Michael Moynihan (Cork North West, Fianna Fail)

I welcome the opportunity to contribute to the debate. As is the case on many occasions, the debate taking place in the House is very important. In the light of the events and revelations of recent months, this is one of the most crucial debates. We have reached a crucial point. In the time available to me I could deal with a raft of issues relating to the monetary situation and our credit rating in international markets. However, I refer to regulatory matters and especially the absolute breakdown of regulation. It was said in the debate last night that financial regulation throughout the world had been very lax. It seems our regulatory system failed us completely.

In reference to any crisis or issue of recent years we must examine where mistakes were made, follow through and ensure what occurred is never allowed to recur. There has been reckless lending by some financial institutions which has led to very severe difficulties with the loan books and on borrowing sheets of the banks. However, we should bear in mind that there is another group of people who will spend the next 30 years, or perhaps longer, paying for the reckless lending engaged in in recent years. This group is especially made up of young couples who bought houses and are now in negative equity. We must examine their situation. Many are facing jobs losses because of the international downturn and some have lost their jobs already.

Deputy Rabbitte alluded to the situation in Bank of Ireland, but there must be root and branch reform and a sea change. Some have said that between 1989 and 1990 the communist system collapsed worldwide. The world has collapsed in recent months. As the revelations unfold, not only in Ireland but throughout the world, there are serious difficulties emerging. It is time to examine these and look outside the box. We must make fundamental changes to the way banking operates in this country and throughout the world. We must examine the practices, culture, amount of money generated or lent and practices of some financial institutions which have come into the public domain. We must change this culture.

The pay of the chief executives and others in financial institutions was mentioned. The public is incensed by the amounts of money earned. Last week we heard one person refer to a reduction in his salary, leaving him with an income of €2 million. Such pay must be capped. We must be seen to be responsible. We should bear in mind that the banks make profits from their customers, that is, from each and every individual throughout the country. However, they have a duty to look after their customers in a responsible and efficient way and in a way which is morally guided.

The regulatory system was established with the Central Bank and there must be fundamental changes to it. Someone must take over the role of either the Governor of the Central Bank or the regulator. Whatever system is put in place should have someone at the top from outside with no allegiance to the current banking system or the Central Bank. Any new system must have an independent voice and authority to ensure the fundamentals are sound. The fundamentals of the financial services sector will serve us well in the coming years, if we manage change correctly.

We should bear in mind that this is not the first time financial institutions have lent recklessly in Ireland — others have said as much. In the late 1970s and early 1980s the banks lent recklessly to the farming community. We did not learn our lessons at that stage. Many farms went out of business because of it. We must put in place a draconian regulatory system. I will support the Government in any attempt it makes to ensure such a draconian law is enacted to ensure we will never again end up in the position in which we find ourselves.

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