Joan Burton (Dublin West, Labour)

As this is Committee Stage, perhaps it might be opportune for the Minister to answer some questions on what he has in mind regarding this scheme. He is talking about taking indefinite powers for renewal but, in practice, we are advised by the officials and others that, in effect, this guarantee is subject to European Union and European Central Bank agreement. We are advised it follows the Paris model and is, therefore, time limited, potentially for five years. This is not the case in Irish law but in terms of EU-type schemes. I would like the Minister to comment on that because the Taoiseach and others have referred to the Paris arrangements at various times. This would indicate a period up to five years. I am not sure when the arrangements commenced.

A more fundamental question concerns the fact that the measure was to allow Irish banks enter the securities market for a longer term than is possible under our two-year guarantee. The Minister did not say that when other countries adopted guarantee schemes, many did so because our arrangement, in the eyes of many, effectively forced their hands to do something similar. I am not sure the Minister would share that analysis. When the countries set up guarantee arrangements of their own, they did so after the Paris meeting, but their arrangements covered a longer period than ours. However, they did not include the kind of ultra-risky debt our guarantee included. We have not had a full analysis of the composition of that debt on a summary basis for the covered institutions nine months after the guarantee. Institutions going to the market from now on effectively have only a year because we are almost in July and the formal guarantee expires in September 2010. I do not understand what the Minister envisages happening. What will Anglo Irish Bank do with this power? Will it go, as it did before, into the UK market to look for some type of mezzanine finance? Is that the idea? Is the Minister encouraging or enabling the bank to do so? That is the kind of deal with which the bank was involved.

In the normal course banks turn over debts. Maturity dates arrive, the debt is converted and turned over. The Minister has made a point of saying at various times that this is new debt, implying that it is not rolled over debt. We are interested in new activity not in the context of the UK market, but of the Irish economy, job retention, job creation and credit flows to business. I cannot make head nor tail of why the Minister says this because he will not level with us and paint a picture of the kind of activity in which he expects this initiative to result. Is it simply a case of the banks in effect renewing various kinds of medium-term loan notes?

The Minister is putting forward an architecture. He and his officials obviously have a game plan in their heads, but he will not share it with us. He has the two year guarantee and the National Asset Management Agency, NAMA, will come on stream. Does he intend NAMA largely to be set up and to have taken over its portfolio of loans from the different institutions by the end of this year? He seems to indicate that the NAMA legislation will be here in September. Much of the work is going on, although there is no legislation for it. Does the Minister intend that by the time the guarantee expires in September 2010 that NAMA will be up and running and have taken the loans? If so, a fundamental question arises about what the Minister is doing with this Bill.

He has set up the depositor guarantee scheme for €100,000, which everybody broadly supported and which will take care of most ordinary depositors in the banks and more. He could, if he wanted to, set up a similar scheme for retail and small and medium-sized enterprises. I am sure the House would broadly agree with that too. There would be no difficulty in doing it. Why does he want to give this carte blanche of another unlimited period under EU rules, probably up to five years, without specifying exactly what is in it? Anglo Irish Bank and Irish Nationwide came to grief because their business model went bad. We know what they are still interested in doing. If they could get sufficient guarantees, they would like to go back into some kind of financing structure presumably with middle range loan notes. Is that what the Minister wants them to do? What does that do for Irish jobs and job retention? I do not understand what it means.

I have seen the notes from JP Morgan and Merrill Lynch and others about the prospects for Irish bank shares. The level of information the Minister has provided does not allow me to know if the Minister's target is to have a short to medium-term increase in Irish bank share values. If that is the Minister's strategy, the problem is that he can boost share values and many of the small shareholders will be delighted, but those share values are going up and down at the moment because people are taking bets on them. However, the increases will not be sustained unless the Minister has a sustainable banking model that involves domestic retail banking, what the Americans call "plain vanilla banking", taking deposits, lending money, short, medium and long, and mortgages to suitable candidates. There is no evidence that such activity is recommencing in any serious way. That is our problem with the structure the Minister proposes and what he is not telling us.

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