John Cregan (Limerick West, Fianna Fail)

I wish to share my time with the Minister for Education and Science, Deputy Batt O'Keeffe.

I welcome the Bill and the opportunity to contribute on this important legislation. I must mention something that has sickened me more than anything else during the debate on NAMA. I will qualify my remarks by saying I have the utmost respect for both Opposition parties which have put forward alternatives to the NAMA proposal. I respect that fully. However, many have made the populist remark that the Government is bailing out bankers and developers. I welcome Deputy Coveney's honesty in his contribution when he acknowledged that the efforts by the Government to stabilise the banking system were in good faith and he did not doubt they were genuine. It is refreshing to hear a member of the main Opposition party say this in the House. It was not just members of political parties but also members of the media who consistently used that line, because it was popular with the public to lay blame at the door of Fianna Fáil and state that we would go on to bail out bankers and developers. These people disgust me with the way they have carried on, and they can hang their heads in shame tonight as this House sits to consider alternatives and discuss a solution to the problem that will give our economy the prospect of growth. I look forward to this happening in the coming months.

This is the most spoken about Bill in the history of the State. This is only natural because it will have an impact on everybody's life. The purpose of the Bill - we are sensible enough to admit this, as Deputy Coveney did - is to restore confidence in the banking system and ensure credit can flow to those in the small business and farming communities and to households. In the last number of months credit has not flowed into these areas, and all Members, in their clinics and advice centres, have met people on a daily basis who give us anecdotal evidence that it is not going to those people who need it most. We are sensible enough to understand that if a solution is not found, whatever it may be, we will be in the same position in 12 months' time or in two years' time, and credit still will not flow to those who need it. We must realise that this is the case.

What has got us where we are? In my opinion, it is greed and a lack of personal responsibility. We saw a disgraceful performance from the Financial Regulator, yet the chief executive sailed off into the sunset, well recompensed, as was the culture of the day. I do not blame anybody for that because there were contractual obligations, I presume, and legal issues. We have a culture in our society whereby people who are entrusted with responsibility to defend the interest of the taxpayer can finish up with a golden handshake and a huge pension and sail off into the sunset. It is time to change that, and I welcome the changes made up to this point by the Minister for Finance with regard to recompensing bankers, encompassing a reduction in their salaries and limits on bonuses. It is high time this happened, and we must go further, because it has sickened the public to see such appalling behaviour across many sectors.

I welcome the improvement in regulation introduced by the Minister. I also welcome the departure from a single financial regulator to a central regulatory authority combining the Financial Regulator's office and the Central Bank. I welcome the appointment of Professor Honohan and wish him well in a difficult job.

I wish to cite a few examples of reckless banking. An email I received from a constituent who was a director of a building and development company, qualified in project management and finance, states:

We as a company have not purchased development land since 2005, we do an appraisal on every single project in advance of negotiating with land owners and our financiers. Any projects that we looked at in '05/'06 and '07 did not stack up in our appraisals.

In 2007, we were looking at a particular project, we spoke to 3 commercial lenders to provide finance, Bank of Ireland, Allied Irish Bank and Anglo Irish Bank. Bank of Ireland said "no thanks lads", A.I.B. hounded us for the business offering 110% finance, Anglo Irish Bank looked at our appraisal and would only offer finance on a 60/40 Loan to Value [basis].

In my opinion the A.I.B. proposal of financing even in July '07 of 110% was absolute reckless lending practices, especially when the financial crisis was beginning in the USA. This type of financing was commonplace at A.I.B.

That is one example of the behaviour of bankers.

In regard to personal borrowing, a constituent of mine in Newcastlewest managed to borrow €74,000 by way of letters of offer in the post and telephone calls without ever standing inside the door of a financial institution. That is absurd and appalling. The person in question cannot afford to repay that loan or anywhere near that amount. It was wrong to allow that person to borrow that amount of money.

With regard to local banking, many years ago local bank managers were in a position of authority and could approve an overdraft facility, mortgage or a personal or term loan for their customers. That practice changed five or six years ago, not on foot of the banking crisis. The local bank manager cannot approve or increase an overdraft facility or approve any type of personal borrowing but a computer system can spit out letters that are issued to customers who might be with the bank for only six months, advising them that they now qualify to borrow up to €5,000 or €10,000.

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