Billy Kelleher (Cork North Central, Fianna Fail)

I welcome the opportunity to speak on this Bill, which is a case of bolting the stable door after the horse has gone down the paddock in the context of oversight, regulation and a lack of enforcement and supervision of the banking sector in recent years. I hope this Bill will go a long way to restoring the confidence of the people, inside and outside Ireland, in ensuring we have a strong, robust regulatory system that sends a strong signal, internationally and nationally, that we are seen to have proper supervision of financial services. Critically, in an international context, the Irish financial services centre is a key component of the Irish economy. It generates a major amount of employment and is seen as an important hub in the provision of financial services. Anything that undermines the confidence of international investors, in terms of banking supervision and regulation, could potentially damage financial services. The financial services sector here has withstood, in general terms, the broader world recession and the damage caused to financial services across the world in respect of employment. The sector is now growing. When speaking publicly about the lack of oversight of banks and financial services in this country, it is important that we do not damage the integrity of the country in broad terms.

This is my first opportunity to speak on financial matters since the return of the Dáil. We must be honest about what we are trying to achieve, which is to ensure that we do not have banks capable of engaging in cowboy activities and reckless lending and becoming so big that they cannot be allowed to fail. That is what happened in recent times. I will take a certain amount of criticism as I was sitting on the Government side of the House for a long period of time. At the time, not only did the Financial Regulator, the Central Bank and the Department of Finance fail, this House failed substantially. It failed because it did not hold anyone to account by raising concerns that we all have now, with the benefit of hindsight, about what the banks were doing. They were involved in speculative lending and forced property prices up, which all fell on mortgage holders in this State.

This was coupled with the emergence of the eurozone and the fact that our economy was out of sync with many other economies. We needed high interest rates and we got low interest rates. The euro was not at the correct value when we joined it, from the point of view of the cyclical nature of our economy. These are historical facts but they lead us to a situation where we have tens of thousands of mortgage holders under major financial pressure because of the activity in the banking sector, developers, the lack of oversight and policy failures. This applies in the context of Government but also in the context of this House. I am not going to apportion blame but trying to highlight the fact that this House never discussed any issue to do with banking, nor did we have a broad debate on banking over many years. There was a general consensus in the House that there would be a soft landing and that we would have potential growth of between 2% and 4% in the years after the rapid growth of the Celtic tiger era. That failed to materialise for a number of reasons. If we want to genuinely address the challenges facing the Minister, this Government and our people in the years ahead, we must be honest about how we arrived at this point and about how we deal with getting out of the equation.

There is a genuine need for an honest investigation into what went wrong and how we can arrive at policy decisions in the years ahead which will ensure it does not recur. A referendum will take place this coming Thursday which seeks to afford the House of the Oireachtas powers of inquiry into matters of public importance. However, under the Commissions of Investigation Act 2004, passed by this House some years ago, we could already have had an inquiry up and running into what went wrong and where the failures arose. The Nyberg report, Honohan report and Regling and Watson report, as well as findings by the Financial Regulator, Mr. Matthew Elderfield, pointed clearly to a lack of oversight in financial regulation as well as policy failures across the board. Instead of waiting an indeterminate period and allowing a political charade to take place in this House, we should have an honest debate on how to get out of our difficulties in a manner which has the support of the public.

We must examine how we can ease the burden on those facing unemployment, mortgage arrears, threatened repossession of the family home and all the other challenges the Minister for Finance faces in framing the budget this December. He must not only devise a sustainable budgetary framework for the coming years which facilitates us in returning to the bond markets but must also ensure it complies with our memorandum of understanding with the EU-IMF-ECB troika. In that context, the Minister must surely accept that we have not yet had an honest debate in this House on all of these issues. Even as early as January and February of this year, a sustained deceit was in evidence in the context of election campaigning. People were promised, for example, that bondholders would be burned and that mortgage interest relief would be extended for those most burdened by mortgage debt as a consequence of negative equity. No action has been taken on either of these issues. Before its publication, the Keane report was held up as a panacea that would address the fundamental issues of mortgage arrears and negative equity. It has not addressed those concerns. We all accept there is no easy solution, but the reality is that people were led to believe that bondholders would be burned, thus reducing the cost to the State of the bank bailout and facilitating some leeway in assisting mortgage holders. That undertaking was clearly given by several political parties at the beginning of the year.

There are great challenges to be faced, unemployment being the most obvious, as well as mortgage arrears, negative equity and Ireland's international reputation. Our objective is to return to the bond markets and to self-sufficiency in funding our activities. Regarding the memorandum of understanding with the troika, I spoke about it to the former Minister for Finance, the late Brian Lenihan, on several occasions, including only several weeks before he passed away. He was clearly of the opinion that we were bullied by the European Central Bank in terms of accessing the bailout fund. Moreover, we received no support from the European Commission.

I have made the point repeatedly that the Commission is meant to be the guarantor of the various treaties ratified since the Treaty of Rome. However, it has singularly failed to ensure that small nations such as Ireland and Portugal get a fair crack of the whip. No bondholders have been burnt and the burden on taxpayers in this State has not been lessened. Rather, we have been saddled with the full debt. We can argue about whether the bank guarantee was the right action to take but, at the time, the view was that there was no choice in the matter. We now have a situation where promissory notes are being issued on a regular basis to fund the bailout of Anglo Irish Bank. There is a clear obligation on the Government to seek to lighten the burden on this State in order to allow it to become self-sufficient by returning to the bond markets.

The debate in this House, particularly against the backdrop of the general election, was deceitful and dishonest in many cases. People were led up the garden path in being told there was an easy route out of the great difficulties we face. I accept my portion of the blame, but rewriting history at this early stage does no service to what we all wish to achieve, namely, to get this State back on its feet and back into the bond markets. Ireland has a good reputation internationally and we are a very capable people. In recent days there has been an acknowledgement at European level that we are resilient, resourceful and willing to make tough decisions and to carry our fair share of the burden. However, we are not getting fair treatment from the European Commission in terms of its responsibility to stand up for the rights of small nations. Likewise, the European Central Bank intimidated and bullied this State into accepting a bailout.

On the challenges facing individuals, I recall speaking in this House some years ago about escalating house prices. Many Deputies were making such points. We were aware for a long time that there was a difficulty in regard to escalating house prices, and previous Governments made several interjections, such as serviced land initiatives, amendments to the tax regimes and so on, in an effort to curtail house price increases. Clearly, those initiatives did not work. We were all assured at that time that there would be a soft landing, everything would proceed in a smooth manner and there would be no great difficulties arising from the large debts accrued by individuals. That has not turned out to be the case and we have made no inroads in addressing those problems.

We have, however, made a start in restoring our international reputation, as has been acknowledged by EU leaders. There will be discussion at tomorrow's summit of the debt crisis facing Europe. For several years, in this Chamber and across all commentary, the only acceptable view was that Ireland's difficulty was entirely our own fault. That is clearly not the case. There is a broader, European context to the debt crisis. For several years we were told that if we got our house in order in addressing our budget deficit, which we began doing in 2008, that all would be well. That has not happened. The Minister will have the support of everybody in this House if he seeks a genuine renegotiation of our bailout terms. However, there is no point in pretending that he has already succeeded in renegotiating several aspects of the memorandum of understanding. The Minister has renegotiated around the edges. On the fundamental issues, in respect of which the Government made commitments to the Irish people in February this year, there has been no renegotiation. Not a single bondholder has been burnt.

In regard to failures of oversight, there is much talk of prosecutions and investigations into potential criminal activity. Charges were made in this House that the previous Government was hiding bankers from being prosecuted. However, in the eight months since this Government assumed office, no banker has been charged with any crime. A little honesty on all sides of the House might persuade the public that we have the capacity to deal with the fundamental challenges facing us all.

See this speech in context