Banking: Statements.

Prior to making my statement, I wish to inform the House that as a result of the reshuffle last week there are now two Ministers of State at the Department of Finance, something which I greatly welcome, not least with regard to the business of this House. The Minister of State, Deputy Dara Calleary, will reply to this debate.

I welcome the opportunity to address the Seanad on the final phase measures that the Government is taking to restore stability and certainty to Ireland's banking system. The banking measures announced by the Minister for Finance yesterday are the latest in a series of successful measures taken to stabilise the banks and to protect the interests of the taxpayer and depositors. They are the final steps in the process that will secure the future of the Irish banking sector, which is crucial to ensuring that the Irish economy can benefit from the global economic recovery that is now in train.

While economic activity remains weak, having introduced budgetary adjustments of more than €15 billion over the past two years the Government's fiscal position is credible. Our efforts to restore stability have been positively received throughout Europe and around the world. As a result, we are now in a position to return to economic growth on a more sustainable basis. I draw attention to an article in today's Financial Times under the headline “Wounded Celtic Tiger shows signs of clawing back growth”. It states that it is becoming apparent that Ireland’s modern economy is holding up well. The decisive steps announced by the Minister yesterday for our banking sector will generate the same sort of confidence in Ireland as the steps taken towards our fiscal position. The measures announced yesterday will position our banking system to play an important role in our recovery. While the cost of facing up to our problems is unpalatable to all, there is not an alternative. The price we pay is the price of long-term stability.

The Government is recapitalising the banks in order that the system as a whole can return to its rightful role of provider of credit to the real economy. Well-capitalised banks are in a much better place to lend and with so much attention focused on NAMA and capitalisation, the lending targets outlined by the Minister yesterday should not be overlooked. Furthermore, the banks will be required to realign their business practices with the needs of the modern Irish economy. Strategically targeted lending to small and medium enterprises, which all recognise as the lifeblood of the economy, will provide a welcome fillip to employment and growth in this sector. The provision of working capital for businesses is simply essential and entrepreneurs must be provided with the tools to demonstrate their innovation and ideas.

While I do not wish to interrupt the Minister of State, will copies of the script be made available?

Yes. The Minister has set specific lending targets for AIB and Bank of Ireland. They will make available for targeted lending not less than €3 billion each for new or increased credit facilities to SMEs in both 2010 and 2011. In particular, it must include funds for working capital for businesses. This represents a considerable increase on lending last year. To ensure the proper management of these funds, the two banks will be required to submit SME lending plans by both geography and sector for 2010 and 2011. Mr. John Trethowan, as the Government's new credit reviewer, will be reviewing bank lending policies as part of his remit.

The first loans have now transferred to NAMA and the agency's painstaking approach to the valuation of the loans will result in the maximum level of protection for the taxpayer. The first tranche represents roughly one fifth of the total amount to be transferred and comes from the ten largest borrowers. The bottom-up valuation means the banks will incur heavy losses on the loans which NAMA will acquire from them, which in some cases will amount to more than 50%. The banks must deal with the resultant losses now as any delay would only lead to stagnation. The losses on these loans, together with the capital requirements outlined by the Financial Regulator, have made clear the likely requirements of the banks and building societies. In this regard, I now wish to address the impacts on each of the institutions.

The Financial Regulator has determined that Bank of Ireland must raise additional equity capital of €2.7 billion by the end of the year to meet the new capital standards. Bank of Ireland already has taken action to address its capital needs through private sources and the Government has committed to supporting the bank in its efforts through the conversion of preference shares. The State intends to achieve full value for its investment while remaining a minority shareholder in the bank. Recapitalising Bank of Ireland will maintain its strong presence in the international capital markets and provide loan finance to individuals and businesses, while supporting Ireland's economic recovery.

The regulator has determined that Allied Irish Banks must raise additional equity capital of at least €7.4 billion by the end of the year to meet the new base case capital standards. In view of the extent of capital to be raised, Allied Irish Banks will be required by the regulator to produce a detailed capital plan by the end of April this year. However, the sale of its assets in the United States, Poland and Great Britain will assist the bank in meeting its capital requirements. The State is willing to convert some or all of its preference shares to provide additional capital in the form of ordinary equity if capital cannot be accessed privately. If private capital proves unavailable, the State will have a majority shareholding in Allied Irish Banks as a listed entity. This is preferable to the prospect of an under-capitalised or barely adequately capitalised bank stagnating in the economy.

Clearly it has proved extremely difficult to find a solution for Anglo Irish Bank, given the poor quality of its very sizeable balance sheet. The Minister for Finance reiterated yesterday that winding up the bank is assuredly not a viable option as the cost would be too great. Such a measure also would cause such disruption to the financial system that it could generate enormous and long-lasting economic instability for the State. As the Minister informed the Dáil, Anglo Irish Bank was much larger relative to the Irish economy than was Lehman Brothers relative to the United States economy. Given that the failure of Lehman Brothers brought the global financial system to the brink, it is clear that the disorderly failure of Anglo Irish Bank just two weeks later would have had a similar effect on the entire Irish financial system. The Government is providing €8.3 billion to support the capital position of the bank to take account of the bank's losses to date. There is no alternative to this capital injection that would meet the bank's unavoidable obligations at a lower cost. The Minister's actions are the logical step towards stability in our banking system. The new management team in Anglo Irish Bank is not part of the old guard and is demonstrably committed to implementing a strong risk management system and to reducing the bank's cost base. Its actions and policies are designed to lead ultimately to the creation of a smaller and stronger bank, leaving the remainder in the form of an asset management and recovery company. The Government's overriding objective is to maximise the potential return for the taxpayer in recognition of the very significant State support that has been afforded this institution.

As this House will be aware, Irish Nationwide Building Society, INBS, was heavily exposed to property speculation and as a result will transfer approximately 80% of its assets to NAMA. It requires a significant injection of capital. The Financial Regulator has determined that INBS will need an injection of €2.6 billion to remain compliant with its current regulatory capital requirements. Again, the provision of this capital is the least costly option available to the Government as without this capital injection, the taxpayer would be obliged to shoulder the significant and immediate costs in meeting the deposits, bondholders and the liabilities due to the ECB. The State will have extensive powers, as well as economic ownership of INBS, following the issuing of €100 million in special investment shares in the institution. The remaining capital required by INBS will be injected by way of a promissory note. This will have the effect of spreading over time the cost to the Exchequer. The Government favours a swift sale of INBS or its integration with another entity.

While EBS is less exposed to the property development sector, it none the less requires the injection of capital by the State. The regulator has determined that the society will need an injection of €875 million to meet the target sufficient to ensure 8% core tier 1 capital. Again, this will be done through the issuing of €100 million in special investment shares in EBS. The State will consequently control EBS. The State has committed to providing the remaining capital required by EBS by way of a promissory note which will spread over time the cost to the Exchequer if the society cannot access the requisite private capital.

There is no doubt that recapitalisation requires substantial investment by the State in the banks, although payments will be structured in a way that eases the burden on the taxpayer. These actions are being taken for a good reason, namely, that the banking system may return to its rightful role as provider of credit to the real economy. No other course of action would result in a swift return by the banking sector to its function as a provider of finance. By forcing the banks to recognise their losses upfront, the Government can rid the system of these speculative loans and end the mismanagement of the banking system.

The suggestion remains that the nationalisation option would have been less costly. The argument seems to be that if only the Government had nationalised AIB and Bank of Ireland, it would have eliminated the valuation risk pertaining to NAMA and as a result there would have been no need for the concept of long-term economic value. As the Minister announced last night, had the Government opted to do this, the losses crystallised at the two main banks still would have had to be fully recognised and real capital still would have been required. As the full owner of these institutions, the State would have been obliged to cover the totality of this enlarged capital requirement with no prospect of new private sector funds contributing. All in all, there is strength in the view that the option chosen by the Government is the least costly to the taxpayer.

The detailed Central Bank legislation outlined in the Dáil yesterday ensures greater protection for our economy from the irresponsible actions of financial institutions in recent times. A combined regulator and Central Bank will ensure enhanced scrutiny of our banks. It will have stronger powers and will be in a position to exercise them more frequently and more stringently. The Central Bank will itself be subject to increased Oireachtas scrutiny and we must never again be in a position where the banks treat the taxpayer with disdain. The new Governor of the Central Bank and the new head of the Financial Regulator are committed to this.

Being in this House, I cannot help but remember the debates on the Financial Regulator six or seven years ago, as do, I am sure, the Leas-Chathaoirleach and Senators Norris and MacSharry. The tendency in the argument was to try to push the Central Bank and the regulator as far apart as possible. The drawbacks of this argument are now evident, as is the importance of their working together.

There is no question but that there are large costs to resolving Ireland's banking crisis. Nevertheless, there are also significant benefits for the State and its taxpayers from these initiatives. As the Taoiseach and the Minister for Finance have explained, the economy should grow faster because the Government has set the banking system on the correct path again, it is likely that NAMA will deliver a net gain for the taxpayer, particularly as the agency has pursued such a robust valuation process, the NPRF will have a valuable shareholding in the two main banks that have the potential to realise gains, the taxpayer has a proven gain of €1 billion, which will accrue in six months time from the bank guarantee schemes, and reinventing Anglo Irish Bank as a much reduced but sound credit institution that can be sold to private investors at a later date will go some way towards recouping the taxpayers' assistance to it.

Ireland now enjoys the confidence of the international markets because of the determined and successful steps the Government has taken to place our public finances on a more sustainable footing. It is clear that facing up to the problems presented by the severe downturn in our fiscal position has paid off. The actions announced yesterday will have the same effect on our financial sector by compelling the banks to face up to their difficulties.

With reference to past debates on social partnership, I am glad that an agreement has been reached. It is subject to ratification by the social partners, but I hope it will bring the current action to an end and help to underpin stability and confidence in the new course that we have been required to adopt.

The banks have been forced to recognise their losses and the Government, on behalf of the taxpayer, has committed the capital that will ensure we have a banking system to serve this economy as it recovers. The certainty provided will further boost international confidence in this nation, its people and its economy. It will, therefore, smooth Ireland's path to economic recovery.

It is strange that, in the course of this debate, the Government has accepted no blame for putting our country in this position. The people know what happened to the economy, that poor regulation, free-wheeling bankers and a few Fianna Fáil Ministers brought us to this point. Given the Cabinet sub-committee on the economy, Ministers carrying on as if this situation has nothing to do with them are disrespectful of the people paying for it.

The people will not forget how this situation came about. It does not matter how many silver-tongued Ministers and their apologists try to mislead them. Some of last night's contributions by Ministers in the Lower House showed a disregard for their role in bringing this country to its knees. I assure those Ministers that, when the opportunity presents itself, people will make them pay for shattering their dreams and destroying their children's bright futures. The people know what needs to be done, but they do not like it.

An atomic bomb was dropped on the economy during Deputy Cowen's tenure as Minister for Finance. That situation has continued during his tenure as Taoiseach. Those who claim we will come out of this in a few years know they are speaking rubbish. Populists with devastating financial policies will ruin the country for at least a decade. We only need to consider the Great Depression. It took the United States 20 years to come out of that. What Ireland is facing is much greater than anything we have faced in the years gone by. The sums are massive. Beyond the billions of euro to be given to Anglo Irish Bank and other institutions, we are borrowing €20 billion per year to pay for public services.

We are in an unbelievable economic crisis the type of which Ireland has never seen previously. The Government needs to acknowledge this fact. The vainglorious carry on of Fianna Fáil and Green Party Ministers would sicken one. I would have expected a bit more from the Green Party, as it was not involved when we were led into this crisis. However, its party conference last weekend saw no acknowledgement of a problem or the need to do something about it. All it could do was celebrate getting an extra junior Ministry. The Green Party Ministers' view of politics has become so simplistic that it is time to get rid of them.

I am annoyed by Fianna Fáil Ministers who, in trying to justifying what they have done, trip over themselves to tell us that Europe, international bankers and the IMF are supportive of their management of the economy. They are accountable to the people and they should acknowledge what they have done to the country. The Minister of State should remind his party colleagues that mocking the people in ministerial contributions on the crisis is foolish.

The economy is shrinking. Our GNP is shrinking dramatically while our national debt is increasing. The scale of the bailout is significant. The Government will put more than €8 billion into Anglo Irish Bank during the coming weeks. That is the amount we will spend on educating every person in the primary, secondary and university levels this year. At least we will get a return on their education, but we will get none from the €8.3 billion to be poured into a financial black hole. The money will be gone, finito. The €16 billion in loans to be transferred to NAMA is equivalent to the amount the HSE will spend this year on providing a health service for every man, woman and child who requires health care. Of the €16 billion to be transferred to NAMA, €7.5 billion has already been written off. The value of the remaining €8.5 billion in loans is questionable.

To try to get the general public to understand these massive figures, we should consider the figure of €75 billion. The Government will only spend approximately €59 billion this year. We should try to put the amounts involved in NAMA into context. The household mortgages of the ordinary men and women on the street, including the Minister of State and myself, are valued at approximately €120 billion. The cost of the NAMA project will probably be approximately €80 billion. It is like telling people that, for every €10,000 of their mortgages, the State will borrow €6,000 to pay for the reckless behaviour of a few bankers, sleeper regulators, a hubristic Minister for Finance and the then Taoiseach. The then Taoiseach should have made a statement in the Lower House last night instead of avoiding facing up to his responsibility for destroying this country.

People understand that they will be paying off debts in the years to come because of what occurred. We are not discussing free money. This is a debt on the people. Paying off that interest will lead to cuts in social welfare and further cuts in health and education. It is amazing to listen to the Minister for Finance being so strong in his defence of subordinate bond holders. These are international risk-taking investors. I do not see the same concern for shareholders in Irish banks. The majority of Irish bank shareholders are conservative, low risk-taking individuals. Many are elderly people who are financing a pension with share dividends. They have been completely ruined, wiped out and destroyed. Nevertheless, the Minister's concern remains with subordinate bond holders. The international gamblers on the banking scene are still the Minister's number one concern.

Why has the Minister not cleaned out the boards of the banks for which we are now responsible? This is maddening the people. We are bailing out Anglo Irish Bank to the tune of tens of millions of euro, but we are also bailing out Allied Irish Banks and Bank of Ireland. We deserve to see something done about this. Why has the Government not demanded a wholesale clean-out of the boards of these two banks? Do not tell me we need the expertise of all of these individuals. Some of them clearly did nothing while they were being paid massive sums of shareholders' money to sit on these boards. We must not let them do the same thing with taxpayers' money and be rewarded for doing nothing. The Minister needs to wake up, show some mettle and get rid of the boards of these two banks. His lack of resolve is an indication of his guilt regarding his Government's massive role in this crisis. This is the only explanation for his lack of resolve in cleaning out these boards. He needs to do it. Over time, history will tell us what exactly happened and how the Government was misled. They must feel very foolish. They should examine at their every policy in this area.

Is the Minister being truthful about the valuations he has presented so far? He says the haircut will be approximately 43% across all financial institutions. I have been thinking about this matter. Very few homes have lost more than 50% of their value while the value of development land and half-built commercial enterprises has collapsed by between 70% and 80%. Most of the valuations being done for NAMA are of development land and of half-developed housing estates and commercial enterprises. The haircut figure seems very low for the type of property being transferred to NAMA. We are given the impression that the NAMA properties will receive the same level of haircut as every home in the country. Domestic houses have dropped in value by approximately 40% but the assets being transferred into NAMA have lost considerably more in value. I believe these figures are wrong. We need more clarity about this. It is not long since banks were telling us they were well capitalised, doing well and not exposed. We have been made fools of for a number of months.

I have many questions for the Minister of State and I fear we will have to return to this topic at a later date. The discussion on NAMA should be a longer-term one. What has been reported in the media in the past 24 hours is not the full picture. I believe the banks are hiding much information. Valuations are not accurate and the amount of money required for this enterprise is much bigger than we have been told. The taxpayer is not getting the full story. This is a black day for the people.

The events of recent years have been horrific. That was the word used by the Minister for Finance yesterday to describe the figures relating to the banking crisis, the amounts of capital required and the loans which need to be transferred to the National Asset Management Agency. There is no question about that.

Senator Twomey referred to the Government's responsibility in this regard. It would be disingenuous of anyone to say, retrospectively, that this was seen coming. While there were bears in the market and individuals who predicted that the events of recent years were likely to happen, no one predicted the scale of what happened. Besides, a stopped clock is right twice a day.

Senator Norris often quotes Professor Brian Lucey, the respected economist and associate professor of Trinity College, on the NAMA project.

Sometimes, and some of his views.

Certainly. Professor Philip Lane, professor of international macroeconomics, has a different view. I respect the fact that there is difference on this issue and that it is the function of the Opposition to oppose. One of the nation's strengths, which is acknowledged in international commentary, is the public debate on this issue as we have taken the appropriate actions in recent years. How can Senator Twomey claim we were fuelling the boom irresponsibly at a time when Fine Gael was advocating a reduction in stamp duty and increases in expenditure and salaries and all of that kind of thing?

They were all at it.

With the benefit of hindsight, I regret that a national and international regulatory regime allowed us, nationally and internationally, to get into the horrifically difficult position in which we find ourselves. All of the people are justifiably angry, not least at the pay-cuts which have been suffered by many families working in the public sector and at the unpalatable nature of the support we have had to give to our banks, because of their systemic relationship to the health of our economy and our people. I am angry at that too. I would like my pound of flesh and to see those who are guilty held to account. I have no doubt that due process will provide us with that pound of flesh.

The Minister and the Government have announced a number of inquiries. One will be conducted by Mr. Patrick Honohan, Governor of the Central Bank. One will be conducted by international experts who will help to scope out the terms of reference of the statutory commission of inquiry which will assess the performance of everyone — in politics, Government, business, banks and elsewhere — during the crisis and in the run-in to it. This will ensure we have the accurate information needed to prevent this kind of situation happening again.

I would like to see more international co-operation in terms of regulatory change to prevent this kind of thing happening in future.

I have not seen that to the extent I would like. I found it worrying to hear the British Prime Minister suggest at a recent G8 meeting that a fund should be put together to cover losses of this nature when they occur again in the future. We should be providing to ensure these things cannot happen in the future. I know international cross-border regulations are difficult and I do not know under what auspices one could regulate matters. Perhaps it could be done by the United Nations or the World Bank. However, we should focus on that in a major way.

Since the crisis has occurred the Minister, Deputy Brian Lenihan, has acted decisively but has taken the necessary time to ensure the steps taken were the correct ones. The bank guarantee scheme was introduced initially, followed by the establishment of NAMA and yesterday the initial transfer of bad loans to NAMA was made following a long period of due diligence, which I, as a valuer in my previous career, believe was extremely prudent. I am pleased about the extent of the write-down at the level of around 40% on average.

I am confident that NAMA will be profitable in the long term. However, in the context of the support of Anglo Irish Bank, it was not possible to effect the kind of wind-down immediately that some people would have wanted or in the way that Fine Gael would have liked in the short term. One cannot contemplate what would amount to sovereign default, not on the subordinated debt which amounts to €2 billion in Anglo Irish Bank and which the Minister said post-September they will examine under advice, but in terms of senior debt. One can negotiate and speak with bondholders but one cannot default. That would have cataclysmic implications for our integrity as a sovereign nation. Deputy Bruton in the other House often refers to the Washington Mutual situation where senior debtholders were allowed to go to the wall but that was a completely different situation because its umbrella company issued the bonds. In Ireland it is the banks who issued the bonds and therefore they have to be protected.

Lehman Brothers, which was allowed to go to the wall, to which the Minister of State, Deputy Mansergh, made reference, constituted 4% of the US economy and we saw the effects that had throughout the world. The balance sheet of Anglo Irish Bank, on the other hand, constitutes half of our economy. Therefore, to let it go at a cost of €70 billion in terms of the liabilities to the State would have been catastrophic for our nation and for our integrity as a sovereign State as we move forward.

People such as Senator Norris, Professor Brian Lucey and other lecturers in economics in Trinity and elsewhere have issues with NAMA and do not believe it is the way forward. That is fine and the expression of such different views is important, as otherwise we would merely have public administration, but there is a critical mass of support nationally and internationally for the steps the Government has taken. For example, today's edition of the Financial Times states:

Ireland is no Greece.

After almost two years of unrelieved misery during which Ireland had sometimes appeared, in local parlance, to have lost the run of itself, a battered and moth-eaten Celtic tiger may be picking itself up.

. . . Ireland looks not only to be managing it but doing so with informed public debate.

That commentary is welcome.

Business groups such as IBEC and Chambers Ireland have welcomed NAMA. The commentary in today's edition of the The Irish Times is worth mentioning. It states:

. . . it is worth remembering that when NAMA was first proposed over 12 months ago, Ireland faced a predicament not unlike the one Greece finds itself in today. The State of national finances was such that serious doubts existed about our ability to manage our way out of our problems and there was a real possibility that debt markets would be closed to us.

Things have improved dramatically since then, due . . . to the Government's efforts to resolve our banking crisis.

While many difficult decisions have been made by the Government, the Minister, Deputy Brian Lenihan, in particular, has taken the required time to be considered and thoughtful in the approach that has been taken to ensure our taxpayers and citizens are protected to the fullest extent possible. There will be a cost for that protection but we hope to minimise that by ensuring Anglo Irish Bank operates under new management and with a new business plan to provide that some of the investment that is being put into it can be recouped by the taxpayer. On the other hand, in terms of the performance of NAMA, the other banks and the substantial holdings that the National Pensions Reserve Fund now has in those banks, I believe a profit will be made for the country. That has been borne out already in terms of the €1 billion that has been provided as a result of the guarantee that was given to the banks.

While I appreciate there is a need for opposition, informed debate and different opinions as we seek to ensure we find the correct solutions to our problems, as we look to the future it is our responsibility to be confident with the template that now exists. We have stabilised our financial position and banking system and the bonds that will be given to the banks, through the operations of NAMA, will provide liquidity — which was missing for the past 18 months — which will allow banks to lend to viable businesses and families who are much in need of credit. I used the word "viable" because under no circumstances should the kind of reckless irresponsible lending that took place here ever be tolerated again.

I welcome the moves by the regulator to shore up the capital positions of the banks — to insist on an 8% core tier 1 capital position. In terms of credit availability, I also welcome the directions from the Minister , Deputy Brian Lenihan, on the amounts of money to be lent to SMEs to support industry.

As we look to the future, we must be vigilant and ensure the correct oversight of NAMA and our banking and regulatory position, but we must be confident, having taken so many difficult decisions during the past 18 months, that we are on the right road to recovery. That has been borne out by national and international commentators. It is time in these Houses that we looked to the future with similar confidence.

I wish to share time with Senator Quinn.

Is that agreed? Agreed.

I welcome the Minister of State. Senator MacSharry referred to the words of the Minister, Deputy Brian Lenihan, in the other House and I would like to do the same. The Minister said that "At every hand's turn our worst fears have been surpassed". That is a very stark statement. He went on to say "Some institutions were worse than others, but the fact is that our banking system to a greater or lesser extent engaged in reckless property development lending". How true is that. A Member on this side of the House referred to a few bankers. It was not a few bankers who were responsible but the entire financial elite and not only in this country. This was a global infection. Although we are tinkering with the system, and with NAMA we are basically still only tinkering with it. It is tragic that we are not addressing the system completely. We are not addressing it radically or fundamentally.

Senator MacSharry spoke about international regulation, of which I am all in favour. There is another aspect I have raised repeatedly but I have not been listened to and that is partly due to the intellectual laziness of the media who will not take up challenging ideas no matter how often they are made in this House. Among the elements that I regard as criminally responsible is not only the regulatory system but the ratings system. How often have I had to say why does nobody challenge Standard & Poor's, Fitch or Moody's, the people who validated the toxic bundles, the mortgages in the United States, that proved to be fatal to the entire system and that brought down the banking system there? They were allowed to continue and to rate Iceland as a triple star country a week before it collapsed and we are still allowing them to rate us. Why does somebody not address that? Why do they not establish an international, properly remunerated system of rating, independent of its reliance on corrupt profit from the people they are validating?

I wish the Minister, Deputy Brian Lenihan well in every sense, both in his personal health and in the financial medicine he is dosing out to this country. He is a man of courage and integrity. He said:

The doubters had been provided wrong. NAMA has carried out its valuations in a hard-headed commercial manner.

It applied the valuations that certain Members of this House said it needed to apply. We were right and the record will show that.

However, I still believe it would have been possible to wind up Anglo Irish Bank. The Minister referred to the costs involved. The costs involved, as I understand them, would not have been in any sense substantially greater than the costs in which we are already involved and we would have had a greater yield and greater profit. One of the people who has advised me on this is not Professor Brian Lucey but Mr. Peter Matthews. He has been right time and again and every figure from him that I gave has been vindicated. This is a moment when we need to unite and avail of wisdom from wherever we can avail of it. I, therefore, appeal to the Minister, as I did to the Leader on the Order of Business today, to facilitate a meeting between Mr. Matthews and certain people leading our financial institutions. I very much welcome the fact that, imaginatively or perhaps in a Machiavellian sense, the Government installed as chairman of Anglo Irish Bank Mr. Alan Dukes who has a very clear financial record. A series of meetings should be facilitated between Mr. Matthews and the people mentioned. The Minister referred to our problems. I reject what he said. The problems we face are not of our creation. Again, they are due to this small elite.

I am glad the Minister spoke about setting specific lending targets for AIB and Bank of Ireland and targeted lending of a sum of not less than €3 billion to industry. That is what I would concentrate on. I know it is wonderful that there are good articles in the Financial Times about the Celtic tiger licking its wounded paws and so on and that confidence is important. We are always being preached to about market values but they do not seem to apply to the big boys. It is like that ghastly woman in America who said only the little people paid tax. Apparently, market values do not apply to the big boys. We must concentrate on the ordinary people who are a hell of a lot more important than the subordinated bondholders or senior creditors in the banks. I applaud this aspect which I hope is true.

As I said at the beginning, AIB will be nationalised. I suggested a national property management agency in January 2009, three months before the Government came up with NAMA. I said we needed a radical solution to take a clear, surgical approach and merge and nationalise the banks and operate them in the interests of the people. I still believe this and know it is radical. People speak about our reputation internationally but what reputation do we have? We have none. Therefore, we must look after the people.

As I mentioned yesterday, I am very interested in the way Bank of Ireland has been operating. It magically reduced its exposure from a sum of €16 billion to €12 billion. One must wonder why. I am certain it was to avoid nationalisation and a majority takeover. I do not believe it is honest and that it will be able to avoid it. It has told us it will be able to raise money in the international markets but let us wait and see. It told us this before but each time it lied. Why should we believe it is correct now, although perhaps it is? I am not that impressed by the fire brigade measures required of some of the banks, or that they are implementing themselves, including selling off profitable investments abroad. That gives one a boost or a once-off cash injection but then it is dead. Perhaps I am thick but would it not be a little more sensible to hold onto them, milk and maximise them in order that they would continue to yield profits? The reason the banks are doing this is that they want to avoid nationalisation.

I will support the Government in anything sensible it does. The record of the House will show that this morning I held myself aside from carping political comment because the situation was too serious. It is worse than in 1929. One of the real problems will emerge when the situation begins to spiral. If the entire mortgage market collapses and people are unable to repay their mortgages, that will kill off another source of income for the banks.

We must very careful and prudent and support the Government but I lend my greatest support to investment in productive industry, in which matter Seanad Éireann has played a role. We dealt with the Energy (Biofuel Obligations and Miscellaneous Provisions) Bill a week or two ago and have potentially helped to create 1,000 jobs in Waterford. While we can do this, we need to be clear, rational and sensible and face up to the liars and crooks in the banking system.

I thank Senator Norris for sharing time. I welcome the Minister of State and his words. I also welcome the banking supplementary documentation booklet we received, in particular section 7 which contains frequently asked questions, which is very useful. I am glad we are having this debate today but I would like to ensure it is a debate which will help us to arrive at conclusions. Let us not only talk about the past and who is to blame. Let us look for alternatives to the proposed solutions if they are not the right ones.

What do we know today that we did not know yesterday? There is some good news. We know less money is needed for AIB and the Bank of Ireland on condition that they sell assets. The bad news is that we need another €10 billion for Anglo Irish Bank. I was embarrassed to read in one of yesterday's newspapers that I was a shareholder in Anglo Irish Bank, a matter to which I referred on the Order of Business today. I have never been a shareholder in Anglo Irish Bank. I am a shareholder in a fund which had an address at Anglo Irish Bank. I say this to ensure no one will believe I am speaking out of place.

There was good news yesterday. There is now clarity about what NAMA will pay for the loans and the capital requirements of the banks but questions remain. The real question is whether the cost of bailing out the banks will be lower than the cost of letting them go to the wall. The answer is not clear because we are not sure how much it will cost. There is talk of a figure of €31 billion in fresh capital and perhaps extra debt of €40 billion. There is not an easy answer, although there is an alternative in that we know what would happen if the banks were to fail. The credit worthiness of the nation would be severely damaged. In this regard, we need only look at the situation in Iceland and Greece. This time last year we were at the same level. We are not now included but there is no guarantee that this solution will solve the problem. However, the Government has taken action.

We will need to keep a close eye on the matter, as we know what happened in the past. I always worry about over-regulation because it stifles the economy but there is little doubt that regulation is needed. If we are to solve the problem and look to the future, we must ensure we have something in that regard. The target set by the Financial Regulator of a reserve of 7% for every €100 lent is tough.

The main aim, as stated, is to provide capital for small and medium-sized enterprises. We have allocated sums but we cannot click our fingers and instruct the banks to do something. If I was a banker, I doubt I would give money to people looking to borrow unless they had a proposition that could pay its way. I am not sure it is easy for a state to instruct a bank to do something.

Should the State-owned Anglo Irish Bank be kept? The State has put €22 billion into it but keeping it could cost a further €30 billion in the next ten years. The banks need so much capital because NAMA is valuing loans at a figure of closer to 50% rather than 30% as was the case last September. That is both safe and worthy.

A strong message must be sent to international financial institutions, investors and those about whom we are concerned. I also read the Financial Times which contained three articles, one of which was critical, while the other two would give one a great deal of confidence. In one article it was stated that, with the public finances stabilised, the Minister had already made the harsh political choices to rein in the budget deficit, in the process setting the standard for the eurozone’s ailing economies. That is good news and for it to appear in the Financial Times is acceptable.

Another article welcomed the new Financial Regulator and stated he was untainted by his predecessor's cosy relationships with the banks. These are very strong words. It also stated the Minister, Deputy Brian Lenihan's plan of action showed determination to repair the damage inflicted by previous sloppy management and regulation.

I am concerned about how we are going to achieve the aims outlined. We will need to keep a close watch and maintain close scrutiny. However, I am very confident that the Financial Regulator will be strong in this regard. I am a gardener and spend a little time growing vegetables. I could never grow celery until I read somewhere that celery seeds should be planted in ground prepared two years previously. While I am still not good at growing celery, I have learned that one must plan, watch and wait. In the context of the banking system, we must be patient and alert and scrutinise matters to ensure the same mistakes are not repeated.

While I have always been concerned that excessive regulation poses a danger of stifling the economy, enterprise, enthusiasm and business ideas, in the case of banking, we took our eye of the ball. Let us ensure we do not do so again.

Senator Quinn has correctly noted that we must look forward as we attempt to deal with the banking crisis. We should also note examples of how other countries addressed similar crises. For the past 18 months we have been trying to develop a coherent response to probably the most difficult circumstances any Government has had to face in financial services. While the period required for a response has been the subject of political criticism, it has been well spent by the relevant arms of the State. For instance, two new officeholders, the recently appointed Financial Regulator and the Governor of the Central Bank, ensured the financial institutions were examined in detail and this scrutiny allowed the Government to make the decisions announced yesterday.

While the Swedish response to the crisis in its banking system has been cited frequently, there was a seven month gap between the advent of the crisis and the government adopting a solution to it. In the United States the response to the crisis was quicker but much of the $700 billion package for the banking system announced by the chairman of the Federal Reserve was unconditional, an issue that has been the subject of much justifiable political criticism. Our neighbouring jurisdiction took a bank by bank approach in fully nationalising Northern Rock and taking a 70% shareholding in Royal Bank of Scotland. However, even that approach has been subject to political criticism.

The series of measures announced yesterday is correct and vindicates many of the earlier decisions made by the Government. It is unfortunate that much of the debate has focused on the concept of establishing an asset management agency, in our case, the National Asset Management Agency. An asset management agency would have formed part of any decision by any Government to address the problems in the banking sector. The alternative proposals submitted by the Fine Gael Party and the Labour Party both featured asset management vehicles. In the case of the latter, the proposal was to establish an asset recovery trust.

In addressing a crisis in financial services one must first ensure clean balance sheets can be achieved to assist future reinvestment. This is the reason for the establishment of the National Asset Management Agency. If yesterday's decision shows anything, it is that the correct decisions were made on the valuation of bad loans. An average haircut of 47% indicates that NAMA is doing its job well. I am confident that it will continue to do a good job and will not incur costs for the taxpayer during its lifetime. I am also confident that as a result of the support we give to our larger financial institutions, Allied Irish Banks and Bank of Ireland, to allow them to become more buoyant and re-lend in the economy — the whole point of the exercise — we will recoup to the taxpayer any investment made.

The point of contention is the approach taken to Anglo Irish Bank. No one is happy about the circumstances surrounding the bank which has shown itself to be an odious institution. Having arrived at a point where we must deal with the mess created by its policies, no one can be pleased with how the institution worked. The choice available to the Government is whether to walk away from the problem immediately or manage it over a long period. The correct choice has been made.

Some have advocated walking away from an institution the balance sheet of which at the peak, as Senator MacSharry noted, was half the value of the economy in a given year. In contrast, the value of Lehman Brothers, a bank which collapsed in the United States, amounted to only 4% of the value of the United States economy. Allowing Anglo Irish Bank to fail would have had a cataclysmic effect on the economy and cost many billions of euro in up-front capital to pay off depositors, not only under the guarantee scheme introduced in September 2008 to provide the confidence required in the financial system but also under the terms of the deposit guarantee scheme which pre-dated September 2008. If we had paid every depositor in September 2008, we would have paid much more than what is required under the current proposals. Paying up front would have required the Government to borrow and pay interest on the borrowings. Its approach is to manage our way out of the situation.

Anglo Irish Bank will become a much different bank under the proposals. Its board of management has changed, as has its focus. It will become a smaller bank with a different focus once its remaining assets have been separated as part of a good bank-bad bank approach. This policy is welcome, as it will result in significant resources being returned to the Exchequer. If we were to adopt a fire sale approach to Anglo Irish Bank of trying to cover existing depositors and selling assets, we would be dependent on the vagaries of the market at the time of sale and would still have to repay the large borrowings required to rescue the bank. This approach is neither logical nor worthy of consideration.

The other aspect of the Government's approach to managing Anglo Irish Bank is that the process will be completed over a period. A promissory note will issue and while the money will be guaranteed, it will be invested in instalments of 10% over a ten-year period. This approach is preferable to borrowing the entire sum up front to address the problem immediately. We must take a carefully managed approach because we also need to address other funding and expenditure problems.

Political debate has been diminished by the decision of many of those who oppose the Government's approach not to accept the bona fides of individuals who have been brought into the process. These individuals have performed commendably since being appointed. I have in mind the newly appointed Governor of the Central Bank, Professor Patrick Honohan, who has an academic background and did not take the traditional route to his position at the helm of the Central Bank. His appointment signalled that the Government wanted to take a different approach to addressing this issue. In addition, the Government appointed a new Financial Regulator, Mr. Matthew Elderfield, who, in stress testing the banks to ensure they are fully capitalised institutions capable of lending in the future, has shown himself to be the regulator we did not have in recent years. His appointment also gives great confidence.

Another element of the Government's package, one on which there has been little comment, is that it will result in banks lending again. This is the most important issue in terms of public confidence. Senator Quinn referred to the difficulties which would arise from interference in State-owned institutions, for example, in directing them to make individual loans. While such interference will not take place, the Government, through various statutory instruments, may stipulate the types of lending in which the various financial institutions should engage and the various sectors to which it should lend, including in percentage terms.

I also welcome the appointment of Mr. John Trethowan, whom I met in the context of the excellent work he did on behalf of Danske Bank in rescuing National Irish Bank after its crisis. We need to have confidence in the ability of such people, their willingness to do the job and their experience of having tackled similar situations. Members of the Opposition might want to make this issue a political contest, but it is too important to reduce to normal points scoring. It is a question of the economic well-being of this country and of those who will be part of it in the years to come. Those who engage in name calling and points scoring about the approach being taken are ill serving politics. It is fair to talk about the policies that may have brought us to the point. The policies that inform the decisions being made now have been agreed on with the utmost sincerity. We believe they are needed to restore our financial services sector and to give our economy a basis for the future. Such decisions may be unpopular and unpalatable, but they are right. If I did not believe that, I would not be standing here, my party would not be in government and the Government would not be proposing this package of measures. The adoption of this policy, which has been informed by our participation, our proposals and our agreement, is necessary and right. I hope that will be accepted by others as they see notice that we are overcoming the initial hurdles brought about by this crisis. If they form an alternative Government in the next few years, they will have to adopt this policy in exactly the same way.

I welcome the Minister of State. Since the Minister for Finance gave an update in the Dáil yesterday on the cost of the banking and building bailout, some 100 babies have been born with a debt of €9,000 hanging around each of their necks. That is the start in life this Fianna Fáil Government has given them and the 1.5 million more babies who will be born in this country over the next 20 years. These children will grow up deprived of the best possible health treatment, education and standards of living. This is already happening, as the Minister of State is aware. Health care budgets are being slashed, we are going into reverse on class sizes, children with special needs are losing their special needs assistants, the cost of going to third level college is escalating and one in every three young people cannot get work.

Charles Haughey, Liam Lawlor and Ray Burke, not to mention other Fianna Fáil politicians who are less well known, fiddled this country out of millions of euro in the past. It was a drop in the ocean compared with what this group of Fianna Fáil leaders has done. When I reflect on the appeal of the Minister, Deputy Brian Lenihan, on 14 October 2008 for us to do our patriotic duty, I find it even more repugnant now than I did then. This Government is helping a small coterie of its business buddies to steal at least €32 billion from their fellow countrymen. Back bench Deputies and Senators are in cahoots with this great banking and building swindle. It is the biggest robbery in the history of the State. The biggest victims are young people. The Government is taking money from their pockets and putting it into the wallets of builders and bankers. It is uncomfortable to think this will continue for years to come. It is Robin Hood in reverse, stealing from the poorer and giving to the rich.

The Minister for Finance announced last December that he intends to introduce a new social contribution levy in the next budget. Will he be honest enough to introduce a bank contribution levy as well? Young people will be paying such a levy for years to come as we attempt to come up with €32 billion and probably more. Will it buy us control over bankers' salaries? It is unlikely, given that we have seen pay increases in Anglo Irish Bank and NAMA in the past fortnight. Has it given us control over bank policy on lending? It has not, because businesses cannot get credit. More and more small businesses are going out of business every day because they cannot get credit to keep going. Will this approach give us control over bank policy on lending? Will it give us control over bank policy on charges? AIB has just increased its mortgage lending rates and the other banks are sure to follow. Will it give us a more competitive banking system? I do not think so, as non-Irish banks are fleeing the market and leaving the field open for the old cartel to do what it does best. People will not have a choice.

The Minister will tell us that new regulations are in place to ensure what happened before cannot happen again. We have already seen that the regulations are protecting the markets and not the real economy. Yesterday, we were told the banks will have to meet a core equity ratio of 8% by the end of the year. That means the money the Government has given the banks will sit in their vaults doing nothing other than supporting their share prices. That would not have happened had we nationalised the banks, as the Labour Party suggested in 2008. Countless experts — far more than those who agreed with the Government's policy — agreed with us. Speaking of agreement, the Government obtained the agreement of its colleagues for NAMA on the basis that the banks would pay a 30% discount, but it was way out in that regard. It was wrong by more than 50%.

That is a good thing.

It is a shame that the Government's supporters in the Dáil failed to bear this in mind last night when they voted to support a plan that has not turned out as intended. The Minister released the figures at 5 p.m., but by 10 p.m. they were all able to vote in support of them. They did not take much time to think about it. They do not seem to be very concerned about the biggest thing that has ever happened us. As Senator Norris said, it is bigger than 1929. Where is the hue and cry that accompanied the plan to reduce the drink driving limit? Many Deputies reacted to that plan with horror and shock. The belly aching that followed the recent Cabinet reshuffle told us everything we need to know about the priorities of Fianna Fáil backbenchers and their Green Party colleagues. They are willing to destabilise the Government for the sake of jobs for the boys and drinks for incompetent drivers, but when the Taoiseach and the Minister for Finance admit to a €22 billion mistake, they do not speak a word in anger. That is what they are telling us today. They keep saying that letting Anglo Irish Bank go to the wall would have cost €70 billion, but that is because they bought it instead of letting it fail.

It would have cost €70 billion anyway.

Now they tell us that a bank which is of no systemic importance to the economy cannot be let go because it would cost up to €30 billion. I remind Senator Boyle that I can do the maths too.

There is a difference between net and gross.

To put €22 billion into the bank is a mistake of epic proportions. The bank in question was run by Seán FitzPatrick, David Drumm and Willie McAteer. It lied to the market about its true financial position. It was involved in the Irish Glass Bottle site fiasco. Its directors gave themselves secret loans. The Minister for Finance and his Government colleagues have presented themselves to the people and said "trust us". How can we do so, when we know how gullible and wrong the Government has been? Where is the evidence to show it knows what it is doing? Where is the evidence to suggest it is motivated by the public interest? What advice was the Government acting on when it gave a blanket guarantee to Anglo Irish Bank? We would like to know that. The figures we were given in 2008 have proved wildly wrong. The Government trusted people who were obviously not trustworthy. It refused to take control of banks that are important to this country, while buying in entirely to those that are not. There will be a price to pay for this. We are paying for it already. The people who will pay the highest price have not been born yet.

I am standing in for Senator Hanafin. I welcome the transfer of bonds, or non-performing debt in the banks, to NAMA. There is no doubt that what the banks have done has been shameful. They have been in denial for over three years. Lies were told to Oireachtas committees over the past three years.

I welcome NAMA for a number of reasons. It forced the banks to tell us the truth, which we received yesterday. In the case of Anglo Irish Bank, it was worse than we thought. Nevertheless, we know exactly where the bottom is now. I welcome the plan that has been devised by the Government over the past 18 months as well as the stabilisation of the banks which has ensured we are credible on the bond market. We also have a big financial services industry that employs many people.

It is important we send out the right message and, in that respect, all we have to do is look at how the market received yesterday's news. It was very positive. Bank of Ireland shares went up 20% and AIB shares went up 7%. Our approach was generally welcomed by the European markets, and the ECB congratulated Ireland on the way we are dealing with the current banking crisis and tackling our finances. I welcome the news we have got from the unions over the weekend which will ensure the work done over the past three budgets to correct our finances will mean we are all working together. This provides a great opportunity to start from here. It would be foolish to think there will not be difficulties. There will be difficulties we will be able to work ourselves out of them.

The Labour Party Members were the first to say we should have nationalised the banks. We now know that if the banks had been nationalised, all the debt would have been taken on. That is what we have seen with Anglo Irish Bank. Our approach with the other banks has been to allow a certain amount of market and Government support to ensure our banking system continues. The Governor of the Central Bank has ensured these banks will be well capitalised and will hold 8% of their deposits on their books at all times. That is a very sensible approach because if we have any shocks in the system afterwards, then at least the banks will be able to deal with them.

Yesterday was also an important day for small businesses in that €3 billion was put into AIB and Bank of Ireland and ring-fenced for enterprise and SMEs. That sends out an important message. We all know the majority of our workers are employed by SMEs and we know these SMEs have been starved of finance for the past few years. It would be foolish to think that we will go back to the old ways of excessive lending to businesses that will not be able to stay in the marketplace. The banks would be foolish to lend money to such businesses. A more sensible approach has to be taken with finance, and the main reason the banks are keeping 8% of their deposits on their books is because we have too much personal debt. Nobody has mentioned credit card debt and the dependence on things like hire purchase and so on. It is sensible to go back to having well-financed banks, and this is the plan which NAMA and the Government have put together. It is vital we continue with that. The international markets are telling us we are doing the right thing and that we should continue.

The Opposition should not accept everything we are saying. It is good to be critical and to tease out these things. It is also important to have a balanced debate. The contribution from the Labour Party was sad to say the least. Its Members are not living in the real world. With respect to the Senator in question, I do not believe she has any business experience in making comments of that nature. We are here to find solutions and I believe this is a solution to our problem. It is a very expensive solution and we should learn lessons from it. The Government has a certain amount of responsibility, but the banks were private entities and the Financial Regulator did not do his job. We have seen how well the new Governor of the Central Bank is doing his job in the last day or so. Mr. Elderfield is there to assist him and he is a fine man of great ability who understands the banking system which will be more solid when he is finished.

I thank the Minister of State for explaining the proposals on yesterday's NAMA announcement. He did a fine job in presenting the issue. Even though there is much bad news, there is a plan that will ensure our banking system will continue. It will help our economy which is the most important thing. We have to spread this out over a number of years, and that is how NAMA will make a profit at the end of the day.

I welcome the Minister of State to the House and I thank him for his introduction to the debate. I had to smile when listening to Senator Butler. Some Members find it very difficult not to be blatantly political about the issues of the day. I assure the Senator that he will not get that kind of contribution from me.

I welcome this debate. We are in an appalling mess. We cannot do good for our economy without a properly functioning banking system and the provision of credit to the economy. All of this is vital and the businesses that need this credit are the lifeblood of our economy. I welcome the specific lending targets laid down for AIB and Bank of Ireland of not less than €3 billion for new and increased credit facilities to SMEs in 2010 and 2011. In that respect, I welcome the appointment of my old friend, Mr. John Trethowan, as the credit reviewer. I knew him as a genuinely prudential banker, which is what we need now. He is an honest broker who, I have no doubt, will do a good job and make a good call on the risks involved for any application. There is some puzzlement regarding AIB and Bank of Ireland. The AIB haircut will be 43%, while the Bank of Ireland's will be 35%. As was outlined yesterday, the Minister envisages we will have a minority stake in Bank of Ireland, but a majority stake in AIB. The capital requirements are different in Bank of Ireland where €2.7 billion has been estimated as the additional equity capital requirement, while in AIB it is €7.4 billion. There is a considerable difference therefore. That said, however, AIB has more assets, particularly outside the State in America, Poland and Britain. Bank of Ireland has some assets in Britain.

As I understand it, there will be a conversion of the preference shares to equity. I would like to hear the Minister of State comment on why there is an absolute need for that. Why is that so? The European Commission has not yet ruled on the plans for the individual banks, but I noted from the Minister's speech that an extra plan is required from AIB by the end of April. I would like to hear more detail on that when the Minister of State responds.

Timing and market sentiment are important for these institutions. While we would all welcome the sell-on by both of those systemic banks because they have a large branch network and are so important to the economy, the timing of that is important. Much play has been made of the fact we do not want a fire sale. At the same time, however, the banks need to realise these assets in order to reduce their dependence on the State. In AIB's case, is it an absolute necessity that the State will have to have a majority stake? I would like to hear the Minister of State's view on the conversion of preference shares to ordinary ones in that regard.

I also welcome what has been announced concerning the Central Bank. We were notified of a Bill in that regard yesterday, which is an important step. I never believed in the twin-pillar approach that was adopted in the past. I am not too sure how that policy emanated at the time, but it was probably through the Progressive Democrats. In any event, I am glad that a unified Central Bank is envisaged when we get through the three Bills that have been promised, one of which was published yesterday.

An important aspect of the reforming legislation is the power to ensure the fitness and probity of nominees to key positions within financial institutions. That vetting procedure is important because of what has happened and the mess we are in. There should have been a wholesale clear-out and replacement of the people — both at board and top management level — who made these reckless, appalling property-based lending decisions and who landed us in this mess. It happened at Anglo Irish Bank, but has not yet occurred — or not completely — at the other institutions. I would like to hear the Minister of State's view in his reply. Given that we are putting up all this extra capital, the Minister should have a firmer and steadier hand on the tiller, with more control.

The appointment of more public interest directors is a vital prerequisite if the banks are to reposition themselves properly in order to restore confidence. Once AIB and Bank of Ireland have proceeded with the sale of assets, as they are required to do, I do not see why they cannot go to the market to raise additional capital from investors and run a rights issue. I hope both banks will position themselves to do that.

The provision of a third banking force is also important. Perhaps the Minister of State can comment on what will be possible regarding the problems with the Irish Nationwide Building Society and the EBS, or is anything possible? Will the Department steer through an amalgamation there? That would be in the national interest. Thankfully, Irish Permanent looks all right and is not involved in the recapitalisation process.

Like so many other speakers, I welcome the appointment of Dr. Patrick Honohan as Governor of the Central Bank and Mr. Matthew Elderfield as the Financial Regulator. They are sound individuals who have started very well and hopefully they will continue in that vein. As the chairman-designate of Anglo Irish Bank, Mr. Alan Dukes, has shown the capacity to do a good job of steering it in the right direction. In an orderly fashion, he will get it down to a core, slimmed-down bank, including the asset management recovery division.

It is intended that further down the line, the taxpayer will recoup some of the losses, although certainly not all of them. It seems to be a bottomless pit and we have got ourselves into an appalling situation. Nonetheless, I am confident that with proper management and a firmer hand on the tiller, better direction can be given to the two main banks, so they can steer their way through for the betterment of our economy and everybody involved, including depositors and investors.

I welcome the Minister of State, Deputy Dara Calleary, and congratulate him on his role in resolving the public service talks recently. I am sure he was working behind the scenes there.

As regards the banking situation, what had to happen yesterday was most unfortunate. It was, however, a consequence of how things have played out. Any responsible person would recognise that while nobody wanted to get to this point, we are there now and must deal with it. In some of the earlier contributions it was disappointing to note the lack of realisation that we are all in this together. It does not matter whether one is on the Government or Opposition side, it is our country and we cannot let it down by the kind of contributions we heard this morning, particularly from the Labour Party.

The Senator has let it down.

We must remind ourselves that nobody enjoys a monopoly of wisdom on the matter.

I would prefer not to be interrupted.

Senator O'Malley, without interruption.

Yesterday, I was in Intel as part of an Oireachtas committee examining energy uses. Intel is a major employer and a big user of energy. As our costs are going through the roof, we needed to talk to them about what they are doing and what we could be doing. The one message we got at Intel was that their competitors are other units within the Intel community internationally. They compete with them for investment. Intel's headquarters in America reads the press in Ireland where local politicians do down this country. People who are reputed to be future taoisigh do nothing but undermine investment here. It really struck me because last week all the Ministers were flying the flag abroad. We have an open door to the rest of the world to sell Ireland, yet there is so much bickering at home. There is an element of political point-scoring, but there is a point at which matters become far too serious for this. We must all rise above the issues and remember whom we serve, namely, as Senator Prendergast mentioned, the children not yet born. The best thing we can do for them is not to cry over spilt milk but to make sure the best and soundest investments are made and that we maintain a positive approach in resolving our issues, rather than do the country down.

It has been mentioned that the international press, including the foremost financial newspaper, the Financial Times, has given a good report on what the Government is doing. It was not easy for anyone who had to vote for these measures yesterday. Of course, they would rather be spending the money on schools and hospitals and delivering better public services generally, but we are where we are and now need to make sure we get the best deal. We would do well to try to keep this in our focus. The best result would be to make borrowing cheaper for Ireland, not just for the State, but also for the people who are investing in the country. We can do this by selling a good story about Ireland. I know it galls the Opposition to think the Government did the right thing in the last budget, but we are reaping the rewards because we can borrow more cheaply.

Was the Senator there yesterday?

These are the basics.

In what world is the Senator living?

Of course, we wish we did not have to cut the variety of items that were cut, but in doing so we have pulled——

They have pulled the wool over everyone's eyes.

We have concentrated our focus and made people realise that if we are to get out of this, we need to act fast. We did not do it in the 1980s and were all paying for it for a long time afterwards. I am glad the Government has taken the bull by the horns and decided we are getting out of this as quickly as possible. It is an awful place to be and terrible to think many of the benefits of the Celtic tiger will have to be spent on paying back loans. It is most unfortunate——

No, they will not. There is no money to pay.

Senator O'Malley to continue, without interruption.

——but that is the way it is. The one thing people forget——

We had to borrow, but that money is gone.

I listened to the Taoiseach talk about this matter this morning. The international financial system is so precarious; it is all built on confidence. Let us consider the overnight decision taken 18 months ago to guarantee deposits. Had we not done that, the banks would have gone down. It is easy, with the benefit of hindsight, to say Anglo Irish Bank is not of systemic importance. Once one bank went over the cliff, the others would not have been far behind. They were all tied together. We can all be wise after the event and theorise about what may or may not have happened. However, the one thing that is for sure is that the Government had no option but to do what it did.

The Labour Party takes pride in the fact that it voted against the Government's decision. I genuinely believe a failure to act would have led to the collapse of the economy, which is not something we can countenance. Similarly, the Government had to make the decision it made yesterday. One could hear in the voice of the Minister for Finance his disgust at what needed to be done, but it does need to be done. The best thing we can do is to remember that this is our country; it belongs to all of us. The Government members may be the ones who are making the decisions now, but the time will come when the Opposition will be in charge and its members will need to think about what they have said and done. It is time we adopted a responsible attitude to the future of the country. We are where we are and must pull together, rise above politics and bear in mind the generations to come in making the repayment of these loans as easy and swift as possible.

Cuirim fáilte roimh an Aire Stáit úr agus déanaim comhghairdeas leis as na cúraimí nua atá aige.

This is an important debate. When I speak after Senator O'Malley, my script usually goes out the window because she gives me so much food for thought and says so much with which I disagree that I must respond to some of her points. I have always said that what we say in the House is based on our ideological positions — what we believe is fair and right — and no one here, whether in Fianna Fáil, Fine Gael, Sinn Féin or the Labour Party, sets out to hurt the people or the community, but the reality is that one's decisions and priorities do hurt people.

Senator O'Malley has said we need to do the best for the country, but it is clear that from the Government's point of view what is best for the country is best for the banking sector, as it wants to get that sector up and running again. I take a different view. If we are to stand by the country, as the previous speaker said, we must stand by its citizens, those who are sending text messages to radio shows today to say they support the sentiments expressed in the over-exaggerated headline in the Irish Daily Star because they feel it reflects their mood. The disgust with the banking sector, developers and the approach of the Government can be clearly seen in the lack of support in the last few months for its plans for economic recovery.

The Government has not, as the previous speaker said, acted swiftly. My oldest son is not even in primary school; he will enter later this year. However, when he is sitting the leaving certificate, he will still be paying back the loans announced last night in the Dáil. That is not swift action; it is pain that is being inflicted on the people which will recur. It is wrong that this has happened in the first place and that we are in this position. It is wrong that the Government prioritises the banking sector over its citizens and that we intend to penalise future generations for the sins of the few.

We hear from the Government that the decisions taken yesterday mean we can borrow at the same rate. However, it does not talk about the fact that we have doubled the national debt or that we will borrow €2 billion every year to sort out the mess. It also fails to mention that if we are really serious about sorting out the economy and getting it back on track, the only way of doing so is not to make decisions that ensure we can borrow at the current rate but to work towards a situation in which we will not need to borrow any more. The only way to do this is to create employment.

Over a ten to 15-year period we are talking about an injection of €22 billion to €32 billion and a €50 billion transfer to the NAMA operation. Let us consider what we could actually do with a sum of €22 billion. We could create a jobs stimulus package, as we in Sinn Féin have done and as every party in opposition should be doing. We should be providing solutions and trying to convince the Government that they are sensible solutions that could be adopted. We have shown through our jobs stimulus package that we could create jobs, not only for the young unemployed but for all sections of society. If we were to have a €22 billion jobs stimulus package in the economy, although we are not arguing for this but for a smaller stimulus package, how many of the 450,000 who are unemployed would go back to work? How much would that save in reduced Government borrowings in the future?

We all know that social welfare payments for those lucky enough to be over 25 years cost the State around €10,000 per person. If a person is in employment, the State benefits by around €12,000 in direct taxation. Thus, for every person we can remove from the live register, there is a saving for the Government of more than €20,000. That is the only way we can deal with the deficit. That is where we should be focusing our resources and investing for the next ten years. That is where we should invest the €2 billion the Government has decided to invest in failed financial institutions to rescue a number of investors who gambled on the practices of the banks. It has decided that over the next ten years we will put €2 billion aside to sort out that bad gamble. What we should be doing is putting €2 billion aside in a job stimulus package to get people back to work.

I met a Minister of State, Deputy Barry Andrews, in my home parish in Gaoth Dobhair recently at a meeting with young people who for the past two years have been seeking a youth worker for their area where there are more than 1,000 young people under the age of 25. The project there closed because of a lack of funding. A youth worker is required and co-funding exists for that. The sum required for this year is €27,000. The Minister of State said a decision would be made by the HSE later this month. While I hope that will be a positive decision, the Minister of State said he could not guarantee funding because there is no extra money. I hung about after the meeting and spoke to some of the young people. They do not understand what is happening in the economy or what happened yesterday, but they understand that a significant amount is being put into the banks. We are talking about the Monopoly figures of billions of euro mentioned last night — €20 billion here and €10 billion there — and about the young people in Gaoth Dobhair who want a safe space. One of the young people, a 17 year old, said to one of the volunteer workers: "I am tired of drinking. It is getting me into trouble. I just wish the project was back up and running because it gives me a safe space." We must put money into this and similar projects. We must find the €27,000 that will benefit the real citizens and people of the country rather than the FitzPatricks or the Fingletons or those on the board of NAMA who got increases in pay or Anglo Irish Bank staff who got increases. We must try to bring benefits to ordinary young people, people who have to attend schools in prefabs and people whose mothers, grandmothers and grandfathers are lying on trolleys. These are the people we need to help.

On the day of the first budget that took place after I became a Senator, when the Minister was in the House making his proposals, I walked across the road where I saw two people who were sleeping in a doorway on Grafton Street being moved by the Garda. These are the people we need to bail out. It is sickening that the Government has taken a similar approach to the one taken by the Garda on that occasion. There are other options. The mantra that we are where we are is unacceptable. We are where we are because the Government has taken decisions to prioritise one area over another. I believe the country is better than where we are now. I do not believe in the attitude of burying our heads in the sand or of telling a good story as the previous speaker suggested. I had the opportunity yesterday to sit down with an international investor, a person involved in a group that intends to invest approximately €1 billion in the north west. International investors do not want to be spun a line. They want the hard facts and want to see decisive action. That is what is missing at this point.

I welcome the Minister of State, Deputy Calleary, to the House and congratulate him on his new appointment and the instant success he had in the early hours of the morning the other night with the deal with the social partners. Never was social partnership more needed than at present. We could do with some social partnership when it comes to dealing with the banks.

I am delighted to have the opportunity to speak on this issue. The collapse of Anglo Irish Bank is the worst and most expensive financial scandal ever to occur in Ireland. The dimensions of the disaster and the gravity of its consequences have no parallel in the history of the State. Not alone did hundreds of small, honest shareholders and investors lose their savings, the people must pay for generations to mop up the mess. The bill has arrived and we are paying it through higher taxes and cuts to pay and to health, education and welfare services. We will pay, as will our children and grandchildren. I will not dwell on the investments forgone, the health care denied or the education system that will be impoverished for three generations because of the bailout, because I do not want to incite a revolution. We might well ask how it happened, who caused it and who was responsible for fiddling while our new Rome burned.

We know who was Minister for Finance when Anglo Irish Bank was run in a manner that would have been considered reckless for a wild west casino in a gold strike town. However, that was then and this is now. When doubts were expressed by the Central Bank about the property bubble, the then Minister for Finance said: "Build enough and they will get cheaper". That was then and this is now. The then Minister for Finance is now the Taoiseach and his hand-picked successor in the Department of Finance, Deputy Brian Lenihan, must admit no mistakes, confess no fault nor own up to any responsibility, for that was then and this is now.

Anglo Irish Bank must be propped up, not because this is the best option for Ireland but because Fianna Fáil cannot own up to the mistakes made by the former Minister, Deputy Brian Cowen. Due to its reckless governing then and owing to it choosing the wrong option now, Fianna Fáil has sold three generations of people into debt slavery. Every man, woman and child owes €1,300 a year just to service the telephone figures of money Deputy Brian Lenihan is borrowing for the banks. The fact that almost 70% of that vast capital will go to a bank that does not lend, does not improve credit flow by one red cent, but which sits and stews in its own putrid mess, is both a national and international scandal. Time was when we might have heard the voice of the Green Party raised in opposition against such a scandal, but it has been even more cheaply bought than the banks. It was bought for an extra ministerial position and a prospective ban on hunting in rural Ireland. The cost of the mess is vast, mind-numbing sums of money no matter which option we choose. However, there are options.

If the Government cannot see there are alternatives to loading Mr. FitzPatrick's mistakes onto the people, it is wilfully and recklessly blind. There are none so blind as those who choose not to see. Fianna Fáil does not want to see what it has done or what it is doing. As Minister for Finance, Deputy Cowen deliberately inflated a property bubble and sucked thousands of young men into unsustainable construction jobs. He made the Exchequer pay for hundreds of hotels, sucking many more thousands into unsustainable construction jobs and bankrupting our hotel industry. At a time that called for restraint and demanded prudence, he was an incendiary in a bush fire of speculation. Now, he and his hand-picked successor, Deputy Lenihan, are loading the debt that Fianna Fáil policy created onto the heads of Ireland's children

Anglo Irish Bank, like a septic boil, sits at the centre of that debt burden. That bank's collapse is due to appalling management, dodgy share dealings and barefaced cronyism. All these faults were encouraged, facilitated and aided by a Government lax in regulation, obsessed with property and living on the proceeds of a bubble. The relationship between those who should have regulated Anglo Irish Bank and the Anglo Irish bankers was too close, too involved and too indulgent. It was more interested in furthering the interests of Mr. FitzPatrick than protecting the interests of ordinary investors and the people.

Deputy Lenihan and Fianna Fáil may believe the Taoiseach is a sainted victim of circumstance, an innocent on the road to Jericho who fell among thieves, but I do not. I have some questions to put and would like answers to these questions in the Minister's response to the debate. Mr. FitzPatrick's reckless mismanagement and failures have brought us to the current mess and juncture. When did Deputy Cowen, as Minister for Finance, become aware of Mr. Seán Quinn's enormous contracts for difference exposure in Anglo Irish Bank shares? Did the shareholding of Mr. Seán Quinn or the Quinn Group in Anglo Irish Bank reach or exceed 30% at any stage during his purchases and the unwinding of his contracts for difference position? What effort did Deputy Cowen or his Department make to clarify the ownership of Anglo Irish Bank in the first three months of 2008, given that there were strong indications that the Quinn Group or Mr. Seán Quinn had built a considerable stake in the bank through a combination of contracts for difference and direct share purchase? When did Deputy Cowen become aware that the positions held by Mr. Seán Quinn on Anglo Irish Bank shares was untenable and needed to be unwound? Did Deputy Cowen, officials at the Department of Finance, the Financial Regulator or the Governor of the Central Bank express any concern to either Seán Quinn or Anglo Irish Bank management or board at the short selling of the bank's stock resulting from rumours about the size of Mr. Quinn's CFD position? When, and by whom, was approval — as is required by law — provided for Mr. Quinn or the Quinn Group to own 10% or more of Anglo Irish Bank? Did the then Minister for Finance, Deputy Cowen, discuss such approval with the Central Bank and Financial Services Authority of Ireland or its Governor? If such approval was provided, why were the public and other shareholders not informed? If approval was not sought and given, then why was the law flouted? When did the then Minister for Finance become aware that the 25% stake that resulted from the unwinding of Mr. Quinn's position overhung the market and threatened the catastrophic slide in the share price of Anglo Irish Bank? What contact did the then Minister or officials from his Department have with the board of management of Anglo Irish Bank on the issue of this shareholding, and its implications for the bank, in March and April 2008?

If Senator John Paul Phelan wants his colleague to be in a position to contribute, he should conclude.

I will do so. Were the then Minister for Finance or his officials aware of the €451 million used by the ten businessmen who bought shares in Anglo Irish Bank? Did the bank loan money to Mr. Quinn or to the Quinn Group to assist in building up or unwinding the CFD position to which I referred earlier?

The Senator must conclude. He cannot ask any more questions because his time has expired.

I welcome the Minister of State, Deputy Calleary. Outside of the resolution of the banking crisis, the two most important issues for this country are the retention of existing jobs and the delivery of public sector reform. As these constitute part of the Minister of State's new brief, I wish him the best of luck. I know he will be extremely successful.

My overriding concern during the financial crisis has been the maintenance of existing jobs and the creation of new employment. The protection and creation of employment are dependent on credit being made available to viable businesses, particularly small and medium size enterprises, SMEs. The latter will be crucial in leading the way out of this recession.

The measures announced by the Minister for Finance, Deputy Brian Lenihan, yesterday will place the banks in a much stronger position than before. Specific lending targets have been imposed on AIB and Bank of Ireland. Both will make available at least €3 billion each for new or increased credit facilities for SMEs in 2010 and 2011. This allocation will include funds for working capital for businesses. It represents a significant increase on the 2009 figure and will assist business development. Bank of Ireland and AIB will also be required to make available €20 million each for seed capital for ventures supported by Enterprise Ireland. Such ventures will be vital in supporting new opportunities. Each of the banks will also establish a fund of up to €100 million for environmental, clean energy and innovation projects. This is in addition to the €100 million provided under the recapitalisation last year.

In his statement to the Dáil, the Minister recognised that Irish banking has been overly focused on property-related lending and has not engaged in an adequate fashion with modern economic sectors. He has now set out targets for the banks to work with Enterprise Ireland and the Irish Banking Federation in order to develop a full range of banking services and to make available new credit products to the modern and innovative growth sectors of the economy. Everyone is aware that small and large businesses, sole traders etc., cannot obtain access to cash or credit for current expenditure or investment purposes.

I am pleased the credit review process previously promised by the Minister for Finance has been set in train since yesterday. As the Minister for Finance informed the Dáil, AIB and Bank of Ireland will be subject to this process, which will be headed by Mr. John Trethowan and which will allow individual enterprises, sole traders and farmers who have had credit refused or withdrawn to apply for an independent review of the bank's decision. Where the reviewer recommends that credit should be granted, the bank is required to comply with the recommendation or explain why it will not do so. This process will also provide an accurate assessment of banks' lending policies and procedures. The administrative arrangements are already in place and the relevant statutory instrument was laid before the Dáil yesterday. As a result, applications for reviews can now be made.

The credit review process will give viable businesses in all sectors an opportunity to obtain an independent second opinion where credit is refused or withdrawn. The review will ensure the banks, which have been supported by the State and the taxpayer, comply with their responsibilities to the economy. Mr. Trethowan will outline his work in this area later in the week. Representatives of ISME and the Small Firms Association, SFA, and members of the general public state on radio each day that the banks are not making cash available to them. In such circumstances, I am delighted with the establishment of the credit review process.

It is always a pleasure to follow my namesake. There is no doubt that Anglo Irish Bank has poisoned the well of this country's banking sector and also its economy. What happened at that bank led to the making of the decisions that were announced yesterday in the Dáil. I do not accept, however, that this issue can be reduced to alleging wrongdoing on the part of certain named individuals. I agree with people who state that in so far as wrongdoing is found to have occurred, those involved should be brought to book. I would be as strong as anyone in advocating that this should happen.

It is part of an emerging narrative, particularly on the part of the Government, to seek to reduce this problem to the proverbial small number of bad apples. I do not accept that when considering what occurred in the past ten to 12 years, it is possible to reduce the wrong that has been done to the people as something which resulted from the actions of three, four or even half a dozen wealthy, or formerly wealthy, individuals. We would be doing a real disservice to the people and this country's history if we insisted, even for one minute, that this was the case.

There is a great word which continues to be bandied about in respect of the banks, particularly Anglo Irish Bank, namely, "systemic". I am extremely interested in the use and abuse of this word. Like everyone else, I have a reasonable understanding of what it means in the English language. However, it has been employed by the Government, particularly in the context of Anglo Irish Bank, in the same way that Americans use the phrase "Too important to fail". As I understand it, if a bank is of systemic importance this means its tentacles and those of its business reach so far into the heart of the economy that if it got into difficulty it would, by necessity, have to be saved.

I am intrigued by the statements made in the past 24 hours to the effect that the contents of the balance sheet of Anglo Irish Bank constitute half of the value of the Irish economy. I had not previously come across such statements. In fairness to the Government, if what is being stated is true then this would point to the importance of Anglo Irish Bank being somewhat systemic in character. Is it truly the case that the contents of one relatively young bank could constitute half the value of the country's economy? If the answer is yes, how was this allowed to occur? In a country where people were previously informed that competition and the plurality of banking services were extremely important, how was such a position allowed to develop? There is a need for someone to clarify the position, particularly in the context of the absence of regulation for such a long period. How did the contents of Anglo Irish Bank's balance sheet come to constitute such an enormous part of the economy?

I stated earlier that Anglo Irish Bank poisoned the well. I simply do not accept that poison could not be detected until the entire well had been contaminated.

Senators Boyle and O'Malley stated the right thing had been done yesterday. I want more evidence and detail, particularly on the Anglo Irish Bank question. Perhaps colleagues opposite are prepared, for whatever reason, to accept what they are told to be the case on the basis of a mere assertion and being told something is true. However, I will not accept it, unless it is demonstrated to me to be true. Perhaps it will be demonstrated to me to be true that it is necessary to save Anglo Irish Bank, a bank which looks to me to have very little life in it. When I discuss it in private with colleagues opposite, they agree with me, roll their eyes and state it does look like it is a dead duck but that it is what we have to do. This morning I heard Mr. Dukes, chairman designate of Anglo Irish Bank, state he would be prepared to produce the relevant figures in order that Members of the Houses and others could assess the statement that it was necessary to save it. Where are these figures and why can we not have them in this debate? Why is it merely an assertion and a claim all the time?

Senator Boyle made the extraordinary statement that what had occurred vindicated the position of the Government on the guarantee. How is it conceivable that attracting to the people a bill of multiple billions vindicate the position of the Government? Even the honest Members opposite — most of them are honest — accept this is extraordinarily painful to have to do but how does it constitute vindication? Statements such as this are made all the time that are not borne out by the evidence or the facts.

It is all very well for Senator O'Malley and others to criticise the Opposition for making outlandish statements in circumstances where she states, again without a scintilla of evidence or support for her statement, that she genuinely believes that if the bank guarantee had not been given on 29 September, it would have led to the collapse of the economy. That is purported to be a statement of fact but what backs it up? Where is the evidence for it? The Labour Party does not engage in self-congratulation on not supporting the bank guarantee. We stated it was excessive and guaranteed things that did not need to be guaranteed. Certainly, there was an argument for guaranteeing deposits but a considerable amount of the debt guaranteed should not have been guaranteed and drew us into the vortex in which we find ourselves and from which it will be so difficult for generations of Irish people to get out. It will be many years and budgets before there is light at the end of the tunnel. How can Senator O'Malley state that if the guarantee had not been given, it would have led to the collapse of the economy? What a statement to make. I am drawing attention to it because it is one of many statements that are made opposite in support of what the Government is doing. I do not think colleagues opposite have more information than we do. I suggest — I am open to being corrected if I am wrong — that the only difference between them and us is that they have a responsibility, as they would see it, to back up what the Government is doing because they make speeches and contributions but they do not have evidence to back up what they state. They state it is cheaper to keep Anglo Irish Bank and have this bailout. There is no question that it is a bailout; if it is not, what is? They state it is cheaper than the cost of letting the bank go to the wall. Perhaps I could be persuaded that is the case but yesterday I heard someone state the cost of retaining it and the cost of letting it go were starting to converge. It might arise that it might be cheaper in the long run to let it go. Can we not have the facts, information and the evidence rather than a mere assertion along the way?

Others have called for this debate to be continued. I heard Senator MacSharry make such a call. When we do so, will we have information and evidence circulated in advance in order that Members of the Houses and the public will be able to see the basis upon which their money is being committed?

I wish to share time.

There are only six minutes left before we adjourn. The debate will continue on another day.

That is all right.

I thank Senator McFadden.

When I was preparing for this debate, I took some time to read the Minister for Finance's statement on banking and the supplementary documentation supplied to the Dáil yesterday. As I was reading the main content of the document, my eye caught the legal notice on the first page. It states:

None of the Minister for Finance, the Department of Finance, the National Treasury Management Agency, the National Asset Management Agency or any of their agents or advisers makes any representation, express or implied, with respect to the accuracy, verification or completeness of any information contained in this document, or accepts any responsibility for its contents.

With such a statement at the beginning of a briefing document for a discussion on such important legislation, is it any wonder people such as me and Senators Alex White and McFadden are justifiably sceptical about the statements we hear made on yesterday's announcement? My party voted in favour of the bank guarantee scheme and I spoke in the debate that night. I believed then and still do that it was right to vote in favour of it. However, we were offered the guarantee as something that would deal with the difficulties the banks were facing and would move the economy forward. That did not happen.

The previous recapitalisation of the banks cost approximately €11 billion. That was also put forward as an injection to get banks lending again, but that did not happen either. Now we have the third attempt by the Government to deal with the issues raised in the banking industry and are asked to believe this is the big bang that will sort out everything and get credit flowing again. Such a track record stretches credibility for us to accept it. I am reminded of what happened in the general election of 2007 and how the country was festooned with posters proclaiming, "A lot done, more to do". Yesterday we saw what the "more to do" was all about. The people were truly chilled by what it had done to them and will do to them.

Among the huge facts about the scale of the problem unveiled yesterday three stand out; two are economic and one is political. The first economic point is that the national debt will be doubled. The second is that if the plan is carried out, Anglo Irish Bank will receive approximately €40 billion of taxpayers' money, which is more than all of the tax revenue in a given year. The political point is that the one person at the centre of this cobweb of regulatory failure and business malpractice is the Taoiseach because he was Minister for Finance during the period when it took place and had ultimate responsibility for the regulatory regime in place, the spend and tax policies of the country and is now running it. He is at the centre of the cobweb of accountability and regulatory collapse.

Despite everything that took place yesterday, three very big questions remain unanswered. The first, to which many of my colleagues have pointed, concerns the future of Anglo Irish Bank. I will emphasise the question I asked earlier: why is the course of action to manage debt open to Independent News and Media and Waterford Wedgwood not open to Anglo Irish Bank? What is the future of Ireland's banking industry? What is the plan for consolidating and integrating it? We know two of our major banks have 30 days in which to come back to the Government with a plan. What is the future of the tens of thousands working in the banking industry? It must be pointed out that almost every other developed economy throughout the world put in place plans for banking capitalisation and to solve the problems of the banking industry a year ago. Why has it taken us so long to do this? With all of the claims made for competence, credibility and agility on behalf of the Government, the fact that it took so long to put a bad plan in place only proves to me that the only thing it is good at in dealing with the banking crisis is being consistently wrong.

Sitting suspended at 2 p.m. and resumed at 3 p.m.