Paschal Donohoe (Dublin Central, Fine Gael)

I wish to share time with Deputy Peter Mathews.

To respond to Deputy Stephen Donnelly's constructive contribution, the reasons for the change in Irish market dynamics in recent weeks include continuing rumours and commentary on possible developments in Greece and the sovereign downgrade of the United States earlier this week by the ratings agencies. These events create an environment within which economies such as that of Ireland will struggle.

Deputy Stephen Donnelly made valuable points which should be discussed. When the Oireachtas committees are established, I hope Members will have an opportunity to have their ideas discussed. One of the important conclusions of the Nyberg report was that dissent and critical discussion were repressed. It would be a tragedy in the current phase of economic depression if such repression were to be repeated. I hope the Oireachtas, through the structures that will be established in the coming weeks, will provide a forum for policy options and ideas to be evaluated.

The most striking line of the Nyberg report is on page 100 which states, "Because the real reason for the crisis is the spread of an ultimately irrational point of view, regulations and watchdog institutions cannot be counted on to be efficient preventers of a systemic crisis". The latter part of the report, which has not yet ignited significant commentary, notes that if all the improvements that are sought in our regulatory regime were delivered, they would not, of themselves, guarantee that a future crisis of this magnitude would not occur again. This is a deeply sobering thought for those who have been elected to govern and to ensure we exit this stage of the economic crisis.

The Nyberg report states there have been only a small number of crises of the magnitude of that experienced by Ireland. This is not the case. In the past 100 years or thereabouts there have been many examples around the world of banking crises triggering profound financial crises in the states concerned.

The second half of the report makes recommendations on changes to the structure and culture of banking and the culture of society in general. These are the areas in which the most radical change needs to be made. The perception among citizens is that taxpayers bail out banks which, in turn, impose costs on taxpayers which they cannot shoulder and ask them to condone behaviour that they will not condone. We have observed many examples of such behaviour, most recently in the form of a payment which was publicised earlier in the week. The costs imposed on citizens are vast. The State will have to shoulder €31 billion to bail out Anglo Irish Bank and Irish Nationwide Building Society. A more subtle cost, however, is the profound crisis of confidence in our ability to govern our way out of our current difficulties.

The Nyberg report illustrates that for a period leading up to and including 2007, the State did not have the ability to govern itself. It states clearly that a herd mentality, groupthink and consensus not only resulted in the misuse of critical faculties but led to their virtual suspension in the institutions tasked with protecting the national interest and citizens. As we seek a way out of our current difficulties, it would be unforgivable if we were to make the same mistake again.

One of the recommendations in the report which we must address is the size and cost of the banking sector. The Government has made progress in this respect by seeking to reduce the size of the banking sector and its potential cost to the taxpayer. We must not lose sight of these issues or the need for regulatory improvement.

See this speech in context