Michael Creed (Cork North West, Fine Gael)

I thank the Ceann Comhairle for the opportunity to say a few brief words. I understand the debate on the Bill is drawing to a conclusion. The saying "We are where we are" drives people daft. It is not a question of recrimination, although I understand people's anger and the need for them to be given a legitimate opportunity to express it. Last night outside Leinster House we saw what happens when people are denied that opportunity in that a less acceptable mechanism was evident. Most people are interested in how we re-establish a financial regulatory framework that will ensure we do not repeat the mistakes of the past.

I do not doubt the Minister's bona fides but it is entirely premature to talk about reform of the Central Bank when we are still waiting for the results of the inquiry. We have debated the shortcomings of the inquiry, which we on this side of the House find entirely unsatisfactory. It is entirely inappropriate to reach conclusions and put in place a new infrastructure dealing with financial regulation, the Financial Regulator and the Central Bank without knowing whether it was a fault of the regime, a cultural fault or due to the individuals who failed to act in spite of having all the necessary powers, or, as has been said, when they did articulate concern that the Government, the Minister for Finance and the Taoiseach did not want to know. It is difficult to comprehend why we are having this debate when we are still awaiting the outcome of the inquiry. That does not inspire confidence.

I understand that in terms of oversight we are expected to be inspired and reassured on the basis that the new structure will report to the Houses of the Oireachtas. I recall the Financial Regulator telling us he had stress tested the banks and that everything was fine. We had the same reassurances from the Central Bank and others. Reporting to the Houses of the Oireachtas and supposedly placating our concerns about a faulty architecture does not wash. It has all the semblance of window dressing. Some one decided that this sop would keep those troublesome people on the floor of Dáil Éireann happy but it just is not going to work.

This House needs its own root and branch reform. I spent all morning in a committee meeting investigating the lost at sea scheme. All political shades of opinion are doing extremely valuable work in the committee but I have the greatest fear that the committee, which is only a reflection of the entire committee system in the Houses, will not do its job properly until this House reforms itself and its structures regarding the way it does its business. The House will flex its own muscles as a Legislature and the voice of the people. We shall always find people outside the gates because this House has failed the people who sent us here. We do not have the appropriate investigative committees. We have something like 20 committees still operating in the dungeons of this institution busily working away while the Government assumes a monopoly of wisdom and gets on with the business of running the country, blithely unaware of the views of other elected Members. That system must stop and the House must reform itself. The commitment that we will have an annual statement form the newly structured Central Bank just does not inspire me.

On the issue of the appointment of new directors, there is no role for the Oireachtas. We see on television hearings being held in other democracies such as the United States, where appointees to every position are quizzed, regardless of whether it is to the banks or the Supreme Court. That is the type of accountability we want. Board members of the Central Bank were reflective of the era of social partnership and people are now jumping up and down criticising public policy who were themselves in very important positions, on the Central Bank and elsewhere. Others were nominated to the boards of these institutions on the basis of being "personalities". That era just will not wash, but in the new era there is no role for the Oireachtas to approve, vet or question the suitability or otherwise of people being proposed for appointment. That is an outrageous shortcoming in the Bill and it is reasonable at this stage to park this legislation and get a better Bill. We should hold on until we find out whether the current structures are at fault or if it was the fault of the personnel in positions of power – the culture rather than the architecture. I cannot lend my support to the Bill on its present basis.

There is no provision in the legislation providing a template for how we might deal in the future with failed banks. It seems to be that either banks prosper and make profits and function, or if they fail the only recourse is for the State to step in and give a guarantee. We have a system, for example, for other businesses, where a court officer may be appointed to see whether the enterprise can trade its way out of difficulty. It is a failing in this Bill, given what we have been through, that such a template is not being provided for as regards banks being in difficulty. We are being asked, almost, to follow blindly the advice and the diktat of Government in this regard. This House is just a rubber stamp, so off we go. The new Central Bank reform structure just is not going to work. The "same old same old" will not work in the future and that is why people are angry, want a changed system, more accountability, more questioning, more probing.

The director of AIB came before the Oireachtas and said he would rather die than face recapitalisation. The Financial Regulator said he had stress tested our banks. Everyone of them lied through their teeth and we were the patsies who were expected to accept all that, and look where it landed us. We are not going to take the type of situation which pertained up to now any longer, and with good reason, because it has landed us in the mess we are in. If the Minister does not recognise the folly of that and the fact that this Bill does not deal with this reality, then I am really worried. It is in the context of being asked to buy a pig in a poke and follow blindly.

If we knew then what we know now, would we have bought the Minister's line in respect of the nationalisation of Anglo Irish Bank and in particular, the guarantee? Would we have extended that blanket coverage if we had known then what we now know as regards Anglo? We were led to believe that its debt was in the region of €4 billion. It is now €20 billion plus. Can the Minister quantify that for us? Irish Nationwide was €1 billion, but it is now €2.5 billion or €2.7 billion. What will the story be next week if we follow blindly, accept the Government's diktat, in the semblance of doing something and giving the impression we are in control of our destiny? The appearance is that the shared wisdom of this House is involved in the formulating of new policy structures, etc., but it is not. All backbenchers and Opposition Members are excluded from the process. The Government knows best, and this is the approach that has led us to where we are. I certainly have the gravest reservations in that regard.

Something has been brought to may attention, and I am not sure whether it is possible. In the context of Anglo Irish Bank and the personal guarantees that were given, there is a rumour around this town that the shredding machine in respect of those guarantees is working overtime and that the people who may have signed up are now escaping scot free. It is alarming if that is true and I cannot say I can substantiate this, but it is something for which I should like to get reassurances from the Minister, at whose behest the bank is now in State ownership.

When NAMA was established, its quid pro quo was that we should see credit flowing. That has not happened and it is squeezing the lifeblood out of existing businesses from the viewpoint of working capital and securing existing jobs. This has to be part of the strategy to get the economy going, to hold onto what we have . I am talking mostly about small and medium-sized enterprises in rural Ireland, including the agricultural community who are finding it extraordinarily difficult. They are being facilitated as regards the credit squeeze by their co-ops and their merchant stores who have over-extended themselves in many respects in this role, but the State has not responded in any meaningful manner in terms of getting credit up and running.

The Minister's credit review office is only window dressing, in its assertion to the effect that it will review whether a bank has treated someone fairly. That will not get money flowing and the Minister needs to come into this House with a detailed plan to get capital to the business that can sustain existing jobs and create new ones. I am of the view that the agricultural sector and agrifood businesses can create more jobs, but we need the proper framework, credit and a successful outcome to CAP negotiations in Europe. However, that engine for recovery, agriculture and agrifood, can be significant in this regard. It was interesting to hear last week the report commissioned by An Bord Bia, identifying very significant potential in that sector, but it is crying out for credit, and the Minister's plan has not worked. He needs a plan to get credit moving.

The hallmark of banking practice over the past ten or 15 years was the increasing downgrading of the role of local bank managers. They might have some discretion as regards the approval of car loans or minor matters, but anything else, including mortgages, was effectively centralised. This was to negate local knowledge as regards businesses that were viable, what the micro-economic realities were etc. The knowledge which local bank managers and their staff had was written off in the interests of centralisation, and we know where that has led us.

As regards the future of banking this is an issue that needs to be addressed. The provision of funding for viable businesses is critical. This competitive issue between banks' obligations to shareholders and the national economy must be addressed. Excessively banks favour profit growing initiatives, paying enormous dividends to shareholders at the expense of the national interest and this must be examined in terms of reorganisation. That is something that should be considered in terms of reorganisation.

These are observations that the Minister may have heard before. However, it is foolish to think we can draw conclusions about what failed and attempt to establish a new architecture for financial management in this country when we have not yet concluded our own banking inquiry. Although the inquiry has been emasculated and engineered to deflect attention, none the less, it is wildly inappropriate to proceed with this Bill before its completion.

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