John Paul Phelan (Carlow-Kilkenny, Fine Gael)

I concur with many of the sentiments expressed by Deputy Heydon on the important role of credit unions. They have a role to play in economic recovery and the provision of small loans to individuals. It is important that whatever legislation is introduced would not have an adverse effect on the important role credit unions have played and can play in our economy in the future.

I am glad to have the opportunity to speak in support of this Bill and to correct some of the points placed on the record by Members of the Opposition, who have left the Chamber, regarding the handling by the previous Government of our economic difficulties in the past few years, particularly the difficulties with the banks. Deputy Costello spoke correctly about the perception that existed that banks could not be allowed to fail. As a result of the decisions of the previous Government the taxpayer was exposed to huge losses.

I commend the Minister, Deputy Noonan, on his first 100 days or so in office. He has done much more in that brief period to provide some certainty about the direction our financial institutions will take in the future than the previous Minister and previous Government managed to do in four or five years of trying to do the same. There has been a clear pronouncement from the Minister for Finance and the Government outlining the structure of the two pillar banks, a structure which has been widely accepted across Europe and elsewhere. We have seen the first attempts at burden sharing with subordinated debt holders and an indication from the Minister that he is prepared to take the fight, for want of a better term, to our colleagues in Europe to seek that the burden sharing regime might be extended to the holders of other Irish bank debt. He has done more in that regard than the previous Government. It is clear to the general public that the previous Government made no effort to take that battle to our colleagues in Europe and I commend the Minister on his recent actions and comments in that regard.

Banks must be allowed to fail like other businesses. However, there are specific circumstances that relate to financial institutions so this legislation provides for the orderly winding down of such institutions. Previous speakers have said it is a case of closing the stable door after the horse has bolted, but we do not know if all the horses have yet bolted. Some have and some are still in the stable. This legislation provides a clear mechanism for how financial institutions in Ireland might be wound up in the future if difficulty arises. As has been mentioned, there is similar legislation in the US, Canada, Japan and other countries for the orderly winding down of financial institutions.

I wish to mention a couple of items in the last minute available to me. The transfer orders allow for the transfer to another institution of some or all of the relevant institution's assets and liabilities. That is carried on from the Credit Institutions (Stabilisation) Act, as are the special management orders. The bridge bank will allow the holding, on a temporary basis, of some or all assets of the financial institution in question.

This legislation provides for the establishment of a resolution fund to minimise the exposure of taxpayers in the future. That is the single main reason I personally support this legislation. I commend it and the efforts of the Minister, Deputy Noonan, to the House.

See this speech in context