Bernard Durkan (Kildare North, Fine Gael)

I am delighted to have an opportunity to speak on this important Bill, the need for which has become patently and painfully obvious over the past few years. It was brought about after the tragic events we have seen in banking over the past few years, which include the colossal losses to the country, to individuals and the fall in the perception of Ireland as a modern economy throughout the European Union and further afield. It is appalling that we should find ourselves at this juncture due to the failure of certain institutions charged with responsibility for doing a job which they obviously did not take too seriously. This happened in spite of the fact that it was clearly laid down for them that in order to pursue good banking practice, it was necessary to have certain regulations in place.

When the DIRT inquiry concluded in 1999 or 2000, certain regulations were put in place in respect of the responsibilities of financial institutions. These included how to go about their business, how to be accountable, how to regulate their business, how to ensure good fiduciary practice, and how they were supposed to have regular audits by independent auditors who were not supposed to have carried out audits in the previous seven years. They were charged with the responsibility to ensure that good governance was seen to be put into operation and to be working. None of that happened. Unfortunately, what happened and what slowly unfolded on an unwitting public was the total collapse of the system that was put in place. Every single precept put in place was ignored.

Who is to blame? Everybody looks for somebody to blame nowadays. I do not know who is to blame, but I do know that responsibilities were thrust upon three different sectors. I will not go into detail on them right now, but if they all did the job they were charged with at that time, there would be no necessity to bring this Bill before the House all these years later. The situation in which this country finds itself, something that unfolded over the past three or four years, was easily visible to the ordinary man and woman in the street. They were all talking about it. They were seeing that things could not last. Where were we going? When would the bubble burst? When would the steam escape from the system? Unfortunately, a number of people charged with responsibility in various institutions did not live up to expectations. They did not live up to their responsibilities. I do not know what distracted them, but they were distracted and the result has been a catastrophe for the country, the economy and the people.

The people of this country now have to carry the responsibility of repaying the debt that arises from the madness that was pursued over a number of years. Legislation was put in place to ensure that this madness did not happen. We put a regulatory authority and a Governor of the Central Bank in place. These things are not rocket science; they are simple. Any traditional banker could explain to any of us what should have been done at particular times over the past few years, and asked the question why it was not done and what should happen afterwards.

I am concerned with the latter part of that. What should happen afterwards? What disciplinary action should take place? Should we just pass it off as if nothing happened, or should those who did not do their job be forced to take responsibility for their actions? They did not do their job. Why did the people charged with responsibility not raise the red flag? Why did they not arrest the downhill speed of the economy at the time? Their function was not to call each other up and say "How are you going there?" That is not the job of a regulator or a Governor of the Central Bank. That is not the job of a member of any institution charged with the responsibilities of banking and its wider implications for the economy.

What is likely to happen now? Will we just walk away? This is a small country and there are those who say that no law was broken. Laws were broken and that is a fact. Company law was broken. We went through the companies Bill for 18 months with a fine tooth comb to ensure that everything was in place, that people could be held accountable for their actions, and that they did their job in accordance with the legislation as laid down. I do not know what happened along the way. I do not know why we suddenly came to a situation where irresponsibility was to take over.

The only conclusion we can make is that the pickings were so good and the aspirations so high, it was deemed that it could go on forever. There would be no change and nothing would ever stop that mad rush to the top of the mountain, or the bottom of the pit, as the case may be. Nobody seemed to know where they were going. These people were charged with specific responsibilities that they did not honour. There is no use in avoiding that fact. Everybody knew their responsibilities and what they were supposed to do at different times over the past eight to ten years, when the indications were there to the effect that the economy was not going in the right direction, that the financial institutions were not lending wisely, that people were not borrowing wisely and that the sums of money were far out of reach in this economy and likely to lead us into a very serious situation. Why did those particular safeguards not kick in? I do not know, but I would like to know. As we do not know and as we move on and legislate for this kind of eventuality, I believe that we could arrive at a similar situation in the future. That would be a woeful catastrophe.

I welcome this Bill. I am so sad that I was in this House during the period that the necessity for this Bill became patently obvious, but it would never make any difference if the people charged with that responsibility did not live up to their task. The same applies again. If the people given the responsibility for doing specific jobs do not do so after this, then nothing will have been achieved and we will be back to square one. The laissez-faire attitude that prevailed in recent years will continue. What will happens if those charged with those responsibilities in the relevant institutions do not fulfil their duties in future? Will they run off to another jurisdiction? Will they speak to us from abroad or write in the newspapers, telling us they did nothing wrong and broke no law? Will we, as legislators, be left with the responsibility of conveying that message to the Irish people? That would be a sad situation.

This is not a criticism of the legislation before us or the previous legislation, wherein provision was made to ensure that the things that happened would not happen and if they were visible, they would be visible to those with responsibility long before becoming a serious threat to the economy. We have learned a harsh lesson and I hope those now charged with the new responsibilities will observe to the letter and the spirit the legislation as set down and will do their jobs without fear or favour or hindrance. If they do not, we will back where we started.

What were the European lending institutions, which had responsibility in respect of borrowing and lending and good practice, doing? Who reported to them? If they were given information, what action did they take and did they take it in time? I am not sure. I remember in this House as far back as 2002 people asking questions about where we were heading. Anyone who asked such stupid questions was told to sit down and shut up because he did not know what he was talking about. Some European institutions, such as the Commission, raised questions but we had in place banking institutions throughout Europe with particular regulations for the eurozone. There were departures from the guidelines that were laid down, however, with many countries to a greater or lesser extent sidestepping the Growth and Stability Pact guidelines because it suited them and they benefited from that. That it happened should have warned the institutions that something was happening that was not provided for and, as a result, it could lead to serious difficulties later on.

That was exactly what happened and everyone all of a sudden knew the fat was in the fire, the whole thing was imploding and we should have seen it beforehand.

There is a lesson to be learned for the European institutions, that regulations are fine when they are drawn up provided they are observed. When too much freedom is given, and too much of a carnival attitude is allowed to prevail, it may work for a while, but it must be remembered that when it began to collapse, the system fragmented overnight.

I would not allow this occasion to pass without directing criticism at those European institutions which should have known what was going to happen and should have kept a stricter eye on what was happening in this and other European countries. There will always be those who say we are all the same, that everyone is doing it. I do not believe in that maxim; I believe smaller, open economies find themselves much more vulnerable than the bigger countries with bigger economies and consumer bases.

Have those European institutions decided how the European financial structures will operate in future? Recently we have seen people speaking out on the issue but I am not sure the European treaties we passed, particularly the Lisbon treaty, gave carte blanche to everyone in the European Union to speak out. It was specifically laid down that only certain people in the Commission and the Council of Ministers would have the influence to speak on behalf of the EU and its institutions. It grieved me greatly to see on a number of occasions people being choreographed at European level to give an opinion that any assistance sought by this country would not be considered because it was in violation of certain other regulations. If those regulations had been applied properly in the first place, we would not be where we are now.

There is a lesson to be learned from this. Responsibility falls to everyone, particularly in banking. Those of us who have been around for a while have been through a number of recessions. Sometimes I feel my whole life has been one long recession because there was never any abundance of funds at any time. In the 1920s and 1930s there was an international crash, and the same happened in the 1840s. Those experiences gave rise to regulations that led to good banking practice. Simple guidelines were laid down for lending and borrowing and these were tried and tested over the years. They were proven by the test of time but they were not quick enough for the modern expert, who with the advance of IT saw a need to make profit more quickly. Sadly, we now find ourselves at a juncture that is a lesson for all such people in future.

I wish this legislation well and I hope it works. I hope the people on whom responsibility will fall as a result of the passage of this legislation will do their job in a forthright fashion without fear or favour, and if they do not do their job they will have to pay a price because we cannot have a repeat performance of what we have currently.

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