Clare Daly (Dublin North, Socialist Party)

We are told the Central Bank and Credit Institutions (Resolution) (No. 2) Bill aims to ensure the taxpayer will not bear the cost of any future bank bailouts. This is clearly a sentiment appreciated by all citizens considering the monumental debacle our banking sector has become, the cost of which has been foisted on to our shoulders and that of future generations. This Bill follows on from the Credit Institutions (Stabilisation) Act 2010, which already has cost the taxpayer €46 billion with costs to go even higher. Once that money is pumped into the banking system, we will see this legislation kicking in to deal with more normal failures in the banking system, if such events exist.

The elephant in the room, however, is that the bondholders have been left out of the equation. No measure is proposed in this legislation which would ensure the losses of a failed bank would be shouldered by the bondholders. Depositors are correctly prioritised in the legislation but the senior bondholders are given the same level of protection. This pinpoints how weak and irrelevant this legislation will be in dealing with bank losses in the future. I hope substantial amendments will be made on Committee Stage to address this shortcoming.

Much play has been made of the legislation's proposal for the banks to contribute to a special fund to cover the future costs of a troubled bank. It raises more questions than answers, however. The provision states contributions would be made by the authorised credit institutions but also by the Minister for Finance, subject to certain parts of the legislation. How much will the levy for this fund be? How will the Minister raise it? Little or no information is given in this regard. It appears a new power will be given to the Minister for Finance to legislate for a new national levy to ensure the banks are paid for by some sort of a national banking fund. What guarantee is in place to ensure this will not end up on taxpayers' shoulders?

I have a problem with the Central Bank being cast as the knight in shining armour in this Bill.

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