Arthur Morgan (Louth, Sinn Fein)

Deputy Bruton moved an amendment.

I would like to make a few general observations at the outset. It cannot be denied that we are in a catastrophic mess at the moment. That mess was made by the Government, in the first instance, and made worse by speculators, who were not reined in, and by bankers. It smacks of the era of Haughey, Lawlor and Burke. I hope I am wrong in that regard, but that is what it looks like to me and many others. It is worrying that the Government is not showing any direction in dealing with the current crisis. I have been saying for many years that we need a State bank that can be trusted. People need to have confidence that a bank will behave as good old-fashioned bankers, whose word was their bond, used to behave. Bankers should confine themselves to making an honest return from the work they do with their clients. I do not see that happening in any of the modern banks, which is most unfortunate.

I would like to pay particular attention to three aspects of the recapitalisation of Allied Irish Banks and Bank of Ireland, which is the issue at hand. First, we need to focus on the need to protect people's homes. The best the terms of this scheme can offer us is a one-year moratorium on efforts by the banks to repossess people's homes. The Government must expect that people who are losing their jobs, getting into financial difficulties and therefore unable to make their mortgage payments will be back in work and in a financial position to start making mortgage payments once more within 12 months. The terms and conditions of the recapitalisation deal, which state that 12 months will have to pass before the banks can make a move to repossess, are clearly based on an expectation that is pie in the sky. There is not even a remote chance that what is expected will come to pass. The moratorium period should be at least two years, with a review at that stage to see how people are getting on. Another aspect of the deal is the introduction of a regulatory code to protect customers. The voluntary code that has been in place for many years is worthless and meaningless. If that code, which was written by the banks, is to apply in this instance, it will have no value. I see no point in adopting a code that is the preserve of the banks.

The second leg of the scheme to which we should pay attention is the absolute need, for a number of reasons, to ensure that a proper financial stream is available to small and medium-sized enterprises. As we know, many businesses are having significant cash flow problems. They may wish to maintain their competitiveness by upgrading their processing systems, buying new machinery or modernising their structures. It is crucially important that those running shops and other enterprises can refit their premises from time to time. We are depending on such people to maintain jobs. If they do not have a steady financial stream, what chance do we have of retaining jobs? In these or any other times, surely job retention is at least as important as job creation. I am concerned about the scheme that is in place to make this happen. Will it happen? The clearance group that is in place, as a result of the Government's negotiations with the banks, has no teeth. It will debate certain matters with the banks as an honest broker. To date, the banks have had to be brought screaming and kicking to the table at every stage. It worries me greatly that the banks, rather than the Government, have been calling the shots. The clearance group has a huge job to do if the confidence of businesses is to improve. I am concerned about it.

The third element of the scheme about which I am concerned relates to the terms and conditions it sets out for executives. I do not want to rely too much on this important point. It is a question of public confidence. We have been told that certain characters, who are being paid approximately €3 million per annum, will take a salary cut of approximately one third. Should we prostrate ourselves before these great people who have agreed to earn just €2 million per annum at a time when public sector workers are being mugged by the Government on a daily basis? People on lower and middle incomes are being mugged every time they open their wage packets at a time when, back at the ranch, executives are having to humble themselves by getting a mere €2 million per annum. Do we really owe executives such a great deal? Why do we tolerate such nonsense? It demonstrates to me that the Government is out of touch with reality. I wish representatives of the Government would occasionally walk into the newsagents or stop to talk to people on the street. When people come to the constituency offices of Government Deputies, they should ask them what they really think and what is being said among the public. Most people think the Government has no perspective on what is going on, or even on reality. Are we supposed to laud a person for accepting a wage cut from €3 million to €2 million?

The former Financial Regulator is walking into the sunset with a €630,000 pay-off and a pension of €142,000 per annum at a time when the pensions of the workers of Waterford Crystal are at risk. One group of people may not get a cent, but this other character is being looked after. A complete realignment across every stratum of the State is needed, rather than merely an adjustment, as the Government is calling it, of the wages of public sector workers on low and middle incomes. I suggest that we adopt an approach equivalent to that of the new US President, Mr. Obama, who has capped bankers' wages at $500,000. I suggest that the salaries of bank executives be linked to those of Ministers. That is an adequate scale for anybody. I am concerned about the huge bonuses and salaries the executives received over the past three years, in particular. During a period of turbulence, they were messing about with our money and our institutions. They should be forced to hand back the bonuses they were paid in respect of each of the last three years, along with at least 50% of the salaries they were paid over that time. We should start on an even footing from there. Nobody in this House can claim that the salaries in question were earned. The scheme, which is tokenistic in the extreme, falls on all three of the aspects I have highlighted.

During this crisis, many Deputies have spoken about public service. I will give the House a brief example of public service in the private sector. Last night, I attended the wake of a man who was the milkman in my home village for almost 50 years. One could depend on one's life that he would turn up and provide an excellent service in any weather. He never overcharged anyone. He dealt honestly and fairly with me and everyone else. That level of service is what public service should be all about. Over recent years, the man in question was receiving an old age pension that, unlike the pensions given to certain characters, did not amount to €142,000 per annum. The public commitment of the proud milkman I have mentioned is an example of what we should expect from bank executives, Ministers and everyone else. We should get that kind of public service from everybody, particularly people in the public sector. Some Ministers have up to six civil servants working for them in their constituency offices, or on behalf of their constituency offices. They should have one staff member, at best; the wages paid to the other five staff members are equivalent to paying five nurses. I appreciate that Ministers are hugely committed to that work and I do not object to them being assigned one civil servant to do it. However, the current position pertaining is equivalent to five nurses, five gardaí or five other public servants having been robbed from the public service. It is scandalous and unacceptable.

The key question is: will this proposal work? Many economists are rightly sceptical about it. People say that the level of recapitalisation should have been of the order of 8% to 10% of GDP. I certainly would not like to see that level of commitment to the recapitalisation scheme. I put on record that I want it to work. I hope the recapitalisation project entered into by the Government, on behalf of taxpayers throughout this State, works and I wish it a fair wind because, if it does not, we are serious trouble.

However, I have concerns about it. It was stress-tested by the Department of Finance. I hope Members will forgive me for being cautious about forecasts from the Department of Finance. In the good times, it got its forecasts brilliantly wrong and in the bad times, it got them spectacularly wrong. It has an extremely poor record on forecasts. I look forward, unfortunately, with some trepidation to this project and hope it has got it right on this occasion.

On the issue of inter-bank loans and the messing that went on in that respect, I have sympathy for the Minister for Finance at one level because we all appreciate the huge volume of reports, reviews and correspondence that arrive on our desks. I readily acknowledge that we cannot read all the material. When the Minister was undoubtedly under pressure in his portfolio in terms of all these matters, I, as finance spokesperson for Sinn Féin, tried to keep abreast of matters, inform myself and cover the research as best I could. I also burned the midnight oil and worked way beyond midnight on many occasions. However, I cannot understand how the PwC report was not read diligently, every fraction, semicolon and full stop in it. I do not know why the Minister did not give attention to that. I question if it is a case of Ministers not reading parts of a report because it is convenient for them not to do so. The Minister of State, Deputy Barry Andrews, did not read a HSE report recently. I do not know if that is the case in this instance. It certainly raises suspicions in my mind and serious suspicions in the minds of the public. It looks poor.

In regard to the rogue loans between these institutions, according to today's edition of The Irish Times, Irish Life & Permanent is now claiming it informed the Financial Regulator of its dodgy deal, the €7 billion transfer in September from it to Anglo Irish Bank, within days of it being carried out. That is a serious charge. We need to know if that is true. If it is, it completely undermines confidence in the Financial Regulator. Let us be clear, Anglo Irish Bank undoubtedly falsified its accounts. There is no question about that at this stage. Anglo Irish Bank transferred money from Irish Life & Permanent, IL&P, and then got it to transfer that money back so that Anglo Irish Bank could falsely present it in its accounts as a customer deposit. I understand the Department knew about this in October. When did the Financial Regulator first know about it? That is a crucial question. Why did the Minister for Finance, who knew about it at the time of the passing of the legislation to nationalise Anglo Irish Bank in January, not inform this House that was the case when he had that knowledge? A further question mark hangs over the head of the Minister for Finance for that failure.

We are asked by the Government and the Minister for Finance to accept a significant number of issues of a very dubious nature. Where were the Greens in all of this? When was the Green Party informed about these rogue loans? Was it aware of them before the nationalisation of Anglo Irish Bank took place? If it was informed about them, what was its view in regard to them? Why did it not require that this House be informed of them? If it was not informed about them, it should let us know about that.

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