Brian Lenihan Jnr (Dublin West, Fianna Fail)

I remind the Deputy that the charge is there to secure a return to the taxpayer for the valuable benefit which sovereign Ireland has conferred upon the institution. That is a consideration which the Minister would be entitled to take into account in considering whether to permit an institution to leave the scheme. That is the reason for the insistence on ministerial consent in the scheme. However, there is the possibility of departure and it could be that institutions would wish to depart.

Deputy Morgan raised the question of the position on the charging model, which I outlined in my speech on Second Stage. On the calculation of the charge, one of the difficulties in this whole area in determining a market rate for a guarantee of this nature is the absence of comparable benchmarks and how one takes into account the potential difficulties in the current circumstances for beneficiaries to bear the amounts that might be estimated, as against those in normal financial circumstances. In normal economic and financial circumstances the need for a guarantee would not arise. However, we are in abnormal circumstances and the price that a private commercial institution would charge for such a guarantee in abnormal economic circumstances would be very high indeed. The charge for the provision of the guarantee is based on the Government funding costs, on the basis that it comes as close as possible to what could be considered an appropriate price in the current financial environment. There is currently no indication that funding costs for the covered institutions have declined on account of the provision of the guarantee.

Deputy Bruton in his Second Stage contribution also asked me about the revision of the charge. There is provision in the scheme that the charge can be revised by the Minister in light of prevailing economic conditions. Were the funding of Government debt to become——

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