Michael McGrath (Cork South Central, Fianna Fail)

I am pleased to have an opportunity to contribute to the debate. Everyone in the House shares a determination to understand the reasons behind the banking crisis, to get to the bottom of why it happened and to ensure to the greatest extent possible that lessons are learned so that such a crisis can never happen again. A number of key questions need to be answered by the inquiry. These include why Irish banks, which historically have been conservative, departed from the traditional model of banking where the level of deposits on hand determined the amount of money lent out. Why did they become over-reliant on international lenders to fund their operations? Why did they engage in a frenzy of reckless lending to a property and development sector, thereby jeopardising their entire business model? Why did the financial regulator not shout stop? Did the regulator not recognise the risks associated with what the banks were doing or did the regulator turn a blind eye? Why did the Central Bank not ring the alarm bells much louder during these years?

Of course the role of Government policy during these years must be examined and this side of the House must be mature about that issue. Was the legislation that established the financial regulator robust enough? Why did the risk management functions in individual banks fail so miserably to identify the risks and address them in a comprehensive way? What about the role of the external and internal auditors in these financial institutions? Why did they not identify the risks and shout stop when it was clear for all to see that the risks associated with the banks' practices were very significant? The bonus and reward system in place for bank executives clearly rewarded the level of lending that occurred and encouraged such risky practices to continue.

What is important for me, everyone in the House and the Irish people is to get to the truth. We would all love nothing more than to bring in some of the leading lights in the banking world over recent years and subject them to a public grilling and put all of these questions and many more directly to them. However, I would be gravely concerned that if we went down that road the outcome would be to prejudice the investigations under way to which we all want to see a successful and speedy conclusion.

The inquiry being established by the Government is not about the individuals. The investigations under way will deal with those issues, it is hoped, in a comprehensive and quick manner and I will return to this point if I have time. It is an independent statutory commission of inquiry preceded by two preliminary reports that will feed into the process. Let us be honest: if we were to deal with the issue solely by way of a fully public Oireachtas inquiry, the temptation would be to bring partisan politics into it on every occasion. Consider the debate we have had in the House since the banking crisis emerged in 2008. It has been characterised by partisan politics from day one. If we were to bring this into the environment of an Oireachtas committee, there would be division along party lines. There should not be but it is inevitable that there would be.

I am all for restoring the primacy of the role of Parliament and the elected Member but this is an issue on which a judgment has to be made on the role of Government. It is better that judgment be made outside of the heated political environment which would inevitably dominate any public inquiry conducted in full by an Oireachtas committee. Comments made in recent days about Professor Honohan have been somewhat unfair. He is completely untainted by some of the practices that led to the banking crisis in Ireland. He was among the first to suggest an inquiry a number of months ago. He is a man of the highest integrity and he is well placed to review the role of the Central Bank during the period when the crisis took root.

The inquiry must work quickly, it must be efficient and it must be cost effective. I am glad to see that deadlines will be placed on the completion of the inquiry. This is particularly important. The Oireachtas Committee on Finance and the Public Service, of which I and Deputies Bruton and Burton are members, will have an important role to play at various stages of the process.

We need to see real progress in the investigations by the Garda and the Office of the Director of Corporate Enforcement which are under way. They have been going on for quite some time. Yesterday, I saw news reports on the case involving DCC and Fyffes which went on for nine years and concerns a transaction from February 2000. It was finally brought to a conclusion in January 2009. I would be utterly depressed if that were to be repeated in the investigations into the practices at Anglo Irish Bank and other institutions. They must be brought to a head very quickly so public confidence can be restored. What certain individuals in some institutions did during those years was patently wrong and there can be no question about that. The decisions they made had real consequences for individuals and families in this country, for pensioners holding shares, for people who bought property at the height of the boom and who are now suffering with negative equity, and for those who lost jobs because of the crisis of confidence and the recession which has taken root partly because of the banking crisis. We need an urgent conclusion to those investigations and the people directly involved must be held to account and brought to justice.

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