Stephen Donnelly (Wicklow, Independent)

As has been said, the Nyberg report confirms what some knew and everyone suspected - that the institutions of the State failed to protect the people; that political decision-making, particularly with regard to the blanket guarantee, was ill-informed; and that a culture of greed and incompetence prevailed in the banking sector. Now that we have seen the Nyberg report, we need to reflect on what we can do and what we can change. I wish to add a little context before I make some suggestions in that regard. We learned yesterday that the chief executive of AIB is to receive a €3 million pay-off. Last week, Moody's rating agency downgraded Irish sovereign debt to one notch above junk status. Yesterday, Moody's downgraded the unguaranteed senior debt in the banks to junk status.

The Minister for Finance has understandably made wide reference to the positive market reaction to his announcement on bank restructuring. The yield on ten-year sovereign debt fell from 10.2% to 9.1%, which was fantastic. That has climbed again in the past week due to the return of market uncertainty, however, and was back to 10.2% today. In other words, every piece of market optimism in reaction to the Government's ideas on bank restructuring has been completely wiped out in approximately ten days of trading. I am sure there are many reasons for this, but I would like to focus on one. The Nyberg report tells us that the banks failed in the past, which we knew. The multimillion euro pay-out to the chief executive of a failed bank tells us that the banks are still failing today. The fact that the banking debt is junk and the Irish sovereign debt is just one level above junk tells us that the markets believe the same institutions will fail in the future. I ask the Government to rethink its policy options in light of all of this evidence. We are pinning our hopes on borrowing a vast amount of money, which we cannot afford to borrow, and stuffing it into institutions which we know have failed in the past, are failing today and - the markets believe - will fail in the future. I ask the Government to consider that all of us can do better than this.

During one of the first sittings of this Dáil, the Minister, Deputy Michael Noonan, asked for ideas from the opposite side of the House. He said he was not hearing any ideas. I would like to finish by offering a few ideas to the Government for its consideration. I suggest it should not repay the €35 billion in outstanding bonds. If this is a problem, the Government should get creative. It could consider freezing them for five or ten years and finding a halfway house where we can take the pressure off. It could implement a debt-for-equity swap on the others. The Government could remove the sovereign guarantee from all the banks bar one - it could choose Bank of Ireland or the AIB and accept it will be tough for a while - and thereby minimise our liability. I suggest a national reconstruction bank that was mentioned in the programme for Government should be established as a matter of urgency. The Government could take out insurance on the remaining bank liabilities, the commercial loans, the non-NAMA development loans and the mortgages. I propose the removal of the senior teams from the banks. Clearly, that is not happening at the moment. Deputy Shane Ross spoke well on this matter. I suggest the Government should set up a failure regime and instigate radical reform in the Department of Finance with the assistance of banking experts and economists, etc. I would be much obliged if the Minister of State, Deputy Dinny McGinley, would bring those ideas back to the Minister for Finance and his team.

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