Eamon Ryan (Dublin South, Green Party)

------in order that we learn the lessons from history.

We took a very harsh approach and examined the banks, and said we said we do not accept their figures any more, that we are giving the figures, in terms of what we see as the potential losses, and are using a much sharper discount than anyone expected. The figures show that our two main banks, namely, AIB and Bank of Ireland, are truly of systemic importance. While they may have made terrible mistakes, in particular AIB, they can survive this. By putting in capital we can get them working again. It is of fundamental economic importance to this country that the two banks which are the bedrock of our economic system can be turned around and get out of their current situation.

While the figures for Anglo Irish Bank are, understandably, shocking, the international perception will be that its assumption of the figures for AIB and Bank of Ireland were far worse. When they hear the regulator, who has real authority and independence, or the Governor of the Central Bank, who has real expertise in this area, say it is worst case scenario in our two main banks it will restore a certain amount of confidence in this country.

We could have, should have and did examine other options. The first thing I did when I went to the Minister for Finance a year and a half ago was tell him we had to nationalise all the banks. I am now glad we did not, because we were not in a fit shape to do anything at that time as we were grappling with such a difficult situation regarding the funding of finance for the State. We did not know what the situation was. It was far better to go through the process we have gone through, whereby we got loan valuations in order to know what was going on.

There are differences between the situations in Bank of Ireland and AIB. Had we gone in and nationalised everything, as some people at the time argued we should, we would not have had a true sense of the reality. Under European regulations, we would have had to go in and do the valuations which we have done over a recent period of time and for which we have legislated. I do not believe a blanket nationalisation would have served this country well. It would have cost us more in higher interest rates, among other problems I have mentioned.

In terms of the default option, I will explain to Deputy Kenny what I said at the weekend because I have examined the issue in detail. I have no love of bond holders or the capitalist system which it underpins. However, it exists and it is the reality within which we as a country must operate and trade. I am concerned about that and I want to be careful to get it right.

Last weekend I referred to going to the bond markets and saying we will not pay our debt on the senior bonds. The subordinated debts are different. Those who hold them have taken a hit and they will take a further hit. However, if we default on senior debt, which is effectively money on deposit in our banks, as seems to have been suggested by some Members-----

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