Joan Burton (Dublin West, Labour)

It was the Minister himself who indicated that the scheme, which is the subject of the amendment, would sketch out the questions I am now asking. The cost of the scheme to the taxpayer is fundamental. After all, we will have to borrow money at a higher cost and I want to know how is the State going to pay for the scheme referred to in the amendment.

The Minister made a reference last night to the scheme seeking to curb reckless behaviour and compensation packages for bank executives. Can the Minister of State confirm that such curbs will be included? Will there be an examination of the banks' balance sheets to look at the issues, not just the liquidity issue addressed by the scheme but the underlying real issue of solvency and the quality of the assets in the banks' balance sheets? I refer in particular to the bad loans held by several of the banks due to lending for land and construction purposes. Many of these loans now seem to be seriously impaired and devalued. We would also like to know more about the additional banks being included. What parameters will the scheme have to prevent British banks who own banks in Ireland importing into their Irish subsidiaries debt and other instruments which the Irish taxpayer will then end up guaranteeing? How will the scheme be ring-fenced if we take on guarantees to British-owned banks operating in Ireland for the purposes of levelling competition and possibly meeting some EU requirements on competition? How are we going to ring-fence ourselves to avoid having to take on debts incurred by the parent company in the UK or elsewhere and passed on to the Irish subsidiary? If we have to do this, the cost to us will be significantly more.

The banks have said today that as a consequence of the guarantee and the scheme, money is now flowing in to Irish banks in the UK where they have UK branches. If this is just simply a case of ordinary deposits in the ordinary course of business, this means that the Irish banks are doing better. However, if this is hot money in speculative flows to take advantage of the Irish guarantee, we need to ensure that the scheme will include some caution or reserve on the banks participating in the scheme so that they will not be reckless with that money. A speculative bubble may be created whereby hot money is put into Irish banks and this money is loaned on neither wisely nor well.

We know that the Financial Regulator and the Central Bank come to all these items after the fact; everything is grand until something goes wrong. How will the Minister ensure that the fundamental interests of the Irish taxpayer are safeguarded? The amendment is welcome as it goes some way to addressing some of the issues raised by the Labour Party. However, given the manner in which the Financial Regulator and the Central Bank have operated in the past year and a half, as this crisis built up, I would much prefer if I heard that Deputy Brian Lenihan was having the odd chat with Warren Buffet or George Soros rather than entirely relying on the not so fantastic wisdom of the people down in the Central Bank or down in the office of the Financial Regulator. They seem to be permanently playing catch-up. These are the questions I would like the Minister of State to address.

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