Kieran O'Donnell (Limerick East, Fine Gael)

I was at the meeting when he asked for an Oireachtas inquiry. It is inappropriate for the Governor to carry out an investigation into an organisation for which he is responsible. The public requires a clear and unambiguous inquiry into the banking system. The first difficulty with the Minister's proposal is that the inquiry it envisages will be conducted in private. Second, it is a cumbersome process, comprising a maze of outlets that will not provide accountability in terms of the political process. It is important above all that any inquiry must be public. Moreover, if it does not have a political dimension it will be akin to a wedding without a bride.

One need only look to some of our European neighbours to see how matters were conducted differently there. For example, the Spanish regulator introduced more severe capital ratios for the banks to ensure there was no reckless landing. Why did we have a situation in this State where the Taoiseach, as Minister for Finance, could state in 2005 that there was no problem with the fundamentals of the economy and where no constraints were placed on the degree of lending by the banks? What is required to restore confidence in the banking system is an inquiry that is open, transparent and fully accountable. That can only be achieved through a public inquiry. The public will not accept the Government's proposal, under which it will take almost a year before anything is achieved. It could take even longer if the various sections seek an extension of time.

Furthermore, the Government amendment to the Labour Party's Private Members' motion suggests that September 2008 will be the cut-off point for the report of the Governor of the Central Bank and the independent review, but the Minister's speech included no reference to September. My concern is that the inquiry will encompass events only up to 31 August 2008, thus excluding the introduction of the guarantee scheme on 29 September of that year and the statement by Mr. Patrick Neary, the former Financial Regulator, at a meeting of the Oireachtas Committee on Economic Regulatory Affairs on 14 October 2008 that, in his view, all the banks were solvent. Within a short period, however, the Minister was obliged to nationalise Anglo Irish Bank. There must be an inquiry into these events of late September 2008 and beyond.

This is a defining moment for the Minister, the Government and this House. The Minister has nothing to be afraid of in establishing a fully accountable public inquiry if he has done nothing wrong. Why is the Government reluctant to establish such an inquiry? There is a view among the public that once the NAMA process is in train, the banks will close the doors behind them, with interest rates increasing and far more severe lending criteria. The public is entitled to a public inquiry. I accept that there must be a scoping exercise at the beginning, and the Government should proceed to consult experts and so on as was done by the then Comptroller and Auditor General in the case of the DIRT inquiry. However, the Governor of the Central Bank should not investigate his own organisation. After the scoping exercise, the Minister must meet the Opposition leaders to agree the make-up of an Oireachtas committee that will conduct public hearings on the basis of those initial findings. It is only in this way that the process will have credibility.

However, what the Minister is putting in place is cumbersome and unwieldy and offers only a veneer of public inquiry. In reality the investigation will be conducted in private and those who are directly responsible for getting us into this situation will not be held accountable. For instance, how could a situation arise at Anglo Irish Bank, which was apparently of systemic importance to the economy of the State, where one individual effectively secured a stake of up to 28% by way of contracts for difference? Did the Financial Regulator know about this? He clearly knew about the 10% stake that was taken by the ten bold individuals, but was he aware of whether those particular shares were financed by the bank itself? Were the margins that arose in respect of the contracts for difference financed by the bank?

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