Richard Bruton (Dublin North Central, Fine Gael)

I apologise. I did not realise I was coming to the end of my slot.

I understand each bank will have its own scheme. Will a different approach be taken in each case? Will a tiered scheme be introduced to differentiate between banks that have strong capitalisation and banks that do not? We do not want the entire banking system to be frozen. If some banks are strongly capitalised, they will be prevented from developing. I would like to know what approach will be taken.

The scheme seems to give the Minister the power to deal with banks that are not based in Ireland. I refer to banks other than the six that were originally mentioned. In his opening statement, the Minister did not explain how he intends to ring-fence assets. He has said previously, on many occasions, that localised assets will be identified. He said he would reassure taxpayers, in giving guarantees in respect of certain liabilities, that the localised assets which were available would be matched in some way. In other words, we were told there would be a buffer between those assets and the guarantee. That has not been explained to my satisfaction.

It does not seem possible for banks to move out of the scheme within the two-year time frame. I am surprised that we are not providing for banks to be able to move out of the scheme if they can prove they are adequately capitalised and have adequate access to liquidity. It would be appropriate to enable the State to wind down its role, in exposing the taxpayer to these liabilities, in an orderly manner. Such an approach does not seem to be envisaged in the scheme. It seems that all the banks will have to participate in the scheme for two years, regardless of whether they overcome their difficulties, do all the worthy things that are set out in the scheme, strengthen their balance sheets, strengthen their lending powers and move on. It would have been prudent for the State, in offering this guarantee, to provide that banks which no longer need to avail of it — I will not refer to it as a life support system — are not still participating in it in August 2010, a month before it is due to come to a conclusion. We should allow banks to withdraw from it in an orderly manner when they no longer need it.

The Minister needs to elaborate on his plans for the long-term recovery of the banking system, whether by means of a bank levy or some other approach. No such plans are outlined in the scheme. It seems that only those banks participating in the scheme will be subject to the levy. In the longer term, the banks within the scheme that have always been relatively strong may be at a disadvantage. They will be subject to the bank levy, whereas financial institutions that remain outside the scheme will not have to carry the levy. We need to hear the Minister's thinking in that regard.

Why are subordinated debt holders covered by the guarantee scheme? I refer to people who, with their eyes open, took on high degrees of risk. The Minister needs to give an assurance about the capability of the new regulatory structure that is to be put in place. He needs to explain the role of the Oireachtas in riding shotgun in that regard. While I am glad the Minister will have to report to an Oireachtas committee, it is important to bear in mind that the committee structure is not generally equipped to deal with the level of oversight that may be envisaged or required. The Oireachtas needs to be confident that this structure will allow it to oversee the new regime in an adequate manner.

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