Michael Moynihan (Cork North West, Fianna Fail)

The stark reality is that the banking system is not providing credit for small to medium sized businesses or anyone else. Some people say we should take a long-term view and caution "steady as she goes". However, serious decisions must be taken quickly to ensure that businesses have access to credit and we get the system moving. If businesses do not get the credit which is so badly needed they will fail, and add further to the current chaos.

The banking system almost collapsed some months ago. There was reckless lending by financial institutions, particularly in the past four to five years. When the office of the Financial Regulator was established, power was taken from the Central Bank. The new proposals place the Central Bank at the centre of financial supervision as well as having a regulatory body. That is fundamental to our economic wellbeing and to our banking system.

People say Irish banks never loaned money so recklessly. They forget that this happened in the late 1970s and early 1980s, particularly among the agricultural community. Many farmers borrowed heavily on the advice of banks when land prices were at their peak and some lost their businesses and family holdings. Banks were giving money to neighbours to outbid each other on land and it was all based on false economy. Huge efforts were made by the Government in the 1980s to rescue the farming community. However, we did not establish draconian regulations to prevent the banking system from behaving in that way again. As public representatives, we must now introduce draconian regulation to ensure that what happened in the recent and more distant past will not happen again. It behoves us to ensure such regulation is put in place.

I now turn to the National Asset Management Agency and the difference of opinion as to how best to approach the current banking difficulty. Banks are not lending and businesses are going to the wall because of lack of finance. We must do something immediately and face up to these serious and real difficulties. The structure of the National Asset Management Agency is well thought out. The National Treasury Management Agency, which has done excellent work in managing the country's finances since it was established 20 years ago, has the necessary expertise. The system can work, despite experts on all sides saying otherwise.

We do not have time to wait. We must get the financial institutions working again. It is a cheap political shot to speak about bailing out banks. That is not what the Government is doing. It is bailing out small businesses, mortgage holders and ordinary punters, who are in serious difficulty and looking for credit, and thereby bailing out the entire economy.

The banking system has been ridiculed. A person who came to tell me about the difficulty he was having with his bank remarked that banks are your friend until you need them. Many people now need a friend in a financial institution but cannot find one. It is time we got the real economy working and credit flowing. I commend the Government's amendment to the House.

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