John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Question 78: To ask the Minister for Finance the reason the Government bailed out mismanaged banks rather than other financially challenged private companies, businesses or individuals; and what makes a private commercial bank different in nature from other private companies in its ability to secure a Government bailout. [40663/11]

Michael Noonan (Limerick City, Fine Gael)
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The previous Government announced the Credit Institutions (Financial Support) Scheme ("CIFS") on 30 September, 2008, in order to maintain financial stability for the benefit of depositors and businesses in general, and for the Irish economy as a whole. This action was taken following advice from the Governor of the Central Bank and the Financial Regulator about the impact of the international market turmoil on the Irish banking system. Similar State interventions across Europe and the world were introduced around that time. The Deputy will be aware that the CIFS expired on 29 September, 2010, and was effectively superseded by the Credit Institutions (Eligible Liabilities) Guarantee Scheme ("ELG Scheme") which came into effect on 9 December, 2009. The reason the Government continues to provide financial support in the form of the ELG Scheme to those banks of systemic importance to the Irish financial system is that, having consulted with the Governor of the Central Bank of Ireland, it considers that circumstances set out in section 2(1) of the Credit Institutions (Financial Support) Act, 2008, exist and are likely to exist until 30 June, 2011, the financial support end date recently approved by EU state aid.

A fundamental element of Government Strategy has been to restore a functioning banking system. However, it is important to point out that the Government has made other important interventions in the wider economy. For example, as part of Bank of Ireland and AIB's capital raising requirements, the pillar banks have both agreed to meet an SME lending target of €3 billion each in the 12 month period for 2011, €3.5 billion each for 2012, and €4 billion each for 2013. The banks produce an annual SME lending plan for each of these 12 month periods to demonstrate the manner in which they intend to meet the targets.

In addition, the Programme for Government contains a commitment to help homeowners who are facing difficulty with their mortgage repayments and the Government will examine a number of proposals in relation to this commitment. In this context, the Economic Management Council asked that further work be carried out to address the situation of over-indebted mortgage holders with a view to identifying a range of responses appropriate to individual circumstances. To facilitate this commitment, a Mortgage Group has carried out this work and reported to Government.

These interventions and the radical restructuring of the banking system are designed to put our banking system and economy on a firm footing which is essential to Ireland's economic recovery.