Shane Ross (Dublin South, Independent)

I wish to respond, in what appears to be an increasingly common trend in this House, to the main Opposition spokesman's contribution on this matter. The Minister for Finance must shiver in his shoes on every occasion on which certain Opposition Members congratulate him on what he is doing. It is increasingly common for these individuals to state that what he is doing is great because it mirrors the policies they pursued when they were in government. If I was the Minister for Finance, I would not be too happy about this trend. However, I have no doubt that Deputy Lenihan's earlier comments were uttered with a certain amount of mischief in mind. The Deputy successfully embarrassed the Minister for Finance with what he said. The Government is following the same policy as its predecessor.

If, as Deputy Lenihan stated, those who have been advocating either burning the bondholders or burden sharing are committing economic treason, then he must realise that there is a growing band of such traitors in this corner and elsewhere throughout the House . I plead guilty to that offence.

As Deputy Clare Daly indicated, everyone appears to be frightened of the word "default" and of the process relating thereto. We say that default is unthinkable. I do not consider it in that way. I view default as part of the solution rather than part of the problem. I consider it as possibly the only solution to the mess we are in. I have not seen any plan, projection, graph or figures which explain how we are going to pay off our debt. I have certainly not seen any convincing plans. I have seen plans that show inflated growth rates that suggest we could, possibly, pay it off over a period of time. They are not credible. No respectable commentator believes them.

The inevitability of default is something we should accept and go for as quickly as possible. In the United States and other countries, default is no shame. It is a solution. One does it, particularly as a corporate entity, one gets on with it and one starts again. Ireland is now in that situation. We really must start again. We are in that sort of deep doodoo. Default is a practical solution that would give us the opportunity to rebuild our financial institutions on our own terms and not on the terms we have at present, which are dictated to us by President Sarkozy and Chancellor Merkel.

Senior bondholders are lucky people. Deputies Daly and Wallace both pointed this out. I know some of these people. I have met them. They cannot believe they have been let off so lightly and that a new Government has not taken the opportunity to give them a haircut. Even though they are ranked pari passu , they are not the same creatures as depositors. They are often professional fund managers who take an investment decision to buy these bonds and take a consequent risk. It is a lesser risk than other bondholders but a risk all the same. Depositors, on the whole, are completely different creatures. Some are large and some small. They give a bank money for safe keeping at a certain interest rate. The difference between the two is massive. There is no reason for stinging the depositors. There is every reason for stinging the senior bondholders, because they have taken this risk in placing money in high risk banks.

The Government strategy of deleveraging, which means reducing the debt and making it smaller, and producing two pillar banks sounds good, solid and reassuring. Is this a well thought out strategy? The Minister knows we had two pillar banks in the past. Allied Irish Banks and Bank of Ireland, particularly in the retail sector, had, I think, 80% dominance. Are we going to introduce a system where two overbearing and overwhelmingly large banks - both State owned, because Bank of Ireland is also likely to go that way despite its efforts - supposedly compete with one another? This is not realistic. In the past when there were too few banks in Ireland cartels were formed by the four major banks. Now we are introducing a system where there will be two dominating banks, plus what the Minister called foreign banks. Does the Minister not realise that foreign banks, particularly in the retail sector, are not staying here? They are pulling out. The trend is for a duopoly.

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