Brian Lenihan Jnr (Dublin West, Fianna Fail)

I am aware that the Labour Party leader quoted Professor Honohan's comment that the banks have reacted to their difficulties by reducing their appetite to take risk. Professor Honohan has also said that our banks lost their edge in small business lending some time ago. I agree completely. I made that point in my banking announcement before Easter. The way to tackle this problem is to restore the banks to health and to set targets that will be monitored. A credit review process has been established. I am not persuaded that a State bank can help in this process. A State bank would have to compete with the Exchequer to raise money on the international markets and with our existing banking system for funds to lend. In this global crisis, all countries have sought to repair their existing banks and to reform regulation, in the interests of rectifying the delinquent behaviour that got them into this crisis. That seems a far sounder basis on which to proceed. The Government's banking strategy is working. It will provide a financial system that will serve the needs of our recovering economy. That is the best way to create and protect jobs.

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