Jim O'Keeffe (Cork South West, Fine Gael)

The view was that if anyone made any suggestion that the fundamentals were not 100% sound, he or she was virtually betraying the country. It was unpatriotic even to think of it, never mind to suggest it. This is the reason we do not have such a report or analysis and it is a basic difficulty I have with the Bill. In many ways, we are putting the cart before the horse. We are attempting to solve a problem without really knowing its causes or without having a real analysis of same. We are flying blind.

People have stated that no one could have known anything like this would happen and no one knew about the machinations that went on in banking circles. One of the best books I read some years ago was called Liar's Poker by Michael Lewis. He gave an insider's account of the graft, greed and corruption involved in building up the bonuses of those working in a particular financial institution. He gave a blow by blow account. It was quite clear that the first item on the agenda in all transactions was how much one could squeeze out of them for the individual involved and for the bank for which that individual was working. Every client was a fat goose to be plucked. In the book, Michael Lewis detailed exactly how it was done. A bank collapsed, but it was not Lehman Brothers. The bank about which he wrote was Salomon Brothers, which went bust 20 years earlier.

Anyone who was involved in the business of financial regulation or supposed to be involved in the system of supervision and monitoring had a prototype of the carry-on that was unfolding in these financial institutions. It was written by an insider who had been directly involved. He admitted he was involved in the activities about which we are now so horrified and surprised and about which the regulators and those supervising the business had no clue. No one knew anything about it. Were they all blind? I presume there was a relevant official section in the Department of Finance. Was any Government official or anyone in the Central Bank or the regulator's office aware? Did anyone else hold even the slightest suspicion that the same activities were taking place under our eyes in this country? Apparently, it was happening under their noses but they did not have the slightest suspicion.

The warnings were there. I do not refer to the 20 year old blueprint in Liar's Poker which set out how it was to be done, but all the warning signals were there nevertheless, including the greatly inflated profits that were being made. I have been involved in business, politics and law for a long time. Sometimes when one is making inflated profits one may be inclined to believe it is too good to be true, but it is and it was too good to be true. However, no one seemed to have the slightest idea that these highly inflated profits, the magical growth in such firms as Anglo Irish Bank and the multi-million euro bonuses, were suspect. It appeared those involved were bankers walking on water, who could do so with impunity and then take off with fat, million euro bonuses in their pockets. The warning signals were everywhere and should have been obvious to anyone who had any function whatever in supervising the shambles that was about to unfold.

I have been reading the Economist for many years. I recall it warned about the bubble that was developing in Ireland some five years ago. It reported that the number of units being constructed exceeded total construction in the entire United Kingdom, a place with a population some 15 times greater than ours. It warned about what was happening but no notice was taken. I refer to another aspect that has not been sufficiently explored. What was the relationship between the bank and other financial institutions and those dealing with such institutions? Was the person dealing with it a customer or a client? Was there a duty of care to that person? Was there a fiduciary relationship? Was it just a limited contractual relationship in which the fat goose waited to be plucked, even though it was nominally a client or customer of the bank? Under the new system, will these institutions owe any responsibility to their clients or customers? Is it a professional relationship at all?

When one follows the hearings that are taking place in the United States at the moment, with regard to certain exploits at Goldman Sachs, one wonders whether they could happen here under the current system. If not, why not? What protections are preventing it from happening? Will it be able to happen under the new system? When one considers the relationships at Goldman Sachs, one has to wonder what duty of care was owed by the institution to its clients. Without prejudging the outcome of those hearings, I have to say there does not appear to be much evidence of fiduciary care on the part of those involved in that transaction. That leads into the question of ethical responsibility. Are there guidelines that set out ethical responsibilities in this area? Are there no ethics? Is it a case of every man and woman for himself or herself, and let the devil take the hindmost? What is the Government's approach to ethical standards, at least in the future if not in the past?

This issue is of some relevance because these problems are continuing to happen today. What responsibility does a financial institution have to its clients? I have come across the case - I had some discussions on it today - of an established bank that is dealing with a small company that has 30 or 40 employees and is doing plenty of work, thanks be to God. When the company applied to have its overdraft of €500,000 renewed, the matter was considered. It is not an exceptional amount for a company that has been in operation for 21 years and has been dealing with the bank in question throughout that time. The company was notified on a Monday morning that the overdraft was not being renewed - in fact, it was being reduced to €200,000, with effect from a date four days later. What kind of way is that for an established bank to do business with an established customer? Many issues of this nature need to be explored. I intend to suggest a means by which that can be done.

The future role of the financial institutions is another issue that has not been considered in this debate. Anglo Irish Bank has been nationalised and the other main banks have been part-nationalised. What are the responsibilities of those working in such banks? I hope they will not be concerned with trying to get inflated bonuses for themselves. To what extent are they answerable to the boards, shareholders and customers of the banks? Does their business essentially amount to increasing the profit line of the banks, with little or no emphasis on increasing their underlying value in the interests of customers or clients? On the question of pay and bonuses, bankers have always told me that if one pays peanuts, one will get monkeys. The bloody trouble for us was that in many cases, we paid millions and we got monkeys nevertheless. In some instances, it was worse than that - it was clearly a case of criminal negligence that will cost taxpayers for decades to come.

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