Seymour Crawford (Cavan-Monaghan, Fine Gael)

I agree with the previous speaker on the issue of Greece and how it puts the Irish situation into context and makes it clear how important it is to get our banking structures right. I am old enough to remember the early 1980s when the interest rate for long-term loans was 10%. Within a year it went to 22%-23% and that caused an enormous amount of damage. Many younger people today do not believe that will happen, but they need to be absolutely sure, because the danger is always there. We have become accustomed to relatively low interest charges and we sometimes do not realise how this could happen.

The main purpose of this Bill is to create a single fully integrated Central Bank with a unitary board and a Central Bank commission chaired by the Governor. The Irish Financial Statutory Regulatory Authority is involved and most existing functions will merge into the new structure. There is no doubt that the Bill reads very well and there should be sufficient goodwill based on the knowledge that we need proper regulation and a proper structure. However, some of the background information available to us indicates that the McDowell report into financial regulation was instigated in 1998, 12 years ago. There was seen to be a need at that time for something to be done. It appears there was overcharging at National Irish Bank, a committee was set up and so on. After that committee had dealt with the issues and put forward its proposals, the Central Bank and Financial Services Authority of Ireland Act 2003 was put in place. The Financial Regulator was established as an independent office within the Central Bank and Financial Services Authority of Ireland, reporting to both the board of the Central Bank and the Minister for Finance.

When one looks back and sees what has happened in recent years, we were, nonetheless, supposed to have the proper degree of regulation in place. The Financial Regulator was to report to the Minister for Finance and one wonders what has happened in the meantime since we find ourselves in such a mess. Was the Financial Regulator doing his job? Was the Minister for Finance paying attention? It must be remembered that the Taoiseach was the Minister for Finance during part of that period.

We are told that one of the functions of the Financial Regulator is for him or her to prudently regulate for the safety and soundness of financial institutions; the stability and integrity of the payments system; the prudential supervision of financial institutions; and crisis resolution and issues related to market integrity. I do not believe that the criteria were satisfied in 2003 when one considers that list. I could go on, but we have to deal with the present.

The Central Bank may make regulations prescribing control functions and nominees to ensure the fitness and probity of key office holders. That has never seen to be more important than in recent times as far as Anglo Irish Bank and Irish Nationwide are concerned.

I am more conscious than most about the need for some type of regulatory service. Only yesterday the house of a constituent was pictured in the paper, where it was being bulldozed away. That was happening because an insured architect had not done his job correctly. The insurance was tied to €300,000 or thereabouts, and it had to cover legal costs. In that case the architect admitted that he was responsible, so one might reasonably believe no legal case was necessary. However, the insured party's solicitor got €60,000. According to the paper and the figures I have been given, the other company which was supposed to service the client, a local insurance company in Monaghan, is looking for €137,000, so that the client will be left with a figure of around €100,000. That client tried to use the existing legal structures to obtain support, but thus far it has been limited.

I raise this issue because we need to be sure the systems work. The system we had in place was a total disaster as far as Anglo Irish Bank was concerned. Mr. FitzPatrick was able to make available more than €100 million in loans to himself and so many other people within the organisation. There were no controls. Money was going from one organisation to another to create fictitious returns. People put all their savings into the bank, having been led to believe it was sound. The then Financial Regulator went before an Oireachtas committee and assured its members that the bank was safe and that there were no problems. He was the regulator in charge of the sector and answerable to the Minister for Finance, yet the country was not made aware of what was going on. I am thinking in particular of Seán Quinn and his family, who were led to believe this was a marvellous bank in which to invest - in fact, they borrowed money to invest in it.

This was the type of thing that was going on, yet the regulator did not act or advise anybody based on the 2003 Act. We now see the problems that have resulted. The nation is providing €22.5 billion over the next number of years. Who will pay for that? It will not be my children, because I do not have any, but for those who do, it is not only their children but also their grandchildren who will be paying for it. We need only remember what happened with PMPA; that was a small issue compared to this.

It is important that the Minister gets this Bill right. As I have said in the House many times, we are great at producing legislation but not so good at making sure it is used in the way it should be. Fine Gael has a number of issues with the Bill, most of which are fairly simple. As yet we have not considered what happened with Anglo Irish Bank and Irish Nationwide Building society or even banks such as AIB and Bank of Ireland, which also got loose and went mad. No proper investigation has been done. There are 40 people in jail in the USA for financial crimes, but not one person is in jail here yet, and there is not even a question of anyone going to jail. We need a proper investigation.

We need urgent reform to change the architecture of existing regulating bodies based on facts. There is no point is just doing it on a whim, without proper advice and structures. We also need a system for appointing directors to the new central banking commission which is not exclusive to the Government. The Government should appoint people to such positions with the support of the other parties in the House, having brought them before a committee of the House to ensure they have some knowledge of what they are doing. This is being done elsewhere, including in the United States. The President of the US is directed by law to select a fair representation of financial, agricultural, industrial and commercial interests and geographical divisions of the country. He cannot just appoint political hacks. It should not just be the people from the Galway tent that are appointed to these boards. They should be people of the highest standard and appointments should be carried out with due diligence and proper scrutiny.

In the United Kingdom, such directors are appointed by the Crown. Prospective members of the monetary policy committee appear before an appointment hearing of the treasury committee, and the committee presents to Parliament its assessment of the candidates. The committee does not have a veto, but it can at least assess them. We need to be absolutely sure, when these committees are set up, that they are properly scrutinised.

The previous speaker spoke about NAMA and the promise of Brendan McDonagh to pursue debtors. That sounds great, but how does one pursue a person with a debt when his or her property is worth one tenth of what it was purchased for? We must be realistic. There are properties out there that are worth only a tenth of what they were purchased for. The banks are realising that some properties are worth only 50% or 60% of what was paid for them, but there are some that are worth much less even than that. There is no point in promising to get money out of a stone. I wish him well, but the whole issue needs to be considered. I do not believe for one second that NAMA will do the job it is supposed to do.

For ordinary people, there is still a major problem with the banks. We have introduced many banking regulations and promised that money will become available to business people and industries, but I assure the Minister that as yet that has not happened. Unfortunately, every time I open my office door or hold a clinic, people come to tell me of their desperation.

I cannot help returning to an issue that was raised by Deputy McGuinness a few minutes ago, that of commercial rates. Between the banking squeeze, rates, water charges and waste charges, the pressure on small businesses is massive. A small business person from a local town contacted me the other day to say she had paid €84,000 in water charges and could not afford to pay her rates, although she will be brought to court if she does not pay them. She has been told that if she cannot utilise the whole premises in which her business is situated, she could rent out part of it. Anybody who knew the area would know that this would not be possible, in view of the type of product the business is using.

This is the difficulty we are in. If some capital was released to this person, she could continue in business, employing 12 people - I know 12 people does not sound like much to some people, but in a small town it is important - and she could also pay her rates. She would love to be able to pay her way. Rates must be dealt with as well, although they are not relevant to this Bill. The issue is important to business people who cannot obtain money from the banks at present.

Another issue that must be dealt with quickly is that of mortgage relief. Deputy McGuinness mentioned sub-prime mortgages; this is something on which the Government must take a strong line. I know it has put more pressure on sub-prime mortgage lenders, but it is ludicrous, wrong and immoral that a person can be landed in the High Court because he or she cannot afford one mortgage payment and a charge of €12,000 can be added on to what is already a difficult mortgage. This needs to be addressed.

I agree with Deputy McGuinness on the importance of the credit union movement. Without credit unions, many small business people could not keep their doors open. However, even though 98% of credit unions have never been in trouble, they are all coming under desperate regulatory pressure. Some of the regulations they being are asked to obey are unreal. If, for example, a good client becomes ill and fails to make a payment, the credit union is prevented from making other loans. That is ludicrous and cannot be justified.

The county enterprise boards and the Leader programme are important but clients are unable to find the matching funds required. A number of worthy projects have been proposed and since the day it was established, Leader has had a reputation in my area of Cavan-Monaghan for being prompt in giving out money and creating employment provided that forms are filled out properly. Its main job has transformed into encouraging people to get involved but its prospective clients are finding it impossible to get money from the banks.

I will welcome the Bill if it works but amendments will be required on Committee Stage. Part 3 of the Bill appears to be extremely important. It provides the Central Bank with the power to regulate sensitive or influential appointments in regulated financial service providers, including the power to direct that a person should not be appointed to perform a controlled function or should be removed or suspended from the performance of a controlled function where the bank is satisfied that the person is not a fit and proper person.

I have first hand knowledge of the extraordinary pressure the Quinn affair is putting on that company's workforce. The Quinn company and its employees have built up a tremendous reputation in Ireland and abroad. It is important that regulators or administrators are able to deal with issues swiftly. In the absence of decisions, Quinn Insurance is losing UK and Northern Ireland trade. I do not want to undermine the role of the regulator but the emphasis must be on making decisions swiftly. The administrators were appointed to ensure the company is run in a financially sound manner but this will be an impossible task without the proper tools or the company being able to access 80% to 90% of the UK market. I urge everybody concerned about banking issues and the protection of jobs to encourage the regulator to make decisions on Quinn at the earliest opportunity.

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