Dáil debates

Tuesday, 22 September 2009

National Asset Management Agency Bill 2009: Second Stage (Resumed)

 

6:00 pm

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)

I am sharing time with the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Billy Kelleher, who will take over the debate tomorrow. I very much welcome the opportunity to contribute on this Bill. I commend the Minister on publishing draft legislation as far back as 30 July, since there has been a very good debate, on the airwaves, in the print media and at the very long committee meeting some weeks ago during which the Minister gave details and answered many questions on the draft legislation. It is fair to say that since then there has been much discussion on the legislation in every part of the country.

I was glad about one thing the Minister did at the outset of these difficulties. He introduced a State guarantee to the banking system which will be there until September 2012 and this got the support of many Deputies in the House. Many of my constituents and others throughout the country were very concerned that there would not be a guarantee, especially for those who had savings in the financial institutions.

Unfortunately, the greed that existed has led to many difficulties. There was greed in the banking sector and among developers who believed that prices would continue to increase forever. I did not know much about this and was not one of those who made prophecies about it. Some years ago when I could see that powers were being taken away from the traditional bank manager's role I made a suggestion. I spoke about rural Ireland in particular, where it seemed that the authority to sanction loans was taken away. I saw many branches of the financial institutions closing down. They were not closed because they were losing money but they were not making enough money to suit the CEOs and the people in the board rooms. I offer the example of a modest service which closed down, the mobile Bank of Ireland in Connemara. The Bank of Ireland in Glenamaddy closed and people were told to go to another county, Roscommon. Allied Irish Bank in Mountbellew was closed. It is very difficult to say to people that we want the banks to do business, to lend and have credit flowing when at the same time we see branches closing down and the whole banking structure moving farther and farther away from people.

Not long afterwards the Permanent TSB announced that it too was doing away with its agencies, some 48 nationwide, eight of which were in County Galway. We now have three left in the city and every other town and small village has lost the agency for Permanent TSB. The ACC acted similarly and 16 jobs were lost in Tuam. At a time when we are trying to hold on to jobs it is really disgraceful to have job losses in a situation whereby the ACC moved its business to Galway city. It is sad that the city has to gain so much at the expense of the smaller towns. If we talk about getting the entire banking system moving again we should look to hold on to these branches and agencies. I praise the credit union movement which seems to increase its branches and its numbers. The credit union is certainly more accessible for people who want to do business with it and long may that continue. The credit union movement has the flexibility to open at times our banking branches are not open.

I was glad to hear the Minister state that we are trying to get the banking system moving again. He talked about how the recapitalisation of the Bank of Ireland and Allied Irish Bank went ahead and the nationalisation of Anglo Irish Bank took place. We needed to do this because banks must have the funds to lend. NAMA will be able to attract more funds from markets and we will be able help funding, which is a serious issue at the moment. Any uncertainty about the banks' balance sheets will be dealt with under this legislation.

We received support from the European Central Bank. Banks receive bonds that can be cashed at the ECB or on the world markets. At a time when we are told we are borrowing €400 billion a week, or €57 million a day, to keep the country going, it is important that we have the facility to be able to deal with the European Central Bank. That should be borne in mind by people who are thinking about which way they will vote in the second Lisbon referendum on 2 October because we must ensure we will be able to get those loans at a very good interest rate.

When we spoke about having a banking system that is moving farther away from people, I thought of the rural transport scheme we have been discussing in our constituencies in recent times. For many years people got free travel and did not use it because they were not able to avail of the services. However, when the service comes under threat thanks to the McCarthy report people say, "My God, are we going to lose something that we are just beginning to get used to?" I hope that will not be the situation with regard to the smaller branches of these banks, building societies and other financial institutions.

The Minister spoke of the need for stimulus in the economy via the banking system. NAMA will deliver that stimulus. It is not bailing out the banks but is buying loans at a discount, as the Minister explained. The banks and their shareholders will have to accept losses. We should also say that NAMA is not bailing out builders. It will move against any borrower who will not or cannot repay loans. Borrowers will owe NAMA the same amount of money they would have owed the banks. The Minister for Finance has kept a very cool head during this debate. It has been a very difficult time.

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