Brian Lenihan Jnr (Dublin West, Fianna Fail)

I welcome that the House is in agreement on the need for a preliminary inquiry. The reports of the two preliminary inquiries will shape the terms of reference of the commission of inquiry. The Oireachtas will also be consulted on these terms of reference.

It has been suggested by the Labour Party that the legislation controlling the Central Bank may constrain the ability of its Governor to carry out the inquiry on the lines proposed by the Government. The advice of the Attorney General is that such an exercise is within the scope of his functions. Legal constraints certainly exist in regard to what the Central Bank or its officers may say in public about confidential data relating to financial institutions but the same applies to regulators throughout Europe and the rest of the world. These constraints arise in part from EU law, which protects certain types of data collected by central banks and financial regulatory bodies, but that does not mean the Governor cannot undertake the preliminary inquiry requested of him by the Government. Professor Honohan is in an especially good position to carry out this inquiry because he has full access to papers and information within the Central Bank and is therefore in a better position than an independent person. Using this unique access, he will be in a position to report fully on the performance of the respective functions of the Central Bank and the regulator in the period since the establishment of the regulator, having regard to its statutory position. There is no prohibition on the Governor giving his analysis of the performance of functions within the regulatory system nor on presenting in his preliminary report appropriate conclusions based on his study of the relevant documentation. He is not barred from expressing in a report his opinion on these matters or on the financial system generally. Most important, there is no prohibition on the Governor giving his guidance and advice on the appropriate scope and terms of reference of the commission of inquiry based on his research and access to data. For these reasons, I believe the Governor is in an ideal position to carry out the task the Government has requested him to perform.

Questions were raised by Deputies Burton, Kenny and Noonan in regard to the time limit of September 2008. The Government has taken the view that the purpose of these inquiries should be to identify, examine and report on the causes of the systemic failures which have occurred in the banking system and which require the State to allocate significant amounts of scarce resources to financial institutions. That is the matter for which the public wants answers. If we do not understand how and why this crisis arose, we will not learn the lessons that will prevent it from ever happening again.

The inquiries are not being established to investigate the present Government's response to the crisis.

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