Ruairi Quinn (Dublin South East, Labour)

I was elected to this Chamber in 1977. Twice in my time in this Chamber I have seen Fianna Fáil bring this country to the brink of bankruptcy - in 1979 to 1980 and in the past year and a half. This Bill is coming from the same party with the same political ethos and the same recklessness that precipitated the previous bankruptcy threat and the current one. It is no wonder that the Irish economic crash is much worse than in any other member state of the European Union. The reasons are because of the scale of the property-driven inflation that was whooped and cheered on by Fianna Fáil. What is extraordinary is that we have yet to hear one word of apology from the Taoiseach, Deputy Cowen, or his predecessor, or one word of admission that they had got it wrong but they are trying to correct it. We heard nothing of that nature this afternoon during Leaders' Questions. We have not got a sense in any way that they are responsible for the mess in which we find ourselves.

We have a complete and comprehensive financial and economic crisis. It is not just about the banks nor just about NAMA. What the Labour Party has proposed, in contrast to what it has been caricatured as offering, is something along the following lines. We need to restore credibility in the economic system and in those who are responsible for managing the financial services sector in particular if we are to attract and retain the type of investment we have so far enjoyed. Our proposal to do that is to establish a financial banking commission headed up by an Irish person of international reputation, such as Niall Fitzgerald, for example, but significantly also with members such as a retired German central banker or a retired American central banker, people from outside the wider shores of this island, because not every investor in the world has an Irish grandmother and looks favourably on the old sod. We need to restore credibility and objectivity.

We then need to turn to the Central Bank. I hold the view that all the members of the board of the Central Bank should be asked to submit their resignations at this point because they were part of a regulatory system that failed. I welcome the appointment of Professor Honohan. His international reputation is precisely what we need to restore credibility, but he should be assisted with a new board.

I wish to deal with the issue that has been the subject of so many deliberate political slurs and misrepresentations coming out of the Pravda section of the Fianna Fáil press office. It is no coincidence that the same line was used in the speeches of the Minister for Finance, Deputy Brian Lenihan, the Minister of State at the Department of Finance, Deputy Mansergh, and the Minister for Education and Science, Deputy Batt O'Keeffe. I repeat what the Labour Party has said: if one pays a reasonable price for the distressed assets, the likelihood is that one will have to recapitalise the two main retail banks, not all the banks, just the two main ones, so they can get back to the high street business of facilitating business and liquidity. There is nowhere in any Labour Party proposal for the words "blanket nationalisation". We have never referred to 100% nationalisation. We are talking about temporary public ownership, in the region of 70% plus, which we will probably have anyway.

The banks will stay quoted on the Stock Exchange. The shareholders will not have their shares confiscated. The toxic loans would be taken out and some form of NAMA set up, whether a bad bank as in the Fine Gael proposal or based on our system. Some form of NAMA is required to separate non-performing toxic loans from the balance sheets of the banks so the main banking activity can continue.

The boards of Allied Irish Bank and Bank of Ireland must complete their exit. So far, their chief executives and chairpersons have left but why stop there? We need new and properly appointed boards and the Opposition should be consulted by Government in this regard. I welcome the limited consultation we have had so far. The new tier of management that would come to the fore in those two banks - which currently have good management through the ranks - would be told they would receive no bonuses and no excessive salaries, that it is our intention to refloat 100% onto the market those banks temporarily in public ownership and that their bonus will be 5% to 10% of the realised value. This would be the incentive to management to achieve the best result.

We would say to the shareholders that we are sorry that they have, as a result of mismanagement of the economy under Fianna Fáil, lost their shirts and that dividends have been suspended. Most people who invested in bank shares did so not for capital appreciation of those shares but for the dividend income they provided. Those people who have held bank shares for the past 20 or 30 years did so for dividends, income that provided the most secure kind of pension available to them at that time. They have already lost this. We would say to the shareholders that we hope to again realise the value of these banks in seven to ten years and that the Irish state will take back in the realised profits only that amount of money invested by the taxpayer through the Government in the first instance and that whatever is left will be theirs. While they may not ever see that money their children or grandchildren will see it. That model has been used successfully in many other countries.

Let me nail another Pravda lie from the Fianna Fáil press office about political interference in a State run, State-owned financial institution. We have one from the stable of the Department of Finance. The life assurance companies in this country got into trouble in the 1930s and had to be bailed out and rescued. They were rescued by a State-owned entity, Irish Life, which was 95% plus owned by the State. The shareholding was held by the Minister for Finance and there was a residual private shareholding left over from the chaos that was rescued by the State payers. Nobody ever suggested that Irish Life was subject to political interference in the same way that the ESB, Bord na Móna or CIE had been subject to political interference. There was no corruption of the commercial mandate from Merrion Street and rightly so. When that bank was subsequently successfully privatised over a number of years shareholders ended up getting money.

Our biggest problem is that there are two people to be protected in this bail-out. This is a bail-out of one kind or another whether the discount is 30% or 70%. I welcome to the House the Minister, Deputy Ó Cuív, with whom I debated this point on a television programme some time ago. We both agreed that the critical point is the price. We now know the critical price. It is a 30% discount as distinct from what the High Courts were saying to Mr. Carroll should be a 70% discount. Whether the discount is 30%, 50% or 70% - which would be disastrous - the question is if the taxpayer is to have a degree of subsidy in all of this. I agree that some form of subsidy is required but what does the taxpayer get under the NAMA proposals currently before us? We get nothing. If we are in the seat whereby we receive part or temporary ownership of whatever the amount happens to be and the banks are refloated then the taxpayer gets that gain.

Senator Share Ross said this afternoon on radio that it was significant that the stock market in Ireland was closed when the Minister was making his speech to the House. He predicted that when the markets open tomorrow the banks will be excessively happy and the market will have bounced up their value. That is a critical assessment from the only qualified stockbroker in these Houses. This gives us first sight of what will be the impact of the NAMA route as currently pursued by the Government.

None of us has been here before. The Government has proposed a solution that we do not believe is a great solution and we have outlined alternatives. However, following conclusion of the Second Stage debate we will have an opportunity on Committee Stage to get right whatever proposal is now on the table. I hope that the arrogance and tribal negativism that we have witnessed so far from Fianna Fáil will not close its mind and ears to the expertise in this House as referred to earlier by Deputy Burton. Sadly, listening to the speeches this afternoon from the Taoiseach and the Minister I do not hold my breadth.

This issue is too big for any of us. The Government will not be in office following the next election. That issue has effectively been decided and the Government knows that as well as us. Let us get this right so that we do not have to pick up the pieces after the general election is called.

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