Lucinda Creighton (Dublin South East, Fine Gael)

We are speaking on this topic two weeks after the Minister for Finance made his announcement. This issue has been in a sense discussed to death in the media and in this House. We have had many debates on the banking crisis during the past two years. There is a legitimate sense of frustration on this side of the House that some, in fact most, of the warnings flagged by spokespeople on the Opposition benches were largely ignored by the Government. While we have heard some platitudes in regard to constructive engagement by all parties in finding solutions to the general economic crisis, the solutions proffered by us are largely ignored.

Deputy Conlon's lament that we should not look back but should simply look forward is simplistic. It would be an indictment of this House were we not to reflect on the decisions taken, the absence of regulation and the mistakes made. It is imperative we do this. It is also imperative this is done by way of independent investigation. Sadly, a comprehensive review of political decision making and regulatory issues does not appear to be on the cards, which is unfortunate.

As we approached the introduction in this House of the NAMA legislation this time last year we were being told by way of strong and convincing narrative in the national media, by almost all commentators and a significant cohort of economic experts, political correspondents and so on, that NAMA was the only show in town and the only way forward and that the Government's approach to the banking crisis was essentially the only option. This has been proven conclusively to be incorrect. We have seen, in particular during the past three or four months, a slow but eventual realisation that the points consistently put forward by our spokespeople on finance since the introduction of the bank guarantee scheme in 2008, that the concept of total and utter exposure of taxpayers to what in effect are the liabilities of risk takers, was and is unjust, inequitable and not propitious. While this was dismissed in a somewhat arrogant manner by Ministers and others it has proven to be correct.

In most other jurisdictions bond holders who took risks in the full knowledge they were taking them have at least suffered some consequences. In no other jurisdiction did a Government adopt the approach of signing blank cheques for defunct financial institutions, as happened here. The Minister for Finance, Deputy Lenihan said at the time - I am open to correction as it may have been the Taoiseach who said this - that Government policy was to write whatever cheques were necessary to bail out all banks, including delinquent banks like Anglo Irish Bank and Irish Nationwide Building Society. This was unfair, not prudent, not in the national interest and could not in any way be perceived or understood to be in the interests of taxpayers.

It is important and incumbent upon us as public representatives to remember that we are elected to this House not to represent bankers or international bond holders and risk takers but to represent and protect the interests of taxpayers and to spend hard earned taxpayers' moneys wisely and prudently in the national interest and, more important, in the interests of those taxpayers. This has not, by any stretch of the imagination, been our approach to the banking crisis.

This debate must be had in the context of the last two budgets, which have been punitive, and the forthcoming budget which is likely to be even more punitive. People are legitimately angry and frustrated and they feel helpless. Our citizens no longer believe they have any control over how their taxes are spent or in regard to decision making at Government level. People are fully prepared to take the hit and to play their part in trying to rectify the abysmal state of the public finances.

The spirit of co-operation we have witnessed during the past 18 months is unrivalled in other countries. However, they are only willing to do this on the basis of the approach taken being fair. It is difficult for our citizens to take hits in terms of pay cuts, income levies and so on given what is happening in regard to Anglo Irish Bank, Irish Nationwide Building Society, Allied Irish Bank and Bank of Ireland. It is difficult for citizens to contemplate what is happening in respect of Anglo Irish Bank, AIB, Irish Nationwide and even Bank of Ireland, particularly when they are being asked to take hits in the context of public pay, increased income tax, the imposition of income levies, etc., and in view of the fact that no sanctions have been imposed with regard to failures in regulation. Sanctions have not been imposed on any banker and they certainly have not been imposed on any Minister. It is highly unlikely that they will ever be imposed on Ministers.

Sanctions have not been imposed on anyone who participated in the grand conspiracy to trade recklessly in the banking and construction sectors. Likewise, there have been no sanctions in respect of flawed decision-making on the part of or bad policies adopted by poor Ministers whose judgment would not be considered appropriate in the context of running a parish council not to mention operating complex banking regulatory systems. Individual citizens who have been doing their jobs, paying their taxes and minding their own business are extremely angry with regard to the pain being inflicted on them, particularly when those who were responsible for the economic catastrophe that has befallen the country are getting away scot free.

Those are the main points I wish to make. It is important that we should reflect on the failures that have brought us to our current position. We must also reflect on the fact that the public will not be content to take much more of what is being handed out if sanctions are not imposed on those responsible for causing our current difficulties.

Over 75% of the money used to recapitalise the banks has been put into Anglo Irish Bank and Irish Nationwide. As already stated, these are essentially dysfunctional and defunct financial institutions which will never lend money again. The original priority, as stated by Government Ministers and, in particular, by the Minister for Finance, ad nauseam, for recapitalising the banks was to free up the flow of credit to SMEs. That was the logic which underpinned many of the decisions - including those relating to the bank guarantee scheme and the recapitalisation programme - made in the past 18 months. Most of that money is being put into banks that will never again be in a position to lend. In such circumstances, serious consideration should be given to accelerating the wind-down process in respect of Anglo Irish Bank. That institution should be wound down and we should begin to concentrate of restoring the balance sheets of Allied Irish Banks plc and Bank of Ireland to health. The latter institutions are of systemic importance while the other banks do not really matter in the context of the future of the economy. The Government should dispose of those which are in trouble.

There is a great deal more to be said on this topic. I do not doubt that similar debates in respect of it will be held in the near future. The bank guarantee is going to have to be extended in the new year. It would have been for more honest if the Government had acknowledged that in the first instance rather than extending the guarantee for a period of three to four months.

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