Leo Varadkar (Dublin West, Fine Gael)

This is one of the most important Bills before the House, certainly in my time here. It is very interesting that more than two years after the bank guarantee was introduced, it is only now that we have bank resolution legislation. The guarantee really was only an exercise in buying time. That time could have been used to restructure the debts of the banks, bring them to resolution, close down Anglo Irish Bank and organise a debt for equity swap in AIB and Bank of Ireland. That did not happen. As a result of that, there is two years worth of water under the bridge as well as billions and billions of euro of taxpayers' money.

It is good that we have bank resolution legislation at long last. Unfortunately, it does not go far enough. In particular, it does not contain any provision for the restructuring of the debts of senior bondholders, particularly those who are not under the guarantee. There is perhaps up to €16 billion of taxpayers' money that could be saved by imposing losses and haircuts on those bondholders. That is the key change of policy that needs to happen when we have a change of government in this country because the people are not responsible for the debts of those banks and should not be held liable for them. That is the big lacuna in this Bill. It is not the appalling disaster that people make it out to be. For example, Washington Mutual in the US restructured its debt by imposing losses on senior bondholders and by organising debt for equity swaps. I do not see any reason that cannot be the case in this country. In fact, I think the markets expect us to do it. One of the reasons we have not had an improvement in our sovereign bond yield numbers is because the bond markets and the rest of the world are waiting for a new government in Ireland to do what everyone expects us to do at this stage. That is the major gap in this Bill.

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