Thomas Byrne (Meath East, Fianna Fail)

I welcome the opportunity to speak on the proposal before the House. I commend the Minister and his Cabinet colleagues on the decision they took in facing the current difficulties. I also commend the Oireachtas on passing the Credit Institutions (Financial Support) Act. It would have been easy to dither, as other governments did before being forced into action. A certain momentum has developed across Europe in the wake of the action taken by the Government to protect our financial institutions and, consequently, to protect the fabric of the economy by allowing ordinary people to continue to conduct their business.

Action was taken promptly to address the serious threat to the economy and that action succeeded in removing the immediate danger. There will be difficult times ahead but this guarantee gives scope to the financial institutions to continue to operate. I refer to the conduct of their normal business and not any attempt to attract business on the basis of this guarantee. The Financial Regulator has made clear that such actions are unacceptable. The purpose of the scheme is to allow financial institutions to operate as normal in the national and international markets and, in turn, to allow the economy to continue to function.

I welcome the interesting provisions regarding executive remuneration. It would be easy to specify a figure denoting a ceiling for executive pay. The United States model includes an interesting provision for a tax levy on amounts above a specified figure. However, I welcome the approach the Government has taken. The ability to award bonuses is necessary if banks want to attract the best staff. Under the scheme, those bonuses will be linked to efforts to reduce credit risk and encourage long-term stability. This is a positive and thoughtful proposal. There would have been a temptation for banks to try to work around a more simplistic provision.

The Minister has taken a reasonable view on the charge to the banks. Imposing an excessive levy would simply have prevented the banks from availing of the scheme, thus negating its value. As other speakers observed, there must be greater regulation and a tighter grip on the lending activities of the banks. However, individuals must also take responsibility. It was difficult for customers to resist when the banks were writing to them with offers of "free" loans and credit cards. However, individuals must take some responsibility for the borrowings they made. Some took out loans which they could not and cannot afford to repay. The banks have a major responsibility in discouraging such irresponsible borrowing by customers.

This scheme will facilitate the banks in entering into the guarantee provided by the Minister. This, together with the work being done throughout the European Union, will allow normal business to continue. We have not had to take the type of action taken in the United Kingdom, for example, in nationalising Northern Rock and Bradford & Bingley. The budgetary decisions to be taken by the Government would have been even more difficult if it was obliged to allow for the cost of such an approach. I commend the Government on the action it has taken.

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