Brian Lenihan Jnr (Dublin West, Fianna Fail)

I outlined the protection for depositors at the beginning of the statement. I restate the existence of the State guarantee. It is not limited to the €100,000 permanent guarantee which is established in our statute law but also extends by virtue of the vote in the House yesterday evening on an unlimited basis to all deposits, be they corporate or retail. That is an important issue. I am pleased the Deputy mentioned it. I welcome the constructive tone of the debate on deposits that was taken by all speakers.

Deputy Noonan's second question was on the constitutional position of the Government, my position, and what advices have been taken from the Attorney General in that regard. I, personally, have not taken advice in that regard because I have not committed to anything in the process. Preliminary advices were obtained on the ECOFIN statement by my officials to ensure that the type of short focussed dialogue which is now envisaged is permissible. The advice was that it was permissible. That is where the matter lies at this stage. I will take into account the advice of the Attorney General in anything I do. I do not sit here as a lawyer. As I often tell Deputy Burton, I sit here as a Deputy of the Dublin West constituency. I accept the advice of the Attorney General on legal matters.

On the question of the liquidity crisis, and collateral and emergency support from the European Central Bank, again, the Deputy referred to an underlying fear of insolvency. It is important to note what Professor Honohan said about that this morning in his interview. He stated:

I don't think there's any question of it all going into the banks, as you put it. Talk about the banks, it's true that the banks need additional confidence. Our efforts, the huge sums of money that have been put in by the Government to support the banks, have not been sufficient, have not generated sufficient confidence yet. The money is enough objectively, [That is the view of the Governor of the Central Bank.] but if the confidence isn't there, and it's partly not there because investors are concerned in general about the Government finances, and the future prospects for growth and employment. So with the market uncertainty generally high, for the last four to five months, effectively since the end of April, I think it is desirable that the banks should have more capital, that's Government capital, ownership funds, available to show to the market, look this is beyond question.

He made the point earlier that it would be "a large loan, because the purpose of the amount to be advanced or to be made available to be borrowed, is to show that Ireland has sufficient firepower to deal with any concerns of the market". Professor Honohan was not suggesting that it is a bailout, in fact he deliberately repudiated the use of the word bailout. Deputies who are fond of quoting him should take note of that. His point was that a large contingency fund available to the State to stand behind the banking system would of itself create confidence. He expressed the clear expectation that discussions would eventuate in such a fund. The discussions have only commenced this morning.

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