Frank Fahey (Galway West, Fianna Fail)

I reiterate the important points that have been made by previous speakers with regard to the guidelines. I welcome their introduction and fully understand the constraints on the Minister with regard to telling the banks what to do or how to run their businesses. The Minister cannot do that. We saw an example of this when Permanent TSB raised its interest rates. While this was a cause of great annoyance to many, the Minister could not interfere. I accept this situation and believe the guidelines for which the Minister is now legislating and which will be put in place are of critical importance.

The regulator already has significant regulatory powers over the banks. Will the Minister outline those powers for us. As Minister, he has some discretion with regard to the banks and perhaps he will comment on that. It is critical that the €54 billion to be given to the banks is utilised in the best way and lent to the economy at sustainable interest rates. Sustainable interest rates are equally as important as the lending of the money. As I have said previously, I have information to the effect that AIB has informed its managers that it wants them to lend money for new projects at 4% above the cost of funds. That is unacceptable when AIB is receiving an investment of money from NAMA. If AIB and Bank of Ireland borrow at 1.5% from the ECB, on the basis of the bonds being issued, there should be a range of interest rates in which that money will be lent. None of us wants to dictate what that range should be, but we must ensure the range is at a sustainable level for Irish businesses.

It is important that a provision is included in the guidelines to monitor lending patterns of the main institutions, particularly Bank of Ireland and AIB, on an ongoing or monthly basis. Is it possible for this to be done? It should be broken down to show the regions in which they are lending in Ireland and elsewhere and the interest rates they are charging.

It is equally important that credit policy for existing customers is monitored carefully. There is ample evidence that banks are calling in their best customers and increasing their interest rates from 1.5% to 3%, particularly customers with cash flow difficulties, something that is unacceptable. It is critically important that banks continue to use the interest-only mechanism. They gave out interest-only loans and mortgages during the good times and it is now vital they do so during these bad times.

There is clearly a policy in Bank of Ireland and AIB to get the money in. I appreciate why but no regard is being shown to customers in that policy. I have evidence of customers who are paying their interest and principal until they are dried up and the bank then telling them to go to hell. That is not acceptable in regard to the regime that existed in the good times. From the beginning of 2003 they increased their lending by €220 billion in the four-year period up to the start of 2007. During the debate last week, I had a call from a manager in one of the two main institutions in Dublin. He told me that he was being pushed to give out money during those four years and was being paid a bonus for doing so. Now he is being pushed to ignore the situation of those customers and simply get it back, irrespective of whether it brings the business to its knees or not. That is not acceptable and the banks must be responsible in the way they treat good customers. It seems they are going after good customers to get their money back as soon as possible.

For that reason the Minister must ensure that when the NAMA money comes into the banks, they lend it responsibly. We are not asking them to increase their risk, we are asking them to go back to the prudent and cautious lending they were famous for before they increased their outstanding credit by €220 billion.

This debate has been very good, with good points made by the Opposition. There has been some criticism, however, of the €240 million that will be paid out in fees per year over the ten years of NAMA. That is the most important €240 million that will be spent in this State in each of those years. My worry about NAMA is that we will not have the best people who are at arm's length from the industry and who are capable of managing this property portfolio to a successful and profitable conclusion. It is therefore vital that we employ the best people who are at arm's length and if that means paying the top people good money to ensure that this portfolio is managed to a profitable conclusion, it is money well spent. I would far prefer to see €240 million spent that way than €120 million being spent and our missing out on the best expertise available for the work NAMA must do.

Deputy Burton's mentioned the €28 million that is being put into Anglo Irish Bank-----

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