Michael Noonan (Limerick East, Fine Gael)

I welcome the motion. We are not coming cold to it because there has been considerable discussion on this matter at the Joint Committee on Finance and the Public Service. I attended last week's meeting but Deputy Burton and others have been attending meetings for quite some time. The amendments being made to the proposed terms of reference by the Minister are acceptable. He has moved very close to the position at which the committee wanted to arrive.

I want to comment in particular on the Minister's extension of the period under investigation. The original terms of reference would have required the commission of investigation to cease its inquiries once events up to 28 September 2008 had been investigated. This is a significant date as the guarantee was discussed on 29 September 2008 in the Department. On that day, the Minister informed the House of the serious problem emerging in our banking system. He obtained the approval of the House for the guarantee he introduced, and he had the support of Fine Gael on the day. We felt the crisis was such that we would take the Minister's advice on trust.

It has emerged since that time that events after 28 September 2008 need to be the subject of an inquiry. One should consider the period of crisis I want investigated as beginning with the guarantee across the banking systems and ending on 15 January 2009. The latter date was the date of the nationalisation of Anglo Irish Bank. Between the two dates, an enormous number of events occurred that threw light on the banking system. They need to be inquired into.

When the Minister sought the approval of the House on the guarantee, he presented, on the basis of the information available to him, the crisis as a liquidity crisis. It emerged subsequently that it moved very quickly from a liquidity crisis to the associated insolvency crisis, on foot of which the banks went bust. I am glad the terms of reference allow for the failures in corporate governance and risk management at Anglo Irish Bank and Irish Nationwide Building Society to be investigated. In effect, they became insolvent and went bust, and the State had to move in and rescue them.

There are many events to be considered. One of the most curious was the information that Anglo Irish Bank was involved in a process entailing back-to-back loans with Irish Life & Permanent. Its money was channelled through the latter institution and was returned as deposits. This improved its balance sheet. This was an attempt to disguise the fact that the bank was well on the way to insolvency. How this happened needs to be investigated. It is very important that the period in the terms of reference was extended.

It emerged that the Central Bank was aware of this matter, in addition to the Financial Regulator. Officials in the Department of Finance have put it on record that PricewaterhouseCoopers became aware of it and informed the Department at official level. For some reason, this information was not passed on to the Minister.

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