Pat Rabbitte (Dublin South West, Labour)

Under the terms of the banks bailout Act of 2008 the Minister is required to get the approval of the Dáil to amend the eligible liabilities guarantee. He is also required to get the approval of the European Commission, and he is required to do so every six months. This particular approval is to continue to guarantee an aggregate figure of €147 billion. It is not clear why the Minister seeks approval to the end of 2011 when he only has EU approval to the end of June 2011, unless it is to avoid coming back to the House before the summer recess.

We are in such chaos with the banks because the Minister's 2008 unimaginably costly bailout did not work. Now we are embarked on a further bailout. How many bailouts can there be? Is this the last? Whatever emerges from the discussions with the IMF, the talks had better ensure that this is the last bailout, unless the Government is going to permit the banks to cannibalise the State. The Government has one last shot at this and it had better get it right this time. Unfortunately and tragically for our citizens, the track record could scarcely be more dispiriting.

The Government has been found wanting at every stage. It failed to supervise the regulation of the banks, to intervene as the credit bubble inflated or to act when alerted by the failure of Northern Rock. It failed to use the period between the collapse of Northern Rock and 28 September of the following year and to enact a bank resolution Act. This leaves the State virtually helpless in the face of the ongoing malfunctioning of a reckless and dysfunctional banking system.

A great deal has been said in this debate that does not particularly relate to this statutory instrument. That is scarcely surprising in the climate in which we find ourselves this afternoon. The instrument is essentially about enabling the Commission to tighten up its supervision of the scheme, for example, the six month review now has the phrase "or shorter" in brackets after it. In other words, the Commission is moving to get the matter under control.

It is clear now that the State bit off more than it could chew with the blanket guarantee. I have heard the arguments from both sides of the House, and I have heard the misrepresentation of the Governor of the Central Bank, Professor Patrick Honohan. When in trouble, the Government side tends to quote the Governor as having given his blessing to a blanket guarantee. He did not do that at all. It is true that the Governor concluded, when talking about the night of 28 September 2008, that a guarantee was necessary, but he did not say it should be a guarantee such as the one drawn up by the Government. It appears that the Government took the view that the State was big enough to take on the markets in terms of a guarantee that, if invoked, would bankrupt the country. It now appears that the markets have been proven right. Unfortunately, we are not big enough to take on a guarantee of €440 billion and to suffer a dysfunctional banking system. As a result, we are where we are.

I must give credit to the Minister for Finance who, like King Canute, is somewhere on the mainland presenting this as Ireland coming to the rescue of Europe. One must hand it to the man; he is immensely skilled in that area. However, it is surreal to present our situation as Ireland somehow coming to the rescue of Europe. Of course, that is not what is happening. Consider the remarks of the Minister of State, Deputy Mansergh. He said: "Yesterday's euro group statement on Ireland welcomed the measures taken to date by Ireland to deal with issues in its banking sector, including the bank guarantee, which the euro group affirms have helped to support the Irish banking sector at a time of great dislocation". It really is a tribute to whoever writes these scripts. Here is Ireland with the heels of our partners in the European Union on its neck because of our reckless profligacy in the past, and the Minister comes into the House with a script saying that the euro group welcomed us and the measures we have taken. The euro group did not do anything of the kind. If the Minister of State is not happy with me saying that I will quote what Professor Honohan said, given that he is so fond of quoting him. He said:

No other country had introduced a blanket, system-wide, guarantee, though this had been a relatively frequent tool in previous systemic crises. As such, the Irish guarantee caused considerable waves, upped the ante for other governments struggling to maintain confidence in their own banking systems and placed some direct competitive funding pressure on banks in the UK where the liquidity position of some of the leading banks was much more critical than was known to the Irish authorities at the time.

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