John Perry (Sligo-North Leitrim, Fine Gael)

From listening to Deputy Noonan's comprehensive review of this Bill, his points were quite apparent when we look at the deficit. The Minister for Finance has repeatedly said that the Government has taken a stake in Allied Irish Banks and Bank of Ireland in the hope that the banks clean their risky property loans, and will be able to raise equity from their own shareholders and from new private investment. We now know that this hope was misplaced in the case of Allied Irish Banks and that the Bank of Ireland is still hoping to avoid a majority stake in shareholding. The two major banks in this State are fully dependent on State funding to maintain their operations. These banks may yet reveal additional losses from loans to businesses and householders.

When we look at the massive shortfall in funding to businesses at the moment, there is no confidence and no credit in the economy. The €12 billion that has been promised by Bank of Ireland and Allied Irish Banks is not available to companies. Viable companies are closing as we speak due to the lack of support, regardless of the Credit Review Office headed by Mr. John Trethowan. His powers are very limited. In the world of real banking, of lodgements, withdrawals, payments and cheque clearances, the banks are struggling to survive. In the casino and gambling part of banking, such as trading activities, the bankers seem to believe that nothing has changed. From the behaviour of bank trading staff in the last few weeks, it is clear that a substantial bonus culture, based on short-term bookkeeping profits, is still the expectation. The people working in banks seem to think it is okay to pay themselves bonuses from taxpayer provided cash. How far out of touch with the reality of everyday in the country are these people? Do they really think they can continue to pick the pocket of the taxpayer while an indifferent Government stands idly by?

Until recently, people in the financial world believed in their own superiority and took salaries and bonuses that were orders of magnitude of ordinary wages. They were getting golden handshakes, bonuses and cheques for leaving that were worth millions. There is no great body of evidence showing that a big bonus culture improved long-term shareholder value in financial services companies. The decent people of Ireland were told to invest their money in these banks, and many of them have lost their life savings. It is unforgivable. People trusted the credibility and the corporate governance of banks and they put their life savings in them, and now they have nothing. All evidence points to the reverse of this theory. There is much commentary about the design of the bonus scheme, where short-term results are valued ahead of solid, long-term improvement. There is no bonus roll back system for situations where risk was misunderstood and serious losses were incurred. That is outrageous.

In the past few years, these delusional masters of finance have been exposed as idiots, and yet our Government has been very slow to learn that lesson. Slapping down the bonus culture in Government controlled banks is a short-term measure that will appeal to the hard-pressed taxpayer. Having the Government involved in micro-managing the individual pay decisions will not work. The evidence from the out-of-control pay and conditions of top semi-State managers clearly demonstrates that the Government does not and cannot micro-manage the pay and bonuses of the financial services sector.

I have stated my case. Enough is enough. What we want is credit for small companies, which are the backbone of this economy.

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