Joan Burton (Dublin West, Labour)

Going back to the Bill, if the regulator spotted that the boss's son was not appropriately qualified for banking, what could he do about it? The boss's son would not have to show any qualifications - he would not even need his leaving certificate. He would just be lifted into his job in London by virtue of being the boss's son. The regulator would have to go to court. Instead of a system where bankers must show their qualifications, the reversal is the case. There is a list of associations someone must have with accountancy, economics, law and social policy before they can qualify as a banker. I know many people who might like to pilot a jumbo jet who could claim to have an interest in flying and to have flown in an aeroplane many times. They could say they have a very good idea what the deck of a jumbo jet looks like, which, in any case, flies by computer, and so they think they would make a good job of it. A teacher might talk of having a great love of children and a tremendous interest in literature, might claim to be very well read and to read all the newspapers every day, and then suggest that he or she would make a very good teacher. In our system, however, we say this is not so, that the person must have some formal qualifications and training. That is nowhere in this legislation and it is an extraordinary piece of folly. The regulator is not being served well by the Minister's legislation in that he must go to court to prove that a person is, ultimately, unsatisfactory. That legislation is the wrong way round because it leaves the incentive and the initiative with the banks rather than the regulator, who can lay down regulations as to the minimum required qualifications for bankers.

Regarding the rest of this legislation, we will see another Bill towards the end of autumn and yet another some time next year. What do we need now? If there were to be another meltdown in the banking system, we would need a resolution structure that would enable us to close down a bad bank, one that was crooked, one in which the directors had abused the depositors and investors. We have no resolution trust mechanism. I mentioned that at the time I spoke about the guarantee. One and a half years later there is no word about a resolution trust mechanism to wind down a delinquent bank, as in the case of Anglo Irish Bank and the Irish Nationwide Building Society. It is disgraceful that the Minister does not even entertain that in this legislation. I do not know why he does not include it in the Bill. Is it that he is letting Irish Nationwide off, even though, effectively, it is a nationalised institution, as is Anglo Irish? Is he hoping that if he gives the bankers enough time they will work things out and get back to business as usual for themselves? That is shameful.

I turn to the issue of consumers in Ireland, who were sold bad products and bad services at high prices by the banks. We may ask what these products were. In the case of ordinary consumers, the especially bad products were mortgages of 100%, 110% and 120%. Were there people in the banking industry who said that this was not a wise thing? The answer is "Yes". Was there any attempt by the Central Bank or the regulator to rein in these practices? No, there was not. The then Governor of the Central Bank and the Central Bank Quarterly made a few references to this practice being unwise. However, the system that Fianna Fáil encouraged allowed banks to pursue a crazy business model that forced the trajectory of bank profit growth into an unreal position. There were banks that were routinely increasing profits by more than 10% a year. In the long run, that is not sustainable. If a bank seems to be making too much money, the reason is that it is not on a sustainable growth path. If a bank is in that position, it must find some other way of making money because one cannot make money in the way that Anglo Irish or Irish Nationwide, and, latterly, Allied Irish Banks, claimed they were making. It was unsustainable. Products and services that were badly and poorly described were being sold to consumers, both businesses and, in particular, mortgage-holders. The result is that we now have a generation of young family householders in their 30s and 40s tied to mortgages of €400,000 and upwards which they do not have the income to sustain and which will last, in many cases, for up to 40 years.

There is no sign or mention of a resolution trust solution in this Bill for those people. It does not even feature. What is the purpose of the Bill? There is much mention of prudential regulation, concerning which the ECB stated that it is not satisfied this Bill provides for sufficient and clear independence in regard to the institution. The ECB's comments were broadly favourable because the Bill does not amount to much and what is involved is a matter of shifting the chairs on the ship. However, the regulator is still there and so is the Governor of the Central Bank. The only difference is that there is now a more direct, formal legal relationship tied to one institution whereas before there were two institutions intimately linked to each other but not as formally tied as they are now. That is the only change in the architecture.

What about the consumer? We must remember that consumers of bank products are not only individuals with bank accounts. They are, in particular, small and medium-sized Irish businesses that do not deal with international banks, but bank and deposit funds in Ireland. The Minister for Finance has shafted consumers in this legislation. He has done this because there is no requirement in the legislation for a description of bank products. There is nothing specific in the legislation, for example, in respect of the bad, poorly described and over-sold products that were the core part of the failure of the business model of banks in Ireland.

We must bear in mind that in any economy for a bank lending into the mortgage business to survive in the long term there must be some parity between the level of wages in that economy and the cost of mortgage payments. People cannot buy a mortgage on a wage or salary figure, or a business earnings figure, any more than they can pay rent if the actual figures and cost of the mortgage or lease are considerably out of kilter with their earnings. In the current downturn, it is not sustainable for the businesses in Grafton Street to have to pay, for example, €300,000 to €400,000 per year for leases before the first customer comes through the door. Landlords can describe rent yields for NAMA purposes any way they like but in terms of long-term viability of businesses in Grafton Street, this is not on. The same is true of a person who goes to acquire a mortgage through a bank when the mortgage bears no relationship to his or her income. Old-fashioned, plain vanilla banking insisted that there be a relationship and a ratio of approximately one and a half to two and a half times a person's income in respect of the kind of mortgage he or she could support. That is why so many economists, including Dr. Morgan Kelly in UCD and David McWilliams, say that Irish house prices still have a considerable way to fall because, as yet, they are not back in kilter with the earnings capacity of people who want to buy their own homes.

I do not know why the Minister has done this. There has been no independent assessment of the effectiveness of the regulator' s mandate to protect consumers. The Irish Financial Services Regulatory Authority, IFSRA, was very good at producing information and websites to compare the prices of different packages. What it did not say clearly enough to people was to warn them that such and such a mortgage was not sustainable if either member of a couple, for example, were to lose their job, fall ill or have a change in family circumstances and their income were to fall by only a small degree. It did not ask them to consider whether a 30 or 40 year mortgage was sustainable at such a price. If people are in their mid 30s, they can expect to work for only another 35 years, even if they work to 70. A mortgage period could extend to 40 years.

There is nothing in this Bill which addresses the issue and the Minister seems to want to hive it off to the National Consumer Agency and the Competition Authority - two quangos that are to be united. Essentially, that will be about giving price comparisons and there will be no tough regulation of the products. There will be no description of products and consideration as to whether the products make sense.

Professor Elizabeth Warren, whom I mentioned to the Minister on a number of occasions, is the Harvard law professor who is head of the oversight commission in the US which reports on these matters. She is correct in stating that regulating for safe products, protecting consumers from themselves and dangerous financial products, is the cornerstone of consumer regulation. Unfortunately, this Bill from Fianna Fáil is completely silent in this regard because it could not give a monkeys about consumer regulation or that it has left young people around the country stuck with unbearable mortgages. No resolution is offered in this Bill to such matters.

Has the Minister learned anything? In true Fianna Fáil fashion he is to personally appoint all the members of the board, bar the statutory members. It will once again be the friends of Fianna Fáil. I do not know what the system of appointment will be and there may be even a public advertisement. The people who will hold important positions on the board will experience no public vetting or examination, as happens in almost every other country in the world.

Why should there be a public vetting or examination of such people? Our system has crashed at an unbelievable cost to our citizens and yet the Minister wants to cleave to the old system behind closed doors of Fianna Fáil mostly appointing its friends. There will be one or two independent appointments and the Green Party will have an appointee to keep it happy.

If somebody is to be on the board of the bank commission, what will be required of them? They will need to eyeball powerful and wealthy people, indicating that despite such people being multi-billionaires as a consequence of owning a bank, what they are doing may not be in the interest of ordinary consumers. Have people been prepared to do so up to now? They have not. If the appointments are made behind closed doors, how are we to know the calibre of these people? There will be one and a half lines in the newspaper indicating the people chosen, with one being an accountant and another a lawyer. There will be one person from every profession.

These will be the Minister's choices, and they will be mostly men, with one or two women at most. As has happened with their predecessors, they will be required to feel grateful that people like millionaire bankers would give them the time of day, a glass of sherry and a nice lunch in a bank building with a few nice paintings at which to look.

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