John Halligan (Waterford, Independent)

There is little doubt that the public is outraged and angered by what has been allowed to happen to the banking system in Ireland. The public is also fed up with wealthy bankers who receive large salaries and bonuses from banks that would have failed if the Government had not intervened. It is not before time for this legislation to be before the House. My only regret, and many other people share it, is that legislation was not in place before the disastrous demise of Ireland's banking system.

While I accept that the Government is anxious to put the problems of the Irish banks to rest, and I welcome in principle many elements of this Bill, it is imperative that it confronts the reality of preventing the financial system from collapsing again, which is not the same as repairing it. The previous speaker referred to bondholders. This has become a tricky subject for both Fine Gael and the Labour Party, who made many sterling promises before the election as to how they would deal with senior bondholders. This issue is fudged again in the Bill. Irish people are saying that if we are in control of the banks, we can surely force the senior bondholders to bear the losses. An overwhelming number of people in this country want that to happen. As they see it, senior bondholders gambled recklessly with our money and brought the country to its knees, but are once again escaping the pain.

Everybody in this country, ranging from small business people to the person working in a bank, has realised what has happened economically in Ireland over the last number of years and all of them have educated themselves to the fact that we were robbed by the senior bondholders, who gambled our money away. They ask why these people are not being dealt with. That is my single reservation about this Bill. Since the start of the financial crisis, Denmark is the only European country that has imposed any losses on senior bondholders. To date, no eurozone has imposed mandatory burden sharing on senior bondholders by way of legislation. That is fundamentally wrong, particularly when one sees what ordinary people in this country have had to pay as a result of the actions of the bondholders.

The Bill provides for the establishment of a resolution fund to minimise taxpayers' exposure to future financial sector difficulties. The fund will be funded by contributions from credit institutions. The Bill appears to provide that should an institution not contribute to the fund, it will be unable to carry on its business and will be guilty of an offence. That is fine, but bearing in mind how financially crippled most of the institutions in the State are, I have reservations as to whether meaningful contributions to this fund are a realistic prospect at present or whether taxpayers in future years might again have to pick up the tab. It is not very clear in the Bill.

The inclusion of the credit unions in the provisions of the Bill is timely given that their trade body, the Irish League of Credit Unions or ILCU, which maintains a small stabilisation fund, is reported to have made losses of €43.5 million last year, stemming from €48 million in guarantees and commitments provided by its savings protection scheme to 13 credit unions and €5.5 million in investment losses. It appears that further losses are inevitable, based on this information and the fact that at least one in five credit unions was unable to pay a dividend last year. This must be further examined.

There are some slight signs of recovery in small businesses, and I have met business people whose books have begun to fill. The only problem is that, once again, they cannot get money or loans from the banks. All Deputies are hearing this. I do not know whether the banks have lost the skill to lend money or are deliberately not lending it, but they are not doing so. If the State can take such a sweeping approach as to take over banks, surely we can further compel them to lend. They are taking in money to build up their reserves but not lending money so that people can generate growth within the economy.

It is all very well for the State to look after the banks. Where does the Bill provide for the State to look after the ordinary people who need funding from the banks? I do not see it. Regardless of all the statistics we hear, the word among small business owners is that the two so-called pillar banks, AIB and Bank of Ireland, are not meeting the borrowing needs of small and medium enterprises. Struggling business cannot keep going if they cannot get money from the banks.

The Irish Small and Medium Enterprises Association, ISME, claims that access to loans has not improved since the Government extracted lending commitments from the Bank of Ireland and AIB as a condition of rescuing those institutions with billions of euro of State capital. We need to look at this comprehensively. It is all very well for the banks to tell us they are giving out money. Every Deputy has spoken to people who are trying to set up a small business, keep one going, recover or expand and who cannot get money from banks. The economy will go nowhere if that does not happen.

I agree with much of the Bill. However, it does nothing to deal with the people who have put us into this crisis. We have not compelled the banks to help get us out of the crisis by lending money, which was hard-earned by taxpayers and which established the banks in the first place, to keep businesses going. The focus of this legislation should not be on the needs of the banks but on the need of the economy for credit.

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