Richard Bruton (Dublin North Central, Fine Gael)

First, the Minister is asking the taxpayer to provide yet another line of defence for the banking system. The critical issue that must be addressed is whether the banks have changed sufficiently and whether there has been a transformation in the banking system that would warrant the taxpayers dipping into their collective pocket once again to underpin them. Quite plainly, the answer to this question is "No". Members have not seen such a transformation within the banking system that would give them the confidence to demand of taxpayers that they should underwrite further guarantees for the banks. The Minister appears to have committed himself to a strategy of keeping the banks independent at almost any cost. The real question that must be asked is whether these independent banks the Minister is propping up are willing to commit to ordinary businesses and to keep those businesses in place. Can they guarantee they will provide the requisite credit? Sadly, the short answer is "No", they are offering no such reassurance.

Where is the evidence that either the philosophy or the leadership of the banks have changed? On the contrary, the two key banks have thumbed their noses at the Government and have insisted on appointing insiders to leading posts. Where is the evidence that the banks are devising strategies to help businesses get through this difficult time? On the contrary, the two major banks appeared before the Joint Committee on Finance and the Public Service and told members that the introduction of NAMA would not change by one whit the availability of credit through those banks. Moreover, it also would not change by a single cent the cost of credit to businesses that sought funding from those banks. If the Minister is so well briefed in this regard, why did he not advert to this point? Where are the changes in the banking laws that would give Members confidence that the banks' attitude and approach have changed permanently? In truth, not a single banker has been arraigned before the courts for any of the gross wrongdoing that occurred and which has brought about this crisis. Moreover, there is no evidence that credit is beginning to flow again. Evidence from the Central Bank suggests that the approach of NAMA and the Government is not delivering credit to businesses that need it.

The public has a right to be deeply sceptical of any proposal by Ministers to further extend the guarantees to banks until evidence is forthcoming of a genuine change in the manner in which banks are run. The people who were at the heart of issuing credit that has brought this country to its knees remain in leadership positions within the banks. They are even thumbing their noses at the salary caps imposed. While they are honouring them in the letter by not paying the chief executive more than €500,000, in spirit it is not being honoured because other executives within those banks are being paid more. This is not acceptable to the ordinary public and the Minister has shown no evidence that he understands what has been happening on the ground. People seethe with rage when they look at the banks and those who lead them and do not discern the change in culture that is needed. Such a change in culture must be seen.

Taxpayers already have been asked to pay €7,000 million more than the market value of these impaired loans with the sole intention of protecting the banks. How are the banks using this largesse, protection and support that has been given by the Government? As the Minister of State is aware, the honest answer is they are using this money to protect banking interests, that is, to protect themselves and their shareholders. This is their priority and many would suggest that this is what one would expect them to do. However, this is not good enough. As the taxpayer has been asked to bail them out twice and now is being asked to extend the guarantee yet again, there must be evidence that matters have really changed. Although the Minister would have Members believe that this proposal simply is a logical extension of what they have done previously, this is not the case. I agree that long-term wholesome investment into our banks would be welcome. However, I refer to the banking system that is being reconstructed. The Minister is asking Members to believe that this proposal forms part of a reconstruction of the banking system. However, Members must see evidence that the banking system it is trying to reconstruct has reformed the manner in which it approaches the difficulties in which we find ourselves. They must see evidence that the banking system now is part of the battle to preserve sound businesses and to ensure that no good business goes to the wall for lack of credit.

Such evidence is not forthcoming and the Minister of State can talk to his own backbenchers in this regard. They have been more than eloquent at the Joint Committee on Finance and the Public Service, of which the Minister of State is a former member, in explaining how the reality differs greatly from what the Minister would have one believe. Members were sold NAMA on the basis that it would extend credit and would get access to cheap ECB money. I recall Deputy Fahey and many other advocates for the Government scheme stating that it would be wonderful, that cheap money would be available at a rate of 1.5% and that the credit problems would be cracked. However, the ink was barely dry on the enacted NAMA legislation before the banks came before the Joint Committee on Finance and the Public Service to state they were sorry but there would be neither more credit nor cheaper credit as a result of NAMA.

Consequently, the public considers that it has been sold a pup and the Government now is asking us to extend the guarantee even further. Members also were told by the Minister that the money being invested in the banks would yield an adequate return for the investment. In reality, the cost of State borrowing rose by €1 billion as a result of the banking crisis and the extension of cover. All that has been received in return is €473 million, meaning the banks have paid less than half. They were told there would be a yield on preference shares of 8%. However, Allied Irish Banks has now stated that money will not be forthcoming because the European Union has blocked it. Similarly, although Members have been told that NAMA would deliver a return, no one, apart from a few Ministers and their close colleagues, believe any of the assumptions that underpin this. I will conclude by noting this is a highly costly adventure on which we are embarking in an effort to reconstruct the banks. Unless there is evidence that the banks genuinely have changed and that a new regime is in place that will support business and get the economy through this difficulty, the Government cannot ask the taxpayer to prop them up with more supports.

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