bheaga agus do dhaoine go ginearálta. Chomh maith leis sin, ba cheart na billiúin a chur isteach in infheistíocht in infrastruchtúir chun na poist atá ag teastáil a chruthú.

Is géarchéim Eorpach atá anseo anois. Tá lucht oibre na Gréige, na Portaingéile agus na Spáinne thíos leis an ngéarchéim seo chomh maith. Ba cheart go dtiocfadh lucht oibre na hEorpa le chéile chun cumhacht tubaisteach uafásach seo na margaí a bhriseadh agus córas daonlathach airgeadais a chur i bhfeidhm ar mhaithe leis an sochaí, le tromlach na ndaoine agus le gach cúrsa sóisialta, seachas a bheith ag cur níos mó airgid isteach ins na hinstitiúidí príobháideacha seo ins an Eoraip d'fhonn níos mó brabúis a dhéanamh dóibh.

While I concur with Deputy Higgins that people continue to be scandalised by the amount of money the public purse was required to contribute to maintain a functioning banking system, he is incorrect to suggest the full figure amounts to €70 billion or that the current bailout amounts to €24 billion of public money ón chiste phoiblí, to use the Deputy's words. As he knows, a number of contributors provided this sum. The objective of the Government was to minimise, as far as possible, the contribution from the public purse in this tranche of recapitalisation.

The banking sector has been the key focus of attention of the new Government's work for the past four weeks. While it is not in my direct line of responsibility in the Department of Public Expenditure and Reform, it has taken up most of my time to ensure that, in as far as practicable, the decisions made were rational and in the interests of workers, the development of the economy and the maintenance of jobs.

No one can be in any doubt regarding the scale and extent of the challenges which confront the incoming Government in seeking to achieve the goals I have outlined. However, following the announcement last Thursday, no one can have any doubt regarding the commitment of this Administration to work with our international partners. Unlike some people, we cannot tell our international partners to take a hike and then expect them to give us money the following day. Unfortunately, we need money to fund day-to-day expenditure because of the disastrous economic decisions of the previous Government. Having debated with some of the Deputies opposite during the election campaign, I am aware that they take the simple attitude that we should tell lenders to take a hike and instead live off the domestic treasury before returning to the bond markets when the treasury is exhausted. This is a hopeless analysis and it is unfair to present it to people as realistic. Many of those opposite did not seek to be in office or implement policy but instead sought to be in opposition, which is where they ended up.

As I stated, the goal of the Government is to reorganise and reconstruct the domestic banking system and return it to viability and sustainability. A major job of work remains to be achieved in this respect but the goal is a prerequisite to returning the economy to sustainable growth and achieving this Administration's foremost priority of creating employment. Regardless of whether we like the banking system, and Deputy Higgins does not like it, banking remains a key enabler of economic activity. The new and reformed banking system, the pillars of which were set out last week, will provide the foundation for rebuilding our economy's capacity to provide the growth and employment that will deliver for people on an enduring basis.

In his statement last Thursday the Minister for Finance announced that the Government's decisions would provide for a radical restructuring of the domestic banking system. People are longing to know what will be the shape of banking in future. The decisions will also return the banking system to long-term viability and profitability and result in a final break in the vicious cycle of the banks' massive dependence on the taxpayer.

To the dismay of Irish people the domestic banks have to date required a substantial level of capital support from the State and funding support from the Central Bank authorities. It is, therefore, of the utmost importance and a critical initial priority of the Government that we radically restructure our banking system and reduce the bank's reliance on State and Central Bank support.

Deputy Lenihan referred to a lack of clarity as to the position of the European Central Bank. The ECB, shortly after the announcement last Thursday, welcomed the Irish authorities' rigorous assessment of the capital needs of Irish banks and indicated its support for the Government's commitment to ensure the capital needs of the institutions are met in a timely manner. It was further announced that the ECB had decided to suspend the application of the minimum credit rating threshold in the collateral eligibility requirements for Irish Government or Irish Government guaranteed debt instruments. In addition, the ECB committed to continuing to provide liquidity to banks in Ireland, a critical enabler of a functioning economy. This continuing and ongoing liquidity support from the euro system will remain critical in safeguarding the stability of the banking system and its capacity to support economic recovery over the period required for the banking system to return to full health and sustain itself through stable market funding.

Deputy Brian Lenihan also raised questions on the future of Irish Life & Permanent and burden sharing with shareholders. As the Minister for Finance set out in last week's statement, Irish Life & Permanent will require a significant restructuring of its business and shareholding to meet the capital requirement identified under the PCAR exercise. The management of Irish Life & Permanent has agreed to produce a detailed capital plan for submission to the Minister for Finance shortly, the basic elements of which are already clear and correspond to what is included in Irish Life & Permanent's deleverage plans.

The role of the group's bank, Permanent TSB, in terms of the future banking landscape will be examined in detail through the restructuring plan process the bank will undertake with the European Commission. The Commission will insist, in line with the Government's objectives, that the restructuring plan demonstrates that sufficient burden sharing has been achieved with shareholders in circumstances that capital support has been provided by the State.