Joan Burton (Dublin West, Labour)

It is clear that within the Bill the Minister proposes to take the most extraordinary powers in regard to regulation. It is interesting that many of the powers referred to in the Bill require no reference, except by the Minister's choice, to other Ministers or even to the Cabinet. In Irish constitutional law power comes from the Government and from Cabinet, not from an individual Minister, so the Bill is an extraordinary blank cheque to the Minister for Finance in conjunction with the Central Bank and the Financial Regulator to, as it were, offer terms and conditions of support and guarantees to banks in an unprecedented way. It is a blank cheque. The Minister has only barely sketched in the details of what the cheque may involve. We know that around the country people are losing jobs at the rate of 300 a day. Firms are calling in people on a weekly basis to say they may have to let them go or put them on short time or half time. We know what Cowen economics and the slump coalition has done to people and we want to see our banks being facilitated to provide liquidity for the real economic activity of the nation, the jobs, businesses, and farms, not the speculators and fat cats who have been making a killing for the past ten years but the ordinary, decent, working families and firms.

I put the Minister on notice regarding some of the Labour Party's requirements of the Bill prior to tomorrow's Committee Stage debate. We want the publication of details of schemes before they come into force. The Bill purports to allow the Minister to create schemes but it appears that the details of same only have to come to the House afterwards rather than before, so that is a blank cheque. We want to know the remuneration being provided in the compensation packages for higher executives and managers in banks and what limitations, if any, are to be put on remuneration. There is no indication in the Bill that there are to be any limitations. Could we start with a simple concept, namely, that no executive in any of the banks that are the subject of the guarantee scheme should earn in compensation more than the Taoiseach or the Minister for Finance during the years when they are getting the guarantee from Government? That would give them a compensation package of a salary in excess of €300,000 plus pension equivalents, which would be significant compared to the income of people who normally rely on the State for support and who end up on social welfare because they have lost their job. Those people are facing compensation of approximately €200 per week but we are not looking at any limitations being offered by the Minister nor any sense of proportionality about what some of the banks have done. They have celebrated the good years and Ireland has benefited from the activity of many of the banks, but some banks have acted greedily and recklessly. We want the Minister to drop the provision for non-commercial terms and conditions that are clearly included in the Bill. We want them excluded because we do not want the Minister or any of his successors to be tempted to offer conditions that perhaps relate to relationships that apply in other locations than are debated on the floor of the House. We want to know about positive approval rather than mere non-annulling by the Houses with regard to changes. We want to know the position of other governments. The Swedish Government faced this problem in the early 1990s and there was an agreement between the centre-right and the centre-left to have an equity stake returned to the Swedish Government, so that when banks recovered to full health the equity stake available to it could be sold so that the taxpayer could be recompensed for his or her investment in the guarantee scheme.

We also wish to know the limits of the guarantee schemes, so that they do not apply, for example, in cases of subsequent acquisitions by institutions or irresponsible lending. For instance, it is likely that with the proposed scheme, deposits will flood towards the Irish banks likely to be covered by the guarantees as opposed to banks operating in this country which are not covered by the guarantees. We need assurance that there is a fair playing pitch for commercial equity.

Only last week in this House the Minister for Finance assured Opposition Deputies that Irish banks were risk secure. We heard that the fundamentals were strong and that there was no sub-prime problem with Irish banks, which is correct. The phrase the Minister used was "risk secure". What a difference a week makes. I remember some years ago, and even this year, families in Dublin and other parts of the country suffered from a major flooding incident. They suffered the economic cost because they had no insurance. There was a question mark over the responsibility of the State to assist them. It was the so-called moral hazard issue, the fear that a State bail-out would reward those who took foolish risks and failed to insure their homes adequately. It was a core value of public policy that those who took risks paid the penalty. Deputy Brian Cowen repeated this policy position when Northern Rock failed in the UK. As Minister for Finance he said he would not countenance a bail-out of reckless behaviour by banks. Recently the Government came out rather proudly after a Cabinet meeting and said that for Waterford Glass there was no question of the Government facilitating a borrowing request which, if I recall correctly, was approximately €34 million. The Government has form on this issue. That was then and this is now. What happens in the past few days to cause such a dramatic——

See this speech in context