Joe McHugh (Donegal North East, Fine Gael)

I welcome this opportunity to speak on the Bill as it is important. Timely is not an appropriate word because we are in a crisis and the decisions that have been made and future decisions will be critical to pave a way for us to get out of the mess we are in. Deputy Michael McGrath spoke about sending people to prison and I have a statistic for him. In the United States, 42 people who were in the banking profession have gone to prison whereas in Ireland not one person has gone to prison. Interestingly, about six weeks ago in County Cavan at a meeting of the British Irish Parliamentary Assembly I asked Patrick Honohan of the Central Bank, who was in attendance, whether bankers should go to prison for being involved in what everybody now knows was malpractice if not corporate neglect. The first part of his answer was that they should, and I thought we would get somewhere. However, Mr. Honohan would be a good man in this House because he ended his answer with a political response, as he stated they should go to prison but first they need to be found guilty of the crime. That is fair enough and one is innocent until proven guilty but in the corporate world of white-collar crime which went on, and I call this white-collar crime, it will be very difficult to prove this in the courts.

There was a tipping point when bankers became sales people in this country. Good bankers worked from a banking philosophy underpinned by prudence in lending. I remember that in the 1980s my parents had a good and positive relationship with bankers. They knew they would not get money on a laissez-faire basis. They built up a relationship with bankers through managing their own affairs and providing savings and it was a good, positive and pro-active relationship. There was two-way respect whereby bankers did not want borrowers to get into difficulty and have long-term debt as a millstone around their necks. They had a shared responsibility from within their institutions and this was underpinned when they learned how to be bankers.

Who decided that all of a sudden commission would be the driving force for bankers? Bankers were on commission to get as many mortgages and as much lending as possible. That was the tipping point. Who was to blame? Was it the bankers themselves or the regulator? In the past week serious questions were asked about the lack of regulation. However, a predominant role was also played by the Government as the ultimate watchdog in the State. Freelance and laissez-faire lending was the culture in this country for the past decade or longer. Someone authorised that change in philosophy and culture and forced good bankers to become salespeople. Unfortunately, human nature being what it is, good bankers bought into this philosophy because they were not in a position to stand up to it and they needed their jobs. Other good bankers decided not to buy into it and many of them lost out through not getting promotions or being cast aside after years of experience. I have heard of various examples of this through contact with people in banking institutions.

Bankers are the people who know banking. I believe the public has the attitude that bankers are leading this charge. I share Deputy Mulcahy's admiration for the Minister for Finance, Deputy Brian Lenihan, and he has to be admired for the work he is doing, the effort he is putting in and his positive attitude to try to get the country out of the banking situation it is in. However, if one removes the layers to see who is leading the charge for the banking solution I believe it is the bankers. The question has to be asked, who knows banking and obviously the answer is the bankers. It is certainly not the people in this House; we are politicians and not bankers. It is not the case that people in this House know how bank institutions are run unless they are former bankers.

We need to build an infrastructure around us with people with the knowledge, understanding and know-how to examine where everything went wrong and how solutions can be put forward. There is way of doing so and there are plenty of young retired bank managers, officials and executives who did not want to be part of this culture or promote this philosophy. We should be reeling them in and pulling together their expertise, knowledge and understanding of the banking system. If the officials at the Department of Finance think they know banking, they are wrong. The Department of Finance is made up of people without banking experience. The Minister should bring in an arsenal of former bank managers and bank executives, who were not part of this culture, were cast aside and missed out on promotions because they did not want to be part of the culture of banking in the past 15 or 20 years. They are the people we should bring in to give us a deep understanding of banking.

Small business is on its knees as the Minister of State will know from talking to people in his constituency. Every Deputy in the House knows the story with small business. Small business is on its knees because the relationship between bankers and the small business community is broken. A two-way relationship no longer exists; it is one way. It is the banker's way and the banker's way is the only way. There is no room for negotiation or compromise. There is no assistance or support. It is bottom line stuff as the Minister of State and every other Deputy in the House know. Businesspeople with overdrafts have had the rug pulled from under them at short notice. In recent days I came across the example of certain banks cutting overdrafts overnight and turning them into term loans with no negotiation or compromise. I know of no solution-based examples of bankers trying to work with the small business community. Many of the clerks who work at the desk and the front-line staff who work at the coalface of the banking institutions are feeling the heat because they are working under instructions. It is important that we do not fall into the trap of shooting the messenger. Many of these people are just messengers and are just doing the job based on the new type of practice that is being carried out.

I am hearing horrendous stories of how the backroom banking executives are treating some of their creditors. I am not talking about the NAMA brigade, those with in excess of €5 million or even in the millions. I am talking about people who are in debt and having difficulty, and are trying their level best to get off the ground with home-grown solutions. Some people are even going abroad to try to rake in a bit of cash, including people flying to Spain on a Monday to do some construction work and flying back to their families on a Friday. Some people may be setting up small businesses - maybe going to England. People are using their family connections and trying different countries looking at the European market. They are looking for medium to long-term solutions for their businesses. Bankers are not interested. They only care about bottom-line answers in the short term. They are not interested in compromise or solutions. They are not interested in people putting together practical proposals that might get them out of the mess in the medium term. The banks are closing them down and are not interested.

Two-way traffic in banking needs to return with respect on both sides of the counter. That respect has gone. It is dysfunctional and some of the people in the backroom offices are treating customers with absolute contempt. I have an example of a certain official ringing up a certain house, could not get the creditor who owed the money but got to speak to the man's wife and took it out on her. The official started asking where the man was and what he was doing. There is interrogation and intimidation. It is one-way traffic. It is an absolute nightmare in terms of the relationship between the backroom banking staff and their clients and creditors, many of whom are in minimal trouble in terms of being in debt.

There is a fear that extra banking charges will be imposed in order for banks to achieve the capital levels and meet the criteria of the regulator. If this happens it is the customer who will suffer. There is a fear among taxpayers that there will be further charges in future. There is very little optimism that people will get out of the traps in which they are stuck and very little optimism that there will be long-term progress in getting the banking crisis under control. The ultimate victim is the taxpayer, whom we all represent. There are people who cannot and will not survive financially. They will be faced with a carbon tax on 1 May. On average it will cost people an additional €50 to put 1,000 litres of oil in their tanks for home heating. That is an extra €50 that people will not have. It will start to apply in the summertime. For people who are already struggling to heat their houses in the summertime, what will it be like next winter?

What is it like for people if we cannot offer them some hope or optimism? It is not just in the sense of addressing culpability. Nobody seems to be coming out of this with any sort of blame or responsibility. Why are we not putting windfall taxes on the bonuses? Should we not have a windfall tax on the bonuses and use that money to stimulate small businesses? Some 18 months ago we were told that Irish Nationwide Building Society and Anglo Irish Bank were of systemic importance to the economy. If those banks were of systemic importance 18 months ago, could it not be the case that they are not of systemic importance today? We have an opportunity next September to wind down these banks. I know Matthew Elderfield recently told an Oireachtas committee that it would cost too much money and the Minister agrees. We on this side of the House would ague differently. It is costing too much money as it is. We believe it is a systematically dysfunctional bank that should be wound down. That is an issue that could be addressed next September.

We are trying to deal with the culture of banking with the same people in charge. It is like the Government. There are many good people in the Government, but it has been in office for too long and has lost the public's confidence in its leadership ability. The same can be said of banking. However, if the same people are kept in place, as with the Government, nothing changes. The same people will not change things.

Regarding the wider picture, we are handicapped compared with the United Kingdom. We cannot influence monetary policy and cannot print our own money. We cannot influence interest rates. However, that begs the question as to where we can be proactive within Europe. It is not just as simple as Deputy Mulcahy saying we get great reviews and respect in Europe, and that international observers say we are doing the right thing. That is a load of nonsense. The people we should heed are the people on the ground in this country who do not share those sentiments. It was the people on the streets who warned of the property bubble bursting and warned against excessive lending and overheating in the economy. They are the people to whom we should be listening, not international observers and high powered people in nice suits and fancy shoes in nice buildings eating big meals. We should go back to basics.

There is a problem in this country at present. People are not angry any longer - they have moved on from that. They are not even suffering from apathy. There is a dangerous phenomenon in this country at present, namely, indifference. There is an attitude of indifference towards Government and how it affects people's lives. That indifference is very dangerous because people are making alternative plans. I meet people from my constituency every week who are planning to emigrate or are making plans for their sons and daughters to go to different countries. Parents are sitting in their houses with PhD and master's degree graduate children who are waking up every morning with no reason to get out of bed. We in this House are lucky in that we have a reason for getting out of bed in the morning but far too many people do not have a reason to do so, including very talented and educated people. Why are we not employing them in some way to help us to get out of this crisis? This is the damage that has been done to this country by banks and by the people who are supposedly in charge of the country.

To return to my original point, I asked a question of Professor Patrick Honohan and I will ask it again of the new regulator, Mr. Matthew Elderfield. I will put the question in two parts. First, will Mr. Elderfield employ a crusade to try to put in jail the people who contributed to this crisis? Second, he is our regulator and it must be understood that this is not just about regulation at the top end. Will he regulate the way in which some of the executives in the back rooms are treating the small business community and taxpayers? This is where the real regulation should be because until we build up that relationship between bankers and the community, we will not get out of this crisis.

At present, the system is dysfunctional and is not working. There has to be culpability and responsibility, and it starts in this House. Obviously, the Government will not take responsibility for the sins of the past but the dangerous point, which history proves, is that the past is always a very good indicator of future performance. With the present bankers and the present Government in office, that is a very negative sign and it will instill a level of indifference among the public.

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