Joan Burton (Dublin West, Labour)

He can close this loophole tonight if he so wishes.

The overhang of the banking crisis affects our nation's international creditworthiness as much as the budget deficit. Of the adjustment of €3.2 billion announced today by the Minister, I reckon at least €500 million - but possibly up to €1 billion - will be used to meet the higher interest charges that must be paid by Ireland on the money it borrows internationally because of mismanagement by this Government. PAYE workers are paying €1.5 billion in extra taxes, much of which will go towards the extra interest costs racked up by the Government by its damage done to our reputation.

I read with some astonishment a report by Stephen Collins and two colleagues in last Saturday's edition of The Irish Times regarding the events of 29 September 2008. According to this report, the State's two largest banks, Allied Irish Banks and Bank of Ireland, left the overnight negotiations on the guarantee scheme on 30 September believing the Government would nationalise Anglo Irish Bank the following weekend, after the introduction of the scheme. The Minister has been strangely silent on this report in contrast to the fuse he blew over Professor Morgan Kelly's very similar proposal some months ago in The Irish Times.

Had Anglo Irish Bank and the Irish Nationwide Building Society been nationalised immediately, and Mr. FitzPatrick and Mr. Fingleton shown the door, we would not have endured quite the fallout we are now suffering. What was it about this pair - Mr. FitzPatrick and Mr. Fingleton, our home-grown Bernie Madoffs - that they were able to persuade a gullible Fianna Fáil, a gullible Central Bank and a gullible regulator that they could resolve the difficulties at their respective institutions? There has been no explanation or apology in this regard. We were already in serous trouble because of the situation with our banks, but the introduction of the guarantee scheme was a disaster for the country and for our reputation. The decisions made on 29 September were flawed and left the country open to a very hostile international reaction. The Taoiseach told the Irish Management Institute in recent days that the risk exposure from the guarantee was "just" 230% of GDP. Of all the understatements I have ever heard, this beats Banagher. We have a situation where "just" 230% of the nation's entire wealth is hanging on the bank guarantee. The man who made this statement is charged with leading the country at this moment of crisis.

The financial institutions guarantee scheme was followed by the nationalisation of Anglo Irish Bank and the allocation of €7 billion for recapitalisation. Now we have come to the grandest act of all in the saga of banking policy with the introduction of a national asset management agency. The Minister is drinking in the famous last chance saloon. He has been very sketchy on the details of how control of debts and toxic assets will be taken from the balance sheets of the banks. One policy issue is central to this scheme, namely, the question of how to handle the valuation of these debts. As long as these toxic debts remain on the balance sheets, our economy will be hobbled by these dead banks walking or zombie banks. These problematic loans must be dealt with in order that ordinary banking and credit flow will resume, thus allowing small, medium and large enterprises, commercial operations and sole traders throughout the State to retain people in employment. As I said, today's budget will see our citizens taking a severe hit in living standards for years to come, with additional taxes of all types, reductions in public services, decreases in social welfare payments and limitations on entitlements, all for no other purpose than to save these financial institutions from the consequences of their own folly and greed.

The Minister mentioned a figure of €80 billion to €90 billion as the likely level of problematic loans. However, he does not indicate what will be the write-down of that figure. Many of these loans are in respect of development lands - the fields outside Dublin city and outside towns throughout the State. These were fields of gold for which the owners may have paid €20 million, €100 million or €200 million. However, they are no longer fields of gold but simply fields. One would be lucky to get a farmer to pay for grazing on some of them, so low will be the demand for construction on them. What value will be put on these former fields of gold? If €80 billion to €90 billion of assets are at issue, a 50% write-down would leave taxpayers with a burden of €40 billion to €45 billion to take onto their backs and those of their children and grandchildren. Why should we pay anything in respect of these loans? What is wrong with either taking a majority stake or nationalising the institutions in question?

In annexe 1, which provides questions and answers relating to the national asset management agency, NAMA, one of the questions asks whether land and development loans outside of Ireland will be transferred to the NAMA. The answer suggests that toxic debts held by our banks outside this State will be eligible for transfer to the NAMA.

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