Kieran O'Donnell (Limerick East, Fine Gael)

All Members desire a sound banking system. While a budget will be announced next Wednesday, I note the existence of a sound banking system is inherently as important to the recovery of the economy as are any other measures to be taken by the Government. This is the reason the Minister for Finance should be present in the Chamber. Members are being asked effectively to extend the guarantee scheme for a certain range of liabilities. The Minister must answer many questions in this regard, one of which pertains to the scheme's commencement date. This is of great relevance to section 30 of the scheme, which notes that lower tier two assets covered on or after the commencement date shall not be guaranteed. However, I do not know when that commencement data will be. Lower tier two capital probably should not have been included in the original guarantee scheme because it is highly risky. Furthermore, as the Minister of State probably is aware, much of the restructuring of the banks over the past year has involved transferring capital into lower tier two, which is guaranteed under the scheme.

I refer to the issue of the flow of credit. The outgoing chief executive officer of Allied Irish Banks, Mr. Eugene Sheehy, appeared recently before the Oireachtas Joint Committee on Finance and the Public Service. He stated that there would be no great changes. He also stated initially that AIB would not use NAMA bonds to obtain credit from the ECB at reduced rates to enable credit to flow. When pushed at length, he then effectively stated the bank might consider it. However, this simply is not good enough.

The original Credit Institutions (Financial Support) Act was passed last September. This was followed by the original Credit Institutions (Financial Support) Scheme on 24 October. A third scheme now has been proposed for the banks. Although the banks must demonstrate change, they still refuse to guarantee the provision of some relaxation by giving credit to hard-pressed small businesses. The banks are not living up to their side of the bargain. The Minister also should state how much the banks have paid under the guarantee scheme to date. What amounts are outstanding under the guarantee scheme? As this is provided for under the original Act after the end of 2009, Members should be informed. Goodwill from the banks must be evident. We are being asked to support this scheme without the banks showing they have changed their management structures or will return to providing credit through the NAMA bonds with the European Central Bank. This morning the Joint Committee on Finance and the Public Service heard of people's concerns of losing their homes through repossession. The banks have not lived up to their side of the bargain. It is imperative they do live up to it as the Dáil is being asked to extend the bank guarantee of €440 billion provided by the taxpayer for another five years.

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