Joan Burton (Dublin West, Labour)

That document did no such thing. Yes, Professor Honohan did acknowledge that some kind of guarantee was required, as did I even before 29 September 2008. A deposit guarantee would have had unanimous support here. Two weeks beforehand, on 16 September 2008, I looked for a €75,000 guarantee for ordinary depositors. I got my answer from the Minister — a very short "No". A year earlier, on 27 September 2007, I had called for a reformed compensation scheme for savers so as to stop a run on the banks following what had happened in Northern Rock.

But Professor Honohan went on to ask sceptical questions about the blanket nature of the guarantee put in place that night. One concerns the inclusion of subordinated debt, an issue also raised at the time in this House by the leader of the Labour Party, Deputy Eamon Gilmore. Professor Honohan went on to ask much more fundamental questions that Ministers have chosen to ignore and to misrepresent. These are his exact words in case Deputies have difficulty in finding them in the Fianna Fáil Ladybird edition of events:

The scope of the Irish guarantee was exceptionally broad. Not only did it cover all deposits, including corporate and even interbank deposits, as well as certain asset backed bonds (covered bonds) and senior debt it also included, as noted already, certain subordinated debt. The inclusion of existing long-term bonds and some subordinated debt was not necessary in order to protect the immediate liquidity position. These investments were in effect locked-in. Their inclusion complicated eventual loss allocation and resolution options.

We have heard so often that many other countries rushed to follow Ireland's lead. Simply not true. There have been few cases of such blanket guarantees elsewhere and since then markets been highly sceptical of Ireland's capacity to meet the obligations that decision imposed.

Each day we pay the price of that folly. It put the taxpayer on the hook for almost all losses, even the losses of Anglo Irish Bank and Irish Nationwide. We want and need big banks, like Bank of Ireland and AIB, but who except the people in Fianna Fáil and the cronies particularly, wanted to hold on forever to Anglo Irish Bank and Irish Nationwide? Only their cronies in their own political circles, and the developers of course.

The blanket guarantee was a direct consequence of the shocking error of judgement over the solvency of Anglo Irish Bank. It is this guarantee that had dumped the Irish State with the responsibility of meeting the entire cost all of Anglo Irish Bank's liabilities, a bill that has already put us the hook for €24 billion and God knows how much more when the full truth is revealed, perhaps as early as tomorrow.

To add to our woes this Government added NAMA to the mix, one extra error of judgement added to the long catalogue of previous errors. There have been eyebrows raised at the discounts imposed by NAMA. Why could anyone be surprised that a cash for trash scheme could have had any other outcome? What is the Minister on about when he says that our excessive disclosure is somehow disadvantageous compared to other countries? They thought up cash for trash. NAMA was their own invention. Why does the Minister moan now? It was his big calling card a few months ago. It was his major calling card a few months ago and we were all supposed to be impressed.

The NAMA concept was flawed from the start. The process relating to it has added to the problem by virtue of the tortuously long and drawn out loss estimates it involves. The decision to put NAMA into the NTMA has brought a cuckoo into the latter's nest. The NTMA has a good reputation but Fianna Fáil foolishly chose to put NAMA in with it. In doing so, it has risked the contagion of the NTMA by Anglo Irish Bank and the undermining our sovereign reputation as a result. When this matter first arose, everything revolved around reputational damage to banks. Following two years of Fianna Fáil dealing with the problem, however, we are now faced with serious reputational damage to the sovereign and to the Irish people. I cannot recall such a level of damage being inflicted upon the country in the past.

When the Carroll case came before the High Court 15 months ago it must have been obvious to the Minister for Finance, Deputy Brian Lenihan, that the value of commercial property in Ireland had fallen catastrophically and had left gaping holes in the capitalisation of the banks. He surely did not need to wait the full period for NAMA to do its business before recognising the true scale of losses and the consequent capital hole that they would create. Despite the guarantee and despite NAMA, the market still lacks confidence in the solvency of the major Irish banks. In that regard, unfortunately, I must include Bank of Ireland and AIB, which are afraid to lend money to ordinary businesses throughout the country. As a result, we have a credit famine. That which I describe has in turn placed a strain on the credibility of the State in the international press and on international markets.

The Government has forgotten those whose interests it was elected to serve. It has no mandate from the Irish people to raid the national coffers to rescue a recklessly mismanaged bank from the consequences of its own folly. If it does not understand that then it should hold an election in order to see what the people think.

Before the commencement of Dáil business earlier today, I went for a walk through town. I was stopped by quite a number of people who expressed serious concern to me about the man who drove the cement mixing truck into the gates of Leinster House this morning and asked if he would be the only one who would be subject to police proceedings and who would see the inside of a police cell as a result of what has happened during the banking crisis.

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