Eamon Ryan (Dublin South, Green Party)

Yes it is, but in failing to do so the difficulty would be that the failure of one bank would lead to a failure in another. It would lead us to the same problem we had at the start, which would have been a systemic failure in our banking system. It was not easy to make the decision to put money into AIB and Bank of Ireland, but I believe it may be a decision from which we can ultimately profit. We can turn the situation around and get our shares transferred to a price that is much higher than they were issued for back in February or March last year.

Those were not easy decisions but they had to be made. We have to make further decisions. I recall attending the NTMA offices in February when the country was in crisis. People did not realise the extent of the liquidity crisis. It was a close call daily to have enough money to keep our banks open and to keep Government borrowing coming in. NTMA officials said we had to raise a significant bond, which could be put into our banks to take out the bad assets and to give us time to get this to work. Let us get the patient on to the operating table and then into intensive care before managing him or her over time. I left that meeting with a sense of conviction and urgency. We could not let the country fall and we had to do something significant to prevent it.

I have been absolutely open to other suggestions about how to address this over the past six months. The first time I was in the House following the February meeting I sat beside the Minister for Finance and I said to him that we would have to nationalise the banks. I could not see any other way out because the scale of the problem was so great. However, I have examined the issue over the past six months and while nothing is certain, no one should make categoric statements in the House about what is right or wrong. We are dealing with markets comprising human beings, which react together in different ways, and it is not easy to judge how they will go. All the evidence suggests that if we nationalise the banks, it may be difficult for the country to secure money. The international markets might say there is too much risk in Ireland and they may hold money back or send it to Austria or Sweden or they could demand a higher price because of the risk all being rolled up into one.

I cannot be absolutely certain what is the rate of risk but it is a potential cost and we could pay much higher interest rates that would quickly clock up a significant bill. There is also a risk that if we try to run the entire banking system, we will not do a good job. We can take certain actions in the political system but we would not run the banking system well. As hard as Department of Finance officials have worked over the past year, they do not have the resources to run the system. A proportion of the system must be in the market in order that supervision, independence, expertise and funding is ensured. There are costs involved. It is easy to think that it will all be sorted through nationalisation and the valuation process, but that would not reduce the cost of capitalisation that would have to be provided. The losses on the loans will still occur and the State would have to pay for every loan. NAMA will not take on loans worth less than €5 million, which are hassle to work out, but they would have to be taken on if the banking system was nationalised.

I totally respect people's right to come up with alternatives but the complex implications and costs behind such decisions must be examined. I have no objection to Deputy Bruton's good bank proposal but if one examines how it would work rationally, it is difficult to see how €2 billion in taxpayer's money could be turned into €30 billion or €40 billion to buy the good assets.

See this speech in context