Richard Bruton (Dublin North Central, Fine Gael)

The first words of the Minister's statement, 1 April, are perhaps the most telling because it is something of an April fool's trick to give a speech on the banking crisis and never make a reference to Anglo Irish Bank, particularly the day after the EU said an in-depth study will have to be conducted into the Government's strategy on Anglo Irish Bank and the day after Anglo Irish Bank revealed the biggest losses ever sustained by a company in Ireland. That the Minister could present what is supposed to be an update on the banking situation and make no reference to Anglo Irish Bank is mind blowing.

There are very severe consequences of what we are learning each day about Anglo Irish Bank and they must be addressed in an honest way instead of being ignored in this fashion. The truth is that when the Government adopted the policy of treating Anglo Irish Bank as a going concern, the estimated cost was to be €4 billion in recapitalisation. The Government said this strategy was justified. Last week we were told another €6 billion to €9 billion might have to go into the bank. Then we discovered that amount has increased to €18 billion and yesterday we discovered that even the cumulative figure of €22 billion that will have gone into the bank might not be the bottom. There might still be a bigger hole. At what point does the penny drop that perhaps the Minister might have to consider other options than regarding Anglo Irish Bank as a going concern? That is the important question everybody is asking. Where is the scrutiny of the evidence about the different alternatives? The Minister quoted the directors of Anglo Irish Bank as the source of evidence about this, but overnight they have rewritten their estimates of the costs of all the options. Every day these options are becoming more expensive. The Government must get a handle on that and deliver some real evidence.

I welcome the comments about SME lending plans for AIB and Bank of Ireland. However, let us not forget that 70% of the recapitalisation money, which was supposed to be the silver bullet to get bank lending going again, is going into Anglo Irish Bank for which there is no SME lending plan. It will not lend a red cent other than to those it is already supporting and to whom it has recklessly lent money. What are the implications for the Minister's strategy of the EU deciding it will not accept the Anglo Irish Bank restructuring plan? It is now demanding that a fresh plan be resubmitted. It has effectively turned down the Minister's plan and is considering the closure option, but the Minister was not willing even to mention that.

We must get to grips with the scale of the challenges. The Minister made selective reference to what is happening and picked out some matters that appear to be good. Yes, the spreads have not increased overnight. They are still at 1.44% over the German rate. However, that is double the Spanish spreads, another country that is going through a property difficulty and having to unwind. We have double the spreads of Spain, so we are not in a robust position on spreads. The question that must be asked has been posed by Professor Lucey in today's newspapers. As he describes it, what NAMA is undertaking is the virus of funding short to buy long. The very tactic that brought down Lehmans is still rampant in NAMA. The Minister is proposing to borrow six month money on a rolling basis to fund NAMA. Where is the calculation of what the long-term funding cost of NAMA will be? That is something we must confront. There was a draft business plan from NAMA but it was a shambles. It was founded on assumptions into which nobody could buy. It was not just the Opposition that did not buy into it, nobody outside the House bought into the notion that 80% of these loans would be fully repaid or the projected cost of funds. If we are to advance this debate and get to grips with what is involved, we must address those issues.

It is interesting that the Minister quoted the Financial Times as if it had endorsed the strategy the Government has adopted. I have a copy of the Financial Times editorial yesterday which discussed the bank strategy. It said that such a risk is only worth taking if the cost to taxpayers has been minimised and the assistance provided genuinely draws a line under the banks' losses. Unfortunately, it stated, in this case neither of these conditions has been clearly met, and the Government might have done more. It goes on to state that the resulting losses will not be shared beyond the equity holders. The Financial Times is saying precisely what Members on this side of the House and many others are saying, that the Government has fallen short. It expects the taxpayer to bear the entire load of this adjustment. It is pretending the taxpayer has a responsibility to people who drove the lending in Anglo Irish Bank. The debts run up by Seán FitzPatrick are not taxpayers' debts and we do not have an obligation to pretend that they are.

We must look cold-heartedly at the options. More and more people need to question this. What we have heard from Government is predominantly about fear of what might happen, such as the sky might fall in to bondholders who might never lend to us again. That is not analysis and it is not enough. As the cost of propping up Anglo Irish Bank has gone from €4 billion to €22 billion, surely there is a point where the balance of cost to benefit begins to tip over. Let us see the Government's analysis of where it begins to tip over.

We are continually seeing special spinning of the Government's view on this, not honest appraisal of where we are. I am disappointed the Minister has not added anything to the debate because we are in a very difficult time.

An issue also arises regarding the approach to Allied Irish Banks, which, as I understand it, is being given substantial time to ascertain whether it can come up with solutions to this. I see this as a prescription for Allied Irish Banks freezing lending for the remaining part of the year because it will be struggling to find how it can preserve its independence from the Government. Has the Government considered the option of taking a more direct approach and moving in, converting its preference shares and managing that process of generating capital so we would protect the taxpayer in that situation? If the Government has considered this option, what determination has it made on it? Allied Irish Banks has been viewing its problems through rose-tinted glasses for too long and the risk is that it will be Irish business and the prospects of Irish recovery that will suffer as it takes this rose-tinted view of its future.

On every front, the Minister has not addressed this issue. We need to see much more honest answers as to what are the options that face us. This is what I hope we will see as the debate moves to a questions and answers session.

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