Joan Burton (Dublin West, Labour)

I am sure the Minister, as a student, had an opportunity to read the greatest novel about the American depression in the 1930s, namely, The Grapes of Wrath by John Steinbeck. I see that he is nodding, so maybe he remembers what John Steinbeck had to say in the novel about the poverty that came from the depression, and the failure of the bankers in the 1930s to stem their own greed, and of governments to cap their greed. "The bank is something more than men, I tell you. It's the monster. Men made it, but they can't control it." In Ireland, we passed on controlling the banks in any tough sense. Instead, under the direction of the former Minister for Finance, Charlie McCreevy, we slavishly copied the British Financial Services Authority line for line. Even though the Minister's former colleague, Michael McDowell, suggested that the regulation ought to be primarily from a consumer, depositor and an ordinary business point of view, and therefore should be in the Department of Enterprise, Trade and Employment, the Central Bank and the then Minister for Finance fought a successful Government battle to give all the powers to the Central Bank and the new office of Financial Regulator. They won that battle, and we are paying a terrible cost for slavishly following the British model of light regulation.

Right across the globe, the British model of regulation, which had its origin in the era of Thatcher, Reagan and the Washington consensus, is at the heart of most of the banking failures. Yet the Minister is asking us to write a blank cheque today, just as he did two weeks ago. The Labour Party wants a functioning banking system. Every business in the country needs a banking and credit system, but the Minister asked us to write a blank cheque for the banks and we said "No". We want to help. We want to sustain, reform and transform the system, but we do not want to write a blank cheque. The Minister's speech today asks us to take more on trust and to give him extraordinarily extensive powers, but we are not to ask him to tell us in detail what he is going to do. We continue to have a terrible difficulty with this because we feel we represent the ordinary small, medium or large businesses across the country for whom banking is the lifeblood of their cash flow, yet the Minister has not answered our questions.

Due to Government failures, the pensioners will suffer to the tune of €100 million. The Minister told us that his guarantee is calculated at €1 billion over ten years, which is €100 million per annum. That is the same figure. The pensioners will suffer due to Government mismanagement, but can the Minister be specific? We know the bank shareholders are suffering. We know that people who hold pension funds through bank investments are suffering. It is stunning to see how low their shares have fallen. What are the bankers suffering? Can the Minister tell us? How many of them will resign, retire, and go off on their yacht to the Cayman Islands? Will they go to the Great Blasket Island, sit out there and think about the state in which they have left the banks? What is the downside of this for the bankers? The Minister is not even talking tough and walking with a big stick. He seems to have rolled over.

The regulation carried out by the Financial Regulator is not regulation by a pitbull in lipstick, rather it is regulation by your friendly Labrador who wants to roll over and have his tummy patted. That seems to be the model. The Office of the Financial Regulator cost €57 million and I have no doubt that the individual who controls it is a person of the highest integrity, as is the individual who controls the Central Bank. However, do they deserve the vote of confidence that has just been given to them again? The Minister has not had a hard word to say about them. He is the Minister for Finance, so where is the big stick? The big stick was taken out on the poor pensioners, who got a belt from which they will be reeling for years. Where is the big stick with the bankers?

Has the scheme that was brought in two weeks ago worked? We know that it has helped the banks to get liquidity, but I raised the question of solvency. I asked the Minister for Finance about repairing the balance sheets of banks where there were impaired assets. We know from the financial media — thank goodness for them — that two of the six initial financial institutions to be covered by the scheme appear to have heavily impaired balance sheets, because they lent the most speculatively to the building industry. One of these was a bank, and one was a building society.

The Minister announced last night that the Financial Regulator would advertise in the newspapers today for more expert staff. I hope he is asking for pitbulls rather than Labradors. I do not know if that is the description in the advertisement, but that is what the Financial Regulator needs to do.

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