Michael McGrath (Cork South Central, Fianna Fail)

I welcome the opportunity to speak in support of the Government amendment to this motion.

Those responsible for inflicting such serious damage on the Irish banking system in recent times must be held to account before the full rigours of the law. Based on what has been publicly disclosed, the events at Anglo Irish Bank are nothing short of a national scandal. These events included the concealment of the directors' loans, the deliberate propping up of the share price following the unwinding of the contracts for difference, as well as the €7 billion window dressing of its customer deposit base at year end. During the Celtic tiger years, the Irish banking system was run by a small number of elite executives, who often put self-interest ahead of the country's interests. In refusing to accept the resignation of its chief executive following exposure of the bank's role in boosting the deposit base of Anglo Irish Bank, the board of Irish Life & Permanent displayed the type of gross arrogance and appalling lack of judgment which has characterised the top echelons of our banking system in recent times.

It is essential that the investigations being undertaken by the Office of the Director of Corporate Enforcement and the Financial Regulator are completed as a matter of absolute priority. The only way national and international confidence can be restored in our banking system is if there is full accountability for the actions of senior executives involved. I welcome today's searches by gardaí attached to the Office of the Director of Corporate Enforcement and I look forward to the completion of these investigations and appropriate action being taken. Deputy Thomas Byrne and I recently wrote to the Garda Commissioner asking that additional resources be made available to assist the director, and I am pleased that eight additional officers have been made available.

It is clear that some of the transactions at Anglo Irish Bank were completely unethical and, in my view, fraudulent and illegal. Those responsible must be pursued vigorously. The competent authorities must do the job they are empowered to do and conclude definitively on these matters. One measure that would help rebuild confidence in the banking system would be to take a tough line on the level of executive pay. Imposing a 33% reduction does not go far enough; the Minister must impose an actual cap in pay at a level to which people can relate. It is not acceptable that senior banking executives are allowed to live in a parallel universe and earn extraordinary amounts of money at a time when the Irish people have come to the rescue of the banks. The oversight committee is reporting on 5 March and I look forward to the recommendation of the committee and the Minister's final decision on the issue of executive pay. I am sure he will apply common sense to the level of executive pay and bonuses, which will be capped following the deliberations of the committee.

It is clear that there needs to be a fundamental overhaul of our regulation system. The reform of the regulation system needs to be brought forward urgently. The current system has been exposed as flawed and inadequate. For example, the Financial Regulator's office seriously mishandled the Seán Fitzpatrick loan scandal at Anglo Irish Bank. In spite of the fact that members of the authority had a series of meetings with Anglo Irish Bank in January 2008, we are led to believe that the chief executive of the authority or any member of the board was not made aware until December 2008 when the Minister informed him. That is completely unacceptable and shows a serious lack of controls and procedures in place at the offices of the Financial Regulator. The authority investigated this itself and the resulting report was a whitewash. I welcome the Minister's intention to bring plans for regulatory reform to the Cabinet, and I believe that the board should be removed as part of that reform.

During the Celtic tiger years, the Central Bank time and again highlighted the risks for the Irish economy arising from excessive lending, particularly in the property market, yet the advice provided by the Central Bank was not implemented by the Financial Regulator in its dealings with individual financial institutions. The role of the regulatory authority is to ensure consumer protection and to foster sound, growing and solvent financial institutions. The regulator has clearly not implemented the economic policy advice from the Central Bank. The answer lies in consolidating the functions of the Central Bank and the regulatory authority under a new financial watchdog. I look forward to reading the Minister's proposals on reform of the regulation system.

Ireland needs to have a strong banking system in order to come through this economic recession. A new banking system needs to emerge from this crisis, and that system needs to be led by executives who recognise their responsibilities to their company, their community and their country. We need people of principle and conviction at the top echelons of our banking system. The banks and the Irish economy have a mutually reliant relationship. We need to get credit back flowing through our economy, and we need to restore trust and confidence in our banking and regulation system as a national priority. I fully support the Minister in his efforts to achieve that end.

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