Brian Lenihan Jnr (Dublin West, Fianna Fail)

When I telephoned Deputy Kenny at 7 a.m. this morning and explained to him the circumstances in which the State found itself in regard to financial stability, he responded without hesitation that he would support any measure the Government brought forward. Of course, it is natural and correct that in the course of the day Deputies would express reservations or doubts, or that in the course of the debate Deputies would query particular provisions. I look forward to Committee Stage tomorrow when there will be an opportunity to elucidate some of those provisions and explain the different issues at stake. I do not propose today to go into the detail of all of the elements of this legislation as many of these matters can be addressed on Committee Stage. However, I want to address some points that have been raised on the floor during the debate because they are of importance.

I welcome the broad welcome which was extended to the Bill in the House. I hope we do not divide on the matter because I believe agreement on Second Stage on this legislation will send a clear signal to the markets tomorrow morning to secure the stability of the financial sector.

Deputy Bruton made a very important point in regard to our compliance with European Union obligations. I assure Deputy Bruton that the advice of the Attorney General was sought on this matter and obtained. The Government is satisfied that this legislation is in conformity with our obligations to the European Union. Contrary to what Deputy Rabbitte suggested, namely, that this was the occasion of the delay today, that is far from the case. The advice of the Attorney General was sought on this matter as part of the contingency planning which led to this legislation, and that advice was crystallised in the course of our deliberations yesterday evening. I want to state that the advice of the Attorney General has been obtained on this legislation and that we are satisfied we are in accordance with our obligations to the European Union in regard to it.

Complaints may be made to the Commission. Complaints are made to the Commission about many matters and when this happens, the Commission rightly and properly seeks explanations from the relevant member state about its position. However, as a Government, we have been advised by the Attorney General that we are acting in accordance with those obligations.

Deputy Quinn raised the question of the banks which are not covered by this guarantee. If one examines the legislation, one will see there are six designated banks which are covered by the guarantee and the option is given to the Minister to extend that guarantee to other entities. However, it is not entered into as a matter of legal obligation. To explain why this is the case, I have to bring Deputies back to the lonely place where the Taoiseach, myself and the Attorney General found ourselves last night. These six institutions do not have any other friend in the European Union or on the Continent of Europe. All of the other banks referred to — we can look at their position in due course — are subsidiaries of a bank the ultimate responsibility for which rests with another member state. There are six institutions for which ultimate responsibility rests with the Irish State. One of the crucial issues running through this debate is the extent of the obligations, or the assumption of obligations, which the State should undertake in regard to them. Deputy Rabbitte touched on this when he referred to the different options that are available to the State.

I want to go back to a point made by Deputy Burton at an earlier stage of the debate when she canvassed the option of following the Swedish model in regard to the problems we face. The Swedish model was adopted in a context where there had been actual bank failure. My Department, and I as Minister, have studied in great detail the Swedish model with regard to bank failure, and it is a very interesting and constructive model. However, the Deputy should be aware that there was a very substantial drop in the gross domestic product of Sweden when there was mass bank failure. The approach taken by the Swedish Government was a constructive one and worthy of emulation, but we are not at that stage yet.

Deputy Coveney raised the question of the possible increase in the cost of borrowing to the State as a result of this guarantee. As I made clear in opening the debate, the process of devising the fee mechanism will take into account such factors as the possibility of increased funding costs for the Exchequer, as well as other factors.

Several Deputies referred to the extensive powers of regulation being conferred on the Minister in this legislation. It is not correct to suggest that a Minister for Finance operates in isolation from his Government colleagues. Powers conferred on the Government are somewhat of a rarity on our Statute Book. The powers conferred on the Minister for Finance are of course exercised by him collectively with his colleagues in Government.

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