Ned O'Keeffe (Cork East, Fianna Fail)

At the outset of the banking crisis, I made a statement in this Chamber about auditors. However, nothing has happened subsequently regarding the entire subject of auditing. Auditors have a major role to play in all company performances with regard to annual reporting and auditing figures. The number of major auditing firms in Ireland has fallen to four, which are based in the city of Dublin. While I do not wish to name them, they are well known and are the only firms available to public and major companies. I believe there must be a change in this regard. While auditors are supposed to be the watchdog of the shareholders, they are the watchdog of no one but their own business and legislative change in this regard is necessary. Further changes are necessary to prevent them from being on the scale and size they have reached at present because they are too big. Many auditing firms are auditing two or three companies of the same nature or business with a different named auditor and this must change. This must be changed as while such practices go on, there will be no proper regulation. The same point applies to legal firms and the major solicitors.

I wish to make the point to the Minister, who is listening, that we are employing auditing firms, legal firms and valuers who were involved in the mischief that went on in the banking sector. This must change as one cannot be a poacher turned gamekeeper or vice versa. This must be changed to the effect that one must have been independent and had no knowledge in respect of valuing, banking and auditing.

One can go back to 2007 regarding the banking crisis and the collapse of Northern Rock. What was the Financial Services Authority in the United Kingdom doing at that time? Members know famous people who were involved in that office. I understand that the new regulator who has been appointed in Ireland was employed in that office. Although amber lights were flashing in the previous year in respect of Northern Rock and other small banking operations in the United Kingdom, no recognition was given to them until it collapsed. That was the first indication of a serious crisis in the banking sector, after which the whole thing started falling. I refer to Bear Stearns, Lehman Brothers and so on. Moreover, in recent days, further mischief has been revealed within the banking system, whereby Goldman Sachs proposed an investment to fool someone. I do not have all the details.

I do not agree with my colleague Deputy O'Flynn, as this country is over-regulated. I come from a farming background and no people are more regulated than the Irish farming community on foot of European regulation. I do not want to see that situation imposed further in other sectors of society.

In the name of God almighty, what will this man do with 700 people in his office in the Central Bank? What are they for? There are not even that many branches. We are making €12 billion available for small business through both banks. If I were a bank manager in any small town, I would not give out a bob because I would be under strict regulation. I would be so frightened of losing my job that the best I could do would be to keep the money and let the bank reinvest it. There is nothing worse than overregulation. It brings further mischief, contempt and blackguardism because people will find their way around it. We have seen that occurring.

I entered the House 28 years ago. I have seen changes. Every year, we lose more authority. Although we are Deputies representing the ordinary, plain people of our constituencies, we have less and less say. It is always being handed over. We probably blame Europe, but there is also the HSE and the NRA.

We are discussing 700 staff. In my county council's area, the bad roads are the fault of the weather. I say "Well done" to the Minister for making €40 million available to Cork County Council, but it cannot employ extra people to spend the money thanks to the embargo. However, this man is getting 700 staff.

I want to be fair to everyone in the House, the various sides of which have said much, but Pat Neary was a decent and honest man. I served on the finance committee for two terms. When he appeared before it, he had no staff or legislation. The 2003 Act was where everything went wrong. We know of the disputes between Ministers and Attorneys General regarding that legislation, which ended up being soft legislation, but the previous Central Bank legislation was worthwhile and did an excellent job since the founding of the State. It was updated occasionally and Dr. Whitaker and others did an excellent job in controlling the system. The deposit to borrowing ratios were kept in order. Everything went astray after 2003 and moved on. Banks can be blamed, but they are composed of business people. It was on an asset's value that they lent money. If I had a house worth €400,000 that was worth €600,000 two years later, I got two thirds of the amount, by and large, but the repayment capacity was based on the capital. This is what occurred. There is no point in our coming into the House to cry and scream about this issue every day of the week. Regulation will solve nothing. Overregulation will just add tier after tier, but it is the policy of the day.

I am a shareholder in many financial institutions. I will declare it in the House because I was questioned last week by journalists. I have shares in Lloyds TSB in the UK and Standard Chartered Bank. I would not be very wealthy, but I have a few quid. My portfolio also includes the Royal Bank of Scotland, AIB, Bank of Ireland and Irish Permanent. This is the truth of the matter. I will not defend one bank over another. However, coming from rural Ireland and an agricultural community, no bank has served Ireland better than AIB, whether it was in the development of the co-operative movement or of small business in rural Ireland or in placing branches in small towns. I am annoyed by what is occurring. I do not want AIB to be nationalised. I want our high street banks owned by the people, not the State.

If there is a problem with Colm McCarthy, I would like to know what it is. Did he give bad advice about privatisation to the Government of the day a few years ago? He was successful and a first class guy in his business and in serving his institution and this country. I would like my question answered.

I do not have a script, but I want to make another point on unregulated investments through auctioneers, accountants and others. All investment should be regulated and licensed. I know several people who have invested and been badly caught. I know people who, having asset values of a few hundred thousand euro or even €1 million, were advised to make back-to-back borrowings to invest in Zurich, Budapest and so on. Joe Meade, who was the Financial Services Ombudsman, referred to this point several times. Accountants are taking in money, but there is no accountability when that money is lost and people are in tears. Newspapers carried a story of a similar case in recent days. I can name several organisations that have done this and failed time and time again, but which were not accountable.

Legislation covers stockbrokers and accountants, but it is not worth the paper on which it is written. An accountant will be knocked off the roll if he or she is found to have made an irregular investment, but there are many accountants and it is time for this area of investment to be regulated. Those who have been caught by their investments are innocent, poor people. As a child many years ago, I remember the same situation could be found where Shannon-Stansted was concerned. People invested £10 or £15, but where did it all go? This country has a long history of failed investments and regulations.

Until 2003, we had an excellent and well regulated banking system, but competition took over. What will happen to foreign banks in Ireland? How will the regulator and the Governor of the Central Bank manage them? I am referring to the likes of Rabobank, the Royal Bank of Scotland, which owns Ulster Bank, and many others. They are causing havoc for people who have borrowings, mortgages and so on. This issue must be treated with an even hand. They cannot have a monopoly over the others because our two banks are those we trounce and about which we give out the most.

How effective have our directors on the banks' boards been? The only director from whom we ever hear is Alan Dukes, who is often criticised. The others are never heard from but are on fat salaries. They should only be awarded their expenses, but many of them are on good ministerial pensions and more. Let us put our house in order and be fair and even-handed. I want to see a report on those directors. The Bank of Ireland has two State directors, but Richie Boucher is still getting hundreds of thousands of euro and a pension fund. This cannot be fair.

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