Simon Coveney (Cork South Central, Fine Gael)

I say to my Government colleagues, who have been lecturing us today on the need for responsible Opposition, that Fine Gael has been calling for bank recapitalisation for months. We accepted the need to invest public money to ensure the survival of our banking system even at a time when Government and bankers were rejecting the concept out of hand. A senior banking leader memorably dismissed the need for recapitalisation saying, "Over my dead body". Like so many other figures in Irish banking, he now has no credibility whatsoever in seeking the confidence of markets or the public.

Despite consistent calls by Fine Gael for recapitalisation, we cannot support what the Government is proposing today. Recapitalisation must go hand in hand with fundamental reform of our banking and regulatory systems. Without that reform, investing billions of euros is like pouring water into a broken bucket in an effort to keep it full.

This is not Fine Gael playing politics. We supported the Government on the bank guarantee scheme because we felt it was an immediate and urgent crisis that needed a response. In truth, it was a crisis response foisted upon the Government at short notice but, since then, the Government has had the time and opportunity to fundamentally reform and build confidence in a new financial regulatory model and banking generally. It has not done that. In fact, by Government incompetence, inaction and indecision, it has added significantly to an already burning banking crisis.

Even yesterday, on the eve of what should have been a good news story today, the Minister allowed another bombshell to undermine confidence in his ability and banking generally. We now know the Government has covered up the falsification of accounts in Anglo Irish Bank and has kept it from this House and from the public. The Minister for Finance did not even read the full text of a report he commissioned to establish the extent of bad debts and risk in Irish banks. The Taoiseach did not even have a copy of the PricewaterhouseCoopers report before making enormous decisions on behalf of the State. The regulator was asked to examine a €7 billion lodgement in Anglo Irish Bank by another bank's subsidiary to give a false impression of financial health, yet we had no results from that examination before making colossal decisions.

I regret to say I no longer have confidence in the Taoiseach or the Minister for Finance being either qualified or able to make the necessary decisions to ensure a viable future for Irish banking. It is not just from this House that confidence in Government has evaporated because the markets are making the same statement this morning. As the State proposes to invest €7 billion of our money in the two big banks, their share prices have dived by 10% and 15% so far today.

This has nothing to do with international factors and everything to do with the Government's mishandling of a crisis. We are a laughing stock among the financial investment community outside Ireland and the Government is directly responsible for this. We need AIB and Bank of Ireland to succeed. The State cannot afford to nationalise them. The economy needs a viable banking system, lending money to businesses and consumers to allow our economy to breathe again. Currently, our banking system is choking the very life out of many businesses that could survive with the oxygen of credit.

The Fine Gael amendment to this motion is clear. We are insisting on a new banking model that separates toxic assets and their management from profitable banking operations to create a healthier banking model with clean balance sheets in which to invest before committing billions of euro of public money. We want to see published clear benchmarks on loans to businesses, on new mortgages and on handling of distressed loans. We want statements on a monthly basis so we can see if commitments are being fulfilled.

Assurances and voluntary codes of behaviour within the banking system do not cut it any longer. We want a clear, flat cap on salaries of senior executives at no more than €250,000 until the State's capital is repaid in full plus interest. Percentage cuts in salaries are much more difficult to quantify and are not acceptable to Fine Gael. It is not acceptable that the salary of a chief executive of a significant bank in Ireland would go from €2 million to €1.3 million. As the Minister says the banks did not respond positively to Fine Gael's proposals, perhaps that is a good place to start. I commend the Fine Gael amendment to the House.

See this speech in context