Aodhán Ó Ríordáin (Dublin North Central, Labour)

I wish to share time with Deputies Michael McCarthy, Colm Keaveney and Derek Nolan.

I welcome the opportunity to speak on the recent announcement of bank reorganisation by the Minister for Finance on behalf of the Government. It is widely acknowledged in this House and beyond that the Government inherited the most appalling economic mess from the previous Administration.

Never before have the actions of so few hurt so many and at such a huge cost. While many of the decisions that need to be taken in the coming months and years are unpalatable, they are absolutely necessary for the survival of the economy, our society and the State. We need a fully functioning banking system for the economy to operate and a constant credit flow to support the small and medium enterprise sector in protecting and helping to grow employment.

We must acknowledge that many citizens feel lost in this debate because we spend more time discussing banking strategies and investing in failing institutions than we do on discussing families and investing in people. Those of us in the political sphere have spoken of little else but banking in recent years. The survival of the banking system is linked most definitely to the survival of our society and the State.

As I stated, the language of the banking debate has been, at best, unfortunate and, at worst, demeaning and dehumanising. Individuals have been reduced to economic units. The cost of unemployment has been calculated in terms of loss to the Exchequer in VAT receipts and the strain of social welfare payments. People need work, employers need credit from banks and banks need to be in a position to supply credit and support families who have justifiable aspirations for themselves and those they love.

For the past 11 years I have been working in the shadow of the International Financial Services Centre in the heart of the constituency of the former Taoiseach, Mr. Bertie Ahern. We saw at first hand the reckless political posturing and unquestioning culture that arose during the era of the Celtic tiger. Society at the time took the view that high level bankers and developers were risk takers and winners, while those who questioned the sustainability of their practices or the political ideology that underpinned them were regarded as whingers and moaners.

While the reckless practices of those based in the IFSC and elsewhere went unregulated, those who lived in its shadow or other parts of my constituency of Dublin North Central were much more likely to see the inside of a prison. Poverty seems to be the only real crime in this country as it is the only one we are prepared to punish in any meaningful way. If this crisis passes us by without jail time being served by those responsible, that is, those who lied, falsified and clearly and blatantly broke the law, the very security of our republic will be at stake. How can anyone, whether a parent, teacher or community leader, convince a child that he or she lives in a fair and just society when the only ones who are seen to serve time in prison are those society has failed from day one? It is a challenge for everyone in the House to ensure justice is seen to be done.

We often talk about crime and anti-social behaviour. The banking and fiscal crisis has unleashed the most incredible anti-social consequences on too many families up and down this land. The need to recapitalise the banking system is a direct result of the anti-social behaviour of the Fianna Fáil Party in government, in particular, its decision to implement a blanket bank guarantee in September 2008. The Labour Party was the only party to oppose the guarantee.

While it will take time to repair the damage of the 14 years in which Fianna Fáil held power, in only three weeks the new Government has taken control of the banking system. We have not hidden away the extent of the damage and have, for the first time since the crisis began, been brutally honest with the people. The stress tests are the most rigorous ever carried out on the banking system. For this reason, it is likely that we have gleaned an accurate picture of the true cost of Fianna Fáil's anti-social behaviour.

The banking system will be restructured. It will have two core pillar banks which will be constructed around the real needs of the economy. The banks will be divested of their weakest parts - their non-core functions - over time and the fire sale losses which the European Central Bank had previously demanded will be avoided. The new banking system will be an engine of economic growth by providing €12 billion of additional credit for businesses and households every year. A clear-out of bank boards will focus on anyone who was a board member before 2008.

The stress test requirement will be €21 billion plus €3 billion in contingency funding. This figure will be reduced, however, by requiring banks to sell off assets and seek private investment, as well as through the imposition of burden sharing on subordinated bondholders. This approach marks a clear break with the blank cheque policy of the past.

We must have a functioning banking system, which means we must recapitalise the core of the system, albeit at a high cost. The proposed restructuring of the banks allows the country to move forward. We are in recovery and the restructuring is part of a recovery process. As a society, we need to know that we will never allow this to happen again.

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