Dáil debates

Friday, 17 October 2008

Approval of Credit Institutions (Financial Support) Scheme 2008: Motion

 

2:00 pm

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)

We can apply elements to it but there has to be a careful ring-fencing of the operation to its presence in the Irish economy. That is the whole purpose of the ring-fencing element of the scheme. Paragraph 50 provides:

A covered institution shall manage the business of its group at all times with a view to furthering the purposes of this Scheme [and] the Minister may require certain obligations of this Scheme... to apply to the parent of a covered institution...

For the purpose of protecting us here in Ireland, the Minister is given the power to impose as a condition of the agreement an obligation on the parent company as well as the subsidiary. That is provided for in paragraph 50 of the scheme. Therefore, it is not just a matter of ring-fencing the assets of the subsidiary in this jurisdiction; the Minister can stipulate, as part of the contract with the relevant institution, that the parent company has to enter into certain obligations as well. That is essential to safeguard the State and the taxpayer in that regard.

Deputy Rabbitte wanted to explore the doomsday scenarios. The point is that, through the guarantee, we have restored solvency and confidence to the banking system. The question of a default by the banks is not envisaged at present. The Taoiseach made it clear that were there a default in the future it could only be dealt with by a levy over time. That is not in the legislation or the scheme, it is something the Oireachtas would have to consider afresh. He did state, however, that that was the policy of the Government in that regard.

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