Richard Bruton (Dublin North Central, Fine Gael)

——which would be introduced by way of a guillotine, as we have seen time and again, with no opportunity for debate about the options. That is what the Taoiseach sees as the role of this House. The House is facing a crisis, as is the whole country, and unless Government can be open to new ideas we will go down the tubes. That is the state of affairs. This Government has shown that it cannot fix the crisis we are in and it has not been capable of addressing the scale of the crisis.

I do not need to tell Members that the banking sector is of core importance. It is the oil that keeps the engine of the economy ticking over. Households could not survive without it; businesses cannot survive without it. Businesses and households are already seeing the consequences of the interruption in the flow of credit. The problems that many businesses are now facing are made greatly worse by their inability to obtain funding to tide them over more difficult trading periods. We do not have a banking system that is adequate for the challenge this economy faces. We must see Government respond much more decisively to this challenge than has been the case so far. The tragedy is that there has been a consistent failure of the regulators either to understand the information presented to them, to pass it up the line or to act on it. This has been of major damage to our international reputation. If we persist with a regulatory system that has failed in such an appalling way — that is still struggling to come to terms with conflicting evidence about what it knew and what it failed to do — we will make our financial crisis greater. We must now make a clean break as far as the regulator is concerned. We must sack or remove the entire regulatory authority and, along with it, the senior management. We must establish a new regulatory authority with the power and the ability to bring in a new regime based on a much sterner ethic than we have ever seen before. It is not acceptable that the body investigating misdemeanours in the regulatory system is the regulatory authority itself. We cannot expect an authority to be judge and jury in its own case and provide the proper investigation that we need.

We can now get rid of the existing authority and bring in a new one that includes international representatives. Over a short space of time, such as three or six months, we should require that new authority to establish a Q mark of internationally sound regulatory standards. If the Government agrees to this, I would take heart that Members on the benches opposite understand the depths of the problems we currently face.

We must also recognise that the present relationship between the Central Bank and the Department of Finance is not acceptable. The notion that Secretaries General of the Department can seamlessly become Governors of the Central Bank is not an acceptable way to manage our affairs because those with the responsibility of calling halt in respect of policies on credit and fiscal strategy are compromised. We must move to a new style of appointing governors through competitions which are open to all comers, including international applicants.

Banks are in a unique position of trust because not only do they have similarly limited liabilities to all other companies but, effectively, they also have an implicit guarantee that the taxpayer will step in when difficulties arise. That puts a huge burden of responsibility on those who manage our banks because the privilege conferred by the underwriting of banks by taxpayers comes with a duty of care. The truth is, however, that banks and their managers abused this privilege for their own enrichment. The boards, which shareholders would have expected to supervise banks' activities, failed in their duty of governance. The regulators, whom we appointed to ride shotgun, failed to recognise the flaws and, even when they came into the possession of information, did not understand its seriousness.

We need a comprehensive clean out in the management of banks. The minimum we require are fresh boards and new executives in the banks that are being recapitalised by the State. These people should be on salaries which are commensurate with the compensation paid to someone running a public service operation. They should not receive the commissions which led us into the difficulties we currently face or bonuses that are linked to profitability. Their salaries have to be capped, in which regard we have proposed a figure of €250,000. The auditors, on whom we depended for overseeing the performance of the banking system, have also let us down. We need to appoint new auditors to all the banks to demonstrate a fresh start. We should look beyond the charmed circle of international names to other auditors who may be more probing and have a better understanding of how to conduct an audit. Perhaps such an auditing firm would not assign junior staff to crucial elements of scrutiny. A fresh start is needed in all aspects of banks' operations if we are to restore confidence. That is not asking too much because, as taxpayers, we are now standing in the breach. We will have to guarantee all the liabilities, offer solutions to some of the huge holes that exist in the loan books and recapitalise the banks. We are entitled, therefore, to see these radical changes in our banking system.

We must also address the wrongdoing that has taken place. The public rightly wants wrongdoing relentlessly pursued. I share the view of one Minister who has described these events as economic treason but we require action that is commensurate with such a level of wrongdoing. We are not seeing the wholesale changes that are needed in response to a Minister's belief that economic treason has been perpetrated. I do not impugn the values or intentions of the Government but the public sees people who had extraordinary access to those in authority and a regulatory system comprising officials drawn from the same circles as the executives they regulated. The public's confidence has been decimated by what has happened in Anglo Irish Bank and other institutions. The concealment of directors' loans seriously damages shareholders' interests. We now know it probably represents a breach of company law and we hope this will be pursued. We are also aware that the unwinding of the major shareholding held by the Quinn Group in Anglo Irish Bank was orchestrated by people within the bank. That suggests prima facie evidence of serious breaches of company law. A company cannot orchestrate the purchase of its own shares and fund them on a charmed basis or in a way that preserves the anonymity of those who benefitted from the deal.

People have a right to know how these decisions were reached and who was involved. As we saw in the report published last week on Anglo Irish Bank, the taxpayer is going to pick up the bill at the end of the day. Not only was this loan delivered in such a way that 75% of the money was without recourse because it was secured on the shareholdings themselves but we now learn that the bank believes it will be unable to recover the remaining 25% in full. Those who are on this list have not even honoured the small element expected of them. The taxpayer, who is left to bear the burden of what a Minister has described as economic treason, has the right to know who was involved. I believe there are many on the Government benches who want these people to be named. While this is not the core issue, it would be a symbol of the Government's determination to introduce change. The failure to use the powers granted by the Central Bank Act or the Companies Act 1990 to put these names in the public domain sends the signal that this Government is not determined to make a clean sweep. The message which has to be sent is that the Government intends to turn over every stone in its determination to ensure wrongdoing is not sheltered.

Rhetoric is no longer of any value. International observers, on whom the success of our banking system and our ability to borrow depend, are not interested in rhetoric. They want action rather than tough talk from Ministers. Until we present convincing evidence that everything has changed in terms of regulation, a fresh approach to banking and the public finances and credible proposals which can be delivered within timescales that will impact on the public finances, we will continue to labour without international confidence. If we cannot rebuild international confidence in our capacity to manage our own affairs, we will run into difficulties in funding our finances and the guarantees and capital commitments we have made to the banks. If this happens, our economic independence will be undermined. Many people fought long and hard to secure our economic independence. The successful economic model created by many people on all sides of this House has been hugely damaged. We now need to have confidence that the Government is willing to take the actions necessary to resolve the problems and to meet the challenges we face.

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