Brian Lenihan Jnr (Dublin West, Fianna Fail)

I can assure Deputy Bruton that the day he walks into the Department of Finance the fig-leaf will be removed.

Deputy Burton broadly welcomed the Bill. I was not aware of the fact that she had raised the issue with the previous Minister. She sees some sinister reason in the fact that the Bill has been separated from other legislation dealing with financial matters. The Bill implements the directive; it is normal practice to implement a directive in a Bill of this type. We have consolidated some of the statutory instruments involved in the legislation and I can assure the Deputy there is no sinister motive for it. I certainly never saw the guarantee given subsequently on 29 September as the cleverest move in the world. I simply saw it as an indispensable step towards maintaining confidence in the banking system. Most European countries have implicitly or explicitly guaranteed banks. The fundamental question that arises in connection with the guarantee concerns the fact that the Government decided it could not let a bank fail - at least, a bank of systemic importance could not be permitted to fail. That is the position of the European Central Bank and also the position of the Government. It is relevant to the current discussion about Anglo Irish Bank. One of the key lessons to which Galbraith and others drew attention regarding the 1929 financial crisis was that if a government permitted a bank to fail and insisted on bank failure as a remedy to solve difficulties in the banks, the shock wave in the economy would be far greater than the shock wave already being felt in the course of a recession. Anyone who studies the 1929 depression or world recessions where bank failure was accepted as an axiomatic solution to a banking crisis will see that the shock wave in those economies was far in excess of anything we have seen in the current economic crisis.

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