Michael McCarthy (Cork South West, Labour)

I am pleased to contribute to this significant debate on the reorganisation of the banking sector at a time when concerns about the structures and day-to-day operations of the State's financial institutions are at an all-time high. We do not need to discuss the matter in specific detail and I propose to keep my contribution as positive and proactive as possible. To use a well worn cliché, we are where we are and know who got us into the current mess. It is now time to engage in constructive, informed and bipartisan dialogue on how best to proceed with recalibrating the banking system.

The reorganisation of the banking system should include three main planks, namely, strict governance and monitoring of how our financial institutions are run, comprehensive reviews of remuneration policies for existing and former bank executives and measures to address the problem of homeowners being at the mercy of banks' escalating fees.

The landmark report of the Governor of the Central Bank, Professor Patrick Honohan, on the causes of the banking crisis determined that there had been a comprehensive failure of bank management and direction and that the major responsibility for the crisis lay with the directors and senior management of the banks. While some progressive steps have been taken, one of the main planks of banking reorganisation must be to root out those individuals who not only ignored the banking crisis but fuelled and aggravated it by failing to exercise adequate prudential supervision or pursue sound policies.

The state authorities in Iceland are taking to task those individuals who caused the collapse of one of the country's largest banks. Bankers' homes were raided, the country's central bank was placed under investigation and, as recently as last month, seven Icelandic banking officials were arrested in London as part of the investigation. We need this type of rigorous and aggressive investigation of the banking system.

While many of the main architects of the economic crisis, including those associated with the Irish Nationwide Building Society and Anglo Irish Bank, may have left the banking system, they are not out of pocket, unlike thousands of distressed families who are in negative equity and many more who are battling to pay mortgages. One of the enduring sagas of recent times was the sight of one former executive clinging desperately to his €1 million bonus from the Irish Nationwide Building Society which was paid out weeks after the blanket guarantee had been introduced. While the then Minister of Finance capped the salaries of banking chiefs at €500,000 last year, the basic salary, bonus and pension levels of chief executives, chairmen and board members in the State's banks and financial houses are in most cases excessive when compared to those of individuals of similar rank in the banks of our global counterparts.

At a time when we are meant to be showing solidarity with the people of this country and undertaking a new chapter of honesty and fairness, it is disgusting and stomach-churning to see former high-ranking officials still enjoying the high life. Where is the quid pro quo for families in negative equity or young graduates who must emigrate to find gainful employment? Where is the quid pro quo for what has been done for the banking institutions, given that thousands of unemployed people are facing an economic crisis?

It is particularly galling to see taxpayers being hit by banking fees. Many homeowners are at the mercy of banking institutions. Tomorrow the ECB is expected to increase interest rates by 0.5%, which will cause further distress and hardship on homeowners with tracker mortgages. Taxpayers are being twisted yet again. In a single day in February, both Ulster Bank and Permanent TSB increased rates for variable rate mortgage holders. Permanent TSB has made four separate increases since August 2009.

I am glad the issue of bank reorganisation is on the agenda and that decisions have been taken to try to get it right. An earlier speaker asked about the strategic investment bank, which is in the programme for Government and remains a key priority. I have a brief history lesson for the Opposition parties. Denial is not just a river in Egypt. Sinn Féin has selective amnesia in denying it supported the blanket guarantee.

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