Billy Kelleher (Cork North Central, Fianna Fail)

The Government guarantee to the banking institutions in September 2008 was of significant importance in ensuring that there was not a collapse of the financial institutions across this country. Now there is a bit of revisionism going on in the debate in the House to the effect that we should not have guaranteed Anglo Irish Bank or that we should not have guaranteed other institutions.

The fact of the matter is that in September 2008 there was international panic on markets. Banks, such as Lehman Brothers, had collapsed in July 2008. For the Government to allow the meltdown of our financial institutions would have put the whole economy in peril.

Some now claim the Government acted in an irresponsible way with the bank guarantee. Any fair minded person will accept that at the time the Government made a crucial decision which has stood well the test of the time. It now allows the Government to deal with the impaired balance sheets of the various financial institutions covered by the guarantee and, more important, to get credit flowing into the small and medium-sized business sector.

This is not about protecting the banks. The purpose of this exercise, painful and all as it is for the taxpayer and the Government, is to provide a functioning banking system. The Government would much prefer to be investing money in developing infrastructure and the broader economy. However, without a working banking system, it would not be possible to deal with the ongoing problems of rising unemployment and the investment requirements for infrastructure and other public services.

We must also consider the Government's subsequent decisions since the bank guarantee was introduced in September 2008. We had the first tranche of capitalisation to keep the banks afloat and functioning. With NAMA up and running now, we will see the transfer of impaired assets from those banks to allow them to function and credit flow to the small and medium-sized business sector.

Ensuring the two major banks will provide credit to small and medium-sized businesses was an important element in the Minister's statement to the Dáil on Tuesday. The provision of €3 billion to AIB and Bank of Ireland in 2010 and 2011 is welcome in this regard. It is important structures are in place to ensure continuing credit flow. The appointment of Mr. John Threthowan as an independent reviewer of credit supply is welcome.

The purpose of the exercise is not about bailing out the banks, as is loudly claimed in the House, but about ensuring a functioning banking system that can loan to small and medium-sized businesses, stem rising unemployment and ensure investment in the broader economy.

The Government's decision on the bank guarantee in 2008 and its subsequent decision to establish NAMA have been applauded internationally. People ask what difference international applause makes. It means Ireland's integrity as a sovereign state is accepted internationally and that it is seen to be willing to deal with the difficult decisions required. More important, it shows Ireland is not defaulting on payments, an action suggested by Members opposite which I find astonishing.

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