Michael Noonan (Limerick East, Fine Gael)

The answer has to be "Yes" this morning - one bank can bring down a country. The Government's banking policy has been an absolute disaster and it pursued it in the teeth of opposition here and expert opinion outside this House. That is what brought us to this point this morning.

As the crisis broke in recent days the Government has been trying to spin itself out of accepting the blame for the disaster. It claims that it is not really a sovereign problem, but merely a bank rescue by the ECB. Of course that is not correct; the IMF does not deal with banks, but with sovereign nations. The fact that the IMF is involved means it is dealing with the sovereign and not dealing with the bank directly. The Financial Stability Fund operating, under law, out of Berlin can only deal with euro states in difficulty. It has no legal mandate to deal with any company in the private sector or any bank. The fact that part of the source of the funds is the Financial Stability Fund and that one of the organisations represented in the Department of Finance this morning is the IMF proves without shadow of doubt that those that are examining Ireland are looking at Ireland incorporated and seeing it as a rescue, an injection of funds into Ireland, a major loan on which Ireland can draw, a bailout for Ireland and not a bailout for the narrow banking sector. Yet the Government continues to spin by pretending and not being straight with the people. It is trying to put a gloss on it by claiming that this is really an unfortunate event in the banks over which it had little or no control.

The Minister has also claimed in his spin that this is a European, not an Irish, problem, that it is European action to protect the euro and that Ireland is the innocent victim of the strategy. This is total nonsense. Of course there has been a knock-on effect in Portugal from Ireland's problems with its banking sector and in bond prices being paid by the Portuguese, and there is an imminent knock-on effect on Spain. However, it is a matter of the contagion, as it is described, spreading from the infection in Ireland and when the ECB seeks to address it, it does not do so in Spain or Portugal but, like a good doctor, it goes back to the source of the infection and addresses it in Ireland. It is Ireland's problem that is being addressed. The Minister has put us in our current position and he cannot spin his way out of it.

The Minister's speech is interesting and I agree with one part of it. I join him in stating that there is no threat to Irish people's deposits in Irish banks. That is covered adequately under our law and under the law in Europe. I join the Minister in stressing that, because I have had numerous calls from constituents to ask if they should open sterling accounts and move out their money. If people act in that way, it will be a self-fulfilling prophecy. Deposits are safe and secure and should be left in the Irish banking system now that Europe is taking action.

The second interesting part of the Minister's speech is the section on the special resolution regime. All the documents about banking and what happened in the time leading up to the guarantee in September 2008 were released to the Committee of Public Accounts. One of those documents showed there was a memorandum in circulation in the Department of Finance as early as February 2008 which discussed resolution legislation so banks could be wound down in an orderly manner. On seeing the word "resolution" many people tend to think it means to resolve or solve the Irish banking problem. That is not what "resolution" means in the technical sense. Resolution is a legal mechanism whereby a bank in trouble may be wound down systematically and those with an input into the bank share the burden of the wind down. The Minister has been promising resolution legislation and the Department has been discussing it for nearly three years, yet we have seen nothing.

However, the Minister has moved dramatically. A couple of weeks ago he moved to agree with the Fine Gael position that subordinated bondholders could be negotiated with and discounts achieved in Anglo Irish Bank.

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