Richard Bruton (Dublin North Central, Fine Gael)

It has not been put under severe scrutiny in the Minister's speech. There was not even a reference to the possibility that the €2 billion of subordinated bond holders in Anglo Irish Bank might lose in this event. Why would we pay back that €2 billion? I do not understand why that has not been addressed in the Minister's speech.

I welcome the tough regulatory capital requirements that the new regulator has set in respect of the other banks. It is crucial that we are not continually coming back to the banking crisis and that we half cure it. The regulator is right to apply rigorous stress tests and to expect the banks to be able to fulfil them. The stress tests look convincing, although I am surprised there has been no reference to the impact of rising interest rates on the potential stress on the loans. Perhaps that is for us to take up another day.

I was surprised to read in the newspapers at the weekend that the attitude the Minister was taking to the banks was take it or quit, that he was going to confront them and firm decisions would be taken, that this was the moment of truth and that they would have to make their decisions at the same time as the taxpayer was facing up to the matter. That is not what has happened today. No decision has come forward from the banks that they are definitely disposing of non-core assets, that they intend to turn to other investors in their banks and expect them to bear some of the losses or that they will offer new shares for subscription.

I believed these were the subject of hard talking by the Minister and that he would bring across the line a package involving everyone making an effort together, even within Allied Irish Banks and Bank of Ireland. Instead, the issue is being kicked down the road like a can being kicked a bit farther. We will have to wait some more months before we see exactly what the banks will do. It will be the end of the year before we find out how the banks will meet their capital requirements. What will happen the banks and the banks' credit while we are waiting for decisions to be made? The banks will try to hoard every bit of capital and ration every loan they can to protect their independence from the Government.

I took heart when the Minister faced up to the take-it-or-quit approach. However, there is now a slow bicycle race that could extend right until the end of the year, at which time the banks will be freezing out people who depend on a flow of credit. Those individuals behind bankable business projects that perhaps could revive this economy will be refused credit by the banks, which will claim they are concentrating on meeting their capital requirements. The banks will say it is too bad they cannot talk to them. This is a real worry. I was misled by the headlines claiming we were finally facing up to this issue.

Let nobody be under any illusion that what we are doing today does not have implications for our capacity to get out of this economic difficulty. Deliberately overpaying for toxic assets is still at the core of the strategy. We have not heard today what the long-term economic value will be or the extent of the uplift over and above the market value. We will deliberately overpay for bank shares considering their value in the marketplace to avoid the majority shareholding. We are to set up a massive State monopoly, the biggest property company in the world, to manage a property portfolio. These decisions will undermine our capacity to do so many things this country needs. The Government's approach is not some inspired stride away from the brink but a step closer to it. The taxpayer will carry all the load for these bad decisions.

I welcome what the Minister has to say about lending but we must question whether we can believe what is now being said about it. When the Minister announced the recapitalisation plan in February last year, he told us the Government had decided on a new recapitalisation plan that would "reinforce stability" and "facilitate banks involved in lending to the economy" and get credit flowing again. He also stated, "The recapitalised banks have agreed to work closely with the IDA, Enterprise Ireland and with State agencies to ensure the supply of appropriate finance". The very same elements that were presented today as part of the credit agreement were presented in February of last year as if they were to be delivered between then and now. No one would agree with the Minister that the commitment of last year has been honoured. Can we believe the commitment of today will be honoured?

While I admit there is a statutory power and that the Minister has the power to issue directives if there is a failure, there is also the reality that the banks will hoard capital to try to defend their position over the coming months and avoid the State taking over. I am grievously worried about what is occurring.

NAMA was mentioned least of all in the Minister's speech today. We are creating the largest property management company in the world. The IMF has warned that State-run asset management companies are fraught with difficulties and that there is a real problem associated with their recovering money, because they become politicised.

We did not hear today about the Oireachtas oversight committee we were supposed to have to oversee the operations of NAMA. We are well past the deadline on which NAMA was to have produced protocols on risk management, its credit management function and its disposals policy. It was committed to providing all those by the end of March, yet none of them has been provided although we almost at the end of that month. We expected to see them so we could have confidence that NAMA, which was moving to take over all the loans, would be managed in a way that would protect the taxpayer. This has not occurred.

There is a genuine worry that NAMA, having paid too much for the assets, will freeze the property market. It will be scared out of its wits to dispose of any property that would show a loss. It is probably worried that the European Union will look over its shoulder stating that if it incurs a loss, it constitutes State aid. Is this a formula for getting the property market back into shape? This issue still has not been addressed.

We do not have the NAMA business plan. Most people who looked at the last version of the NAMA business plan would regard it as a work of fiction. It purported that 80% of the loans transferred to NAMA would perform fully and that everything would be paid back. Who believes that? The belief that the loans would perform fully underpinned the last business plan. We need to see the revised business plan because we are now crossing the Rubicon. There is no coming back or means of repairing our model or finding a new way of proceeding. We will have this on our balance sheet.

This is a time to be hard-headed in this House, a time to demand evidence from those who thrust this course of action upon us. Thus far, evidence has been in short supply. We need to see the revised business plan and the assessment of all the options, not just those preferred by Anglo Irish Bank. We need to see the independent audits of the various assessments being carried out and to see the risk governance in NAMA. We need to see the Oireachtas committee being established, with clear terms of reference, and a role for the Office of the Comptroller and Auditor General that would protect us.

I agree there is no risk-free approach. This is a difficult time. It is superficially attractive for any Government to throw its arms around everyone and tell them it will look after them and that they need not take a loss. However, we are not in a position now to take that approach. The decisions being taken are mortgaging the future of Irish taxpayers. The decisions are pretending the dream can continue such that we can in some way sort out the dreams of the past. Today's decision on where we go as a nation is very important.

The sum total of the Government's strategy seems to involve retrenchment in fiscal policy and writing whatever cheques are necessary to get the banks back in order. This is not a sufficiently good choice. It involves looking back at the mistakes we made, nursing solutions along and battening down the hatches to see whether we will get by. This is the time when we need to have the vision to strike out for a very different future and invent a different future for the country.

Today is a momentous day because the commitments we make, including today's doubling of the national debt and the investment of €4 billion in Anglo Irish Bank, restrict our capacity to reinvent ourselves as a nation. We must be very careful in scrutinising the evidence before we give the pass to them. I do not see the evidence and am gravely worried about what is proposed. We must rethink our approach.

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