Michael Noonan (Limerick East, Fine Gael)

I am concerned about the role of the Governor of the Central Bank under this legislation. I would have expected resolution legislation to have conferred the special powers on the Governor of the Central Bank, rather than on the Minister. In this Bill the special powers are conferred on the Minister on all occasions. There is a section which states that the independence of the Governor of the Central Bank is not affected, but the powers taken by the Minister and the lack of additional powers being given to the Governor of the Central Bank are quite noticeable.

There is a curious section which provides that the relationship between the Governor of the Central Bank and the Minister will be specified in writing. I understood that under the Central Bank Acts the Governor of the Central Bank was independent in the exercise of his functions. How can that be squared with the provision in this Bill which states that the relationship in respect of the provisions of the Bill will be specified in writing by the Minister? It appears to suggest that the Minister will, from time to time, give written instructions to the Governor of the Central Bank and he will have no recourse but to obey them. That is a peculiar restatement of the relationship with the Governor of the Central Bank, given that one of the pillars of our fiscal and monetary system was the independence of the Central Bank.

There is a provision under which direction orders may be issued by the Minister from time to time. However, the Minister appears to be doubtful about the legality of what he is doing because in all the instances where he is taking powers, he is providing for recourse to the High Court to underpin his actions under the legislation. The High Court has little power to overturn what the Minister is doing but it is as if the Minister is nervous on constitutional grounds and each time he provides for a power which will be exercised at his discretion, there is a parallel provision providing for the Minister to go to the High Court to get it authorised. It appears to be an attempt to put the Minister's actions beyond constitutional challenge and I am not sure that is an appropriate way to legislate in this case.

The Minister is careful to pitch everything so it is in accordance with EU Directive 2001/24 of the European Parliament and Council of April 2001, the credit institutions winding up directive, CIWUD. I understand why he does that and it is appropriate to do so. Obviously, his actions must have the force of law across the Union and must be consistent with this directive. However, is it also in accordance with the law in the United States and the United Kingdom, in particular, and in other jurisdictions? There is a provision dealing with subordinated debt. In circumstances where part of the assets of Irish credit institutions are subject to US and UK law, Chapter 15 provisions should apply in the United States and the provisions in English law similar to examinership would apply in the UK. There is a possibility that the Minister will take power to move against the providers of subordinated debt and find that they will move against assets of the banks in the UK or the US unless the Minister has proofed it sufficiently that his actions are recognised under the provisions of Chapter 15 and UK law. However, the Minister has hitched his wagon to the CIWUD directive, which probably has the force of law in the UK but not in the United States of America.

There are various other provisions which my colleagues will discuss. In section 51, the Minister makes an attempt to protect in law the actions he is taking against those employees of the banks, especially AIB, who have received bonuses. On first reading, the provision appears to be cosmetic rather than having any effect. Deputy Burton already pointed out on the Order of Business that it appears to be doubtful from a constitutional point of view. I have a slightly different view. The Minister's legal empowerment arises from the letter he sent to the board of directors of AIB and he is relying on force majeure concepts to carry it through. This is a cosmetic provision in the legislation to give respectability to that letter, which was relying on far older and more forceful concepts.

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