Ruairi Quinn (Dublin South East, Labour)

This is not a night for recriminations, but we cannot pretend that this problem fell from the sky. We have had a failure of regulation in this country in the sense that the advice of the regulator — Deputy Bruton has already cited this — to curtail the massive lending and extreme extension of funding into the construction sector was consistently ignored by the lending institutions and by the Department of Finance. The tax breaks stayed in place. All the advice coming from independent economic advisors and commentators was simply ignored by the Department of Finance and by the Minister's predecessor. When the regulator voiced concerns, as did the Governor of the Central Bank, he did not seem to have the power to enforce his advice.

I refer the Minister and his colleagues from the Department of Finance to page 6 of today's Financial Times where an article by Gillian Tett refers to the success the Spanish Central Bank's governor has had in helping Spanish banks, which have a big property exposure, to avoid the road we currently find ourselves on. The Spanish banks, particularly Banco Santander, have moved into a premier position in the new European landscape.

The meat of this Bill is in sections 5 and 6. The meaning of section 5 is that the regulations introduced on foot of whatever decisions the Minister makes will have to be laid in draft form in this House before they can be activated and become law. However, that procedure is reversed in section 6, where the Minister reverts to the traditional manner. As we all know, that kind of draft regulation is never scrutinised here. I again defer to the point made by Deputy Bruton. We are sailing very close to unconstitutionality with this Bill, and as a senior counsel, the Minister must be aware of that. I ask him to look seriously at reversing that particular mechanism and return to how we scrutinise the draft regulation in section 6.

The Government is guaranteeing €400 billion. What will it charge the banks for this insurance policy? The Bill does not tell us what the banks will pay for this facility. The rate in credit default swaps is approximately 2%. This means the banks are getting an insurance policy worth €8 billion for two years. These are points that are being brought to our attention, and I am bringing them to the attention of the Minister so we can get answers to them by tomorrow. What is to stop the banks that are covered by this guarantee from poaching deposits from those that are not covered and lending them on to make enormous profits? It appears to us that there is no attempt to limit the competitive damage to other banks not covered by the scheme.

What is the signal that we are sending to the financial institutions in the IFSC, many of which are completely outside the remit of this Bill? This is a flagship in which we have all taken some pride, particularly Fianna Fáil, yet down in the IFSC they are wondering why they have been singled out for non-inclusion. I have not even mentioned the traditional high street banks whose parents are located in other jurisdictions attached to other central banks. Does the definition of credit institutions, as defined under the Central Bank Act 1989 in S.I. 395 of 1992, allow the Minister to ring-fence an Irish bank operating on the Irish high street, whose parent is outside this jurisdiction, to benefit from the same facilities he is providing for the six banks in order to level the playing pitch?

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