Enda Kenny (Mayo, Fine Gael)

Since I last spoke it appears there has been some movement on this matter. I note the Financial Regulator has said he would not rule out the appointment of persons to boards of risk management committees of banks. That is a very important intervention and I hope the Minister will elaborate on it when he replies to the debate on amendment No. 1. The longer one leaves something like this, the more questions that arise. We want a strong, energetic, accountable, workable banking system and, from that perspective, the Government must foresee the contingencies that make it equitable and competitive. Institutions regulated in this country should be able to apply for consideration under the guarantee where it is clear that they have substantial interests here and where they are regulated here in terms of their liquidity, assets, solvency, etc. I expect the Minister for Finance to reply to those concerns. I hope he can do so.

Two core points arise from dealing with section 6(4) about the appointment of persons to be seen to be active in the regulation under the conditions laid down by the Minister. When the initial statement came from Government yesterday morning it was indicated that normal practices would apply. However, normal practice as heretofore applied cannot apply in the future. This is a different regime requiring a different response entirely. The Minister has a very strong legal instrument and it is his responsibility to set out the conditions and the regulations governing it.

One of the most interesting points made in the House today was by Deputy Ardagh who said it would be very interesting to see what figure would emerge from a prudential assessment of the value of the assets. The Department of Finance indicated it is €80 billion of assets in excess of liabilities. It would be interesting to follow through on that suggestion. Other points include whether credit unions can apply to the system for a guarantee. Some comments were made also about the banks in the IFSC.

Section 6(4) states: "Financial support may be provided under this section in a form and manner determined by the Minister". On what basis will the commercial terms be determined? Who will make the determination and at what level will it be pitched? My understanding is that the Financial Regulator does not have sufficient personnel to undertake that task. While the market has already determined that there are substantial losses, particularly relating to property in two institutions, the commercial terms appropriate in these circumstances could well be so severe as to be beyond the scope of the institutions concerned. The Minister needs to be very specific and not just aspirational in his response.

Section 6(4) further states: "Financial support provided shall so far as possible ultimately be recouped from the credit institution". That is also a fine aspiration but the credit institutions that require support will be unable to repay it because they will only need support when their own capital is exhausted. That statement must be clarified.

Section 6(6) deals with the appointment of persons to committees. I do not know whether the Minister is personally disposed towards this but I believe it is in both his interests and the system's that we in the House should be seen to make this work. I recall standing in the house of a young couple just over a year ago. It was furnished to the hilt and funded by a mortgage from a financial institution. The wife has lost her job and it will be impossible for them to pay the substantial mortgage. That example can be multiplied by many other cases. The Minister has an opportunity to respond to the emergency that occurred the other night. It is absolutely critical that the system is seen to be able to work, but in the new response that is required that the system will be regulated with conditions attached.

I do not wish to hold up proceedings any further. We have made our points about protection of the system, defence of the economy and, as Deputy Bruton pointed out, the necessity to keep the oil flowing through the engine of the system that affects the lives of ordinary people. From that perspective, I hope the Minister can respond to the legitimate concerns and constructive points put forward by Members during the course of the debate. We can then proceed to the remaining sections.

See this speech in context