Dick Roche (Wicklow, Fianna Fail)

I thank the House for the opportunity to address this serious issue. This problem is not uniquely Irish, but there are aspects within the banking system which are uniquely Irish. There is no doubt practices have developed in the banking system which, regrettably, reflect the culture which used to be known as "cute hoorism". Let us get to the point. This is not a uniquely Irish problem, although there are aspects of it which are uniquely Irish, but we must move forward. We must escape from the blame game and stop pointing the finger at each other. It is easy to look for scapegoats but it is critical to look for solutions, which we must do now.

The concerns of people on the streets, in businesses and in houses are not unique. In the most recent Eurobarometer poll, citizens were asked what they considered to be the two most important issues at present. The issue of the economy was reckoned to be the most critical throughout the European Union. It is easy to understand the public anger regarding bankers and the banking system, and it is easy to understand why people are angry with the failure of regulation in the country. The matter of the dog that did not bark always raises questions.

There is no doubt that some senior figures in banking have betrayed the country, their profession and the thousands of workers in the banking system who carried on with their jobs each day and who were not crooked, bent, indolent or greedy. As a Deputy from the Opposition stated, the image of Irish banking was once one of staid but solid institutions. That image is now sullied and damaged to a degree such that it will take a good deal of time to repair. Serious damage has been done to our reputation internationally. The real tragedy is that the damage has been done by people who have been at the top of banking circles for years. Some people wisely say such people have been in that position for far too long. This hubris-ridden group have operated with an arrogant disregard for the normal conventions of even their own business.

It is extraordinary to look back over the newspapers in recent months and to read the comments of some who are now in the spotlight. It is intolerable to read of senior bankers suggesting that their actions were not criminal, and that this is in some way an exoneration of those actions. This suggests that there was a complete lack of moral compass at some levels in Irish banking. Logic went out the door and greed was the motivator. This must stop.

I refer to regulation. Bankers in recent times, especially some of the leading personalities, argued that we were in some way over-regulated. Tragically, we know from events in recent months that the opposite is the case. The suggestion was made that over-regulation was preventing progress, but we now see the truth. These were self-serving deceptions, delusions from people who thought that they could walk on water, and that they alone were the holders of wisdom on banking issues. There is a lesson for the State in this regard. We should not be cowed by special interests, because we understand and know from the political reality in which we live that regulation is a requirement.

There was within the banking sector a grotesque inflation of salaries. Salaries and bonuses were based on what was termed "performance". The measure of performance was the number of loans one could get out the door, rather than the return for the banking system or shareholders. The measure of performance was basically the same measure of performance which caused toxic loans to become a reality in the United States of America.

Undoubtedly, we have witnessed a bonfire of the vanities in Ireland. One can understand the temptation to say, "A plague on all your houses". Let us be honest about it, if I sat on the Opposition benches I would probably be doing just that. It is certain there are people within political circles who play to the gallery, but I do not suggest this is the case throughout the Opposition. People will argue that the bailout of the banks is wrong. Such arguments are self-serving. Whether we like or loathe it, banking is something we need. We cannot survive as a trading nation without a banking system, or conduct normal business, or get on with our daily lives. It seems those who wish to play the political game or play to the political gallery do a dangerous job at this time.

I accept the arguments that there is a rot at the very heart of banking and I accept the argument that there have been serious problems in the regulatory system. The chief executives of lending banks have been careless and reckless. The regulatory system has not operated as it should or as the House envisaged. Some in banking and regulation have been guilty of gross incompetence. Others acted in a way which, although not necessarily illegal, was certainly highly improper and undoubtedly immoral. Others have been careless or complicit. The boards of the banks have been asleep. Earlier, a point was well made that too many people were from the same circles in the banking business. There have been revelations in newspapers in recent times about relations between the Dublin Docklands Authority, DDA, and a particular bank. The relationship in that case is too cosy. I agree their actions must be investigated and they must go beyond the gentle probings of a detailed audit. In time, the question of criminality must be examined.

However, the understandable anger and frustration on the streets should not allow us to believe this matter can simply be dealt with by seeking scapegoats or punishing those in banking or politics. Mr. Brendan Keenan, in a remarkably perceptive article some weeks ago in the Irish Independent, summarised the position: "If someone burns down your house, you would still need somewhere to live. But you might want to have a strong word with the arsonist." We wish to have a strong word with the arsonists.

I refer to the point made by Deputy Simon Coveney. The arrangements for recapitalisation are not the end, but the beginning of a process. New regulation must be put in place. Speaking before the most recent revelations, Mr. Keenan raised the obvious question of why we should be expected to risk billions of euro to rescue the banks following the shocking revelations of how senior bankers misled shareholders and regulators. He is correct to do so. We must do this not because we wish to feed the fat cats, but because we must recapitalise the banks to continue the business of running the State and if we are to continue to make progress as a nation.

On the matter of regulation, Mr. Keenan suggested that not least of the concerns of potential investors in Irish banks must be the standards of bank regulation. He points out that, ironically, the controversial decision by the then boss of the Financial Regulator to keep the matter confidential was probably inspired by fear of the damage publicity would do to the reputation of Anglo Irish Bank and to Irish banks in general. I appreciate the point made by Mr. Keenan. He is illustrating the necessity of having a better system and we must have such a system in future.

Mr. Keenan also refers to the lack of transparency and makes a very good point. He suggests the lack of transparency is very damaging, especially when transparency is needed. I do not imply it is precisely what Deputy Coveney suggested, but doing nothing is not an option. I agree with Deputy Coveney that further steps are necessary. No one in the House doubts as much. However, we are discussing the issue of recapitalisation. Decisions and an actions are necessary to assure investors that Ireland is still a place in which to do business.

I agree with Fine Gael's analysis on recapitalisation and I have done so for several weeks. If we do not proceed with the recapitalisation of the banks, such confidence as may continue to exist will be gone. Through the recapitalisation scheme, new capital will allow the banks to take the risks associated with lending into the economy. We have all seen in our constituencies instances of small business which need relatively small amounts of capital being denied that capital. The work does not stop with the job we are doing today. This is a vital step, but it is not the final step. The leading Opposition party made the point that recapitalisation is vital at this stage.

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