Séamus Healy (Tipperary South, Workers and Unemployed Action Group)

I welcome the opportunity to speak on this Bill and I will start with two brief case histories. A self-employed individual had a house - a family home - with a mortgage. He was doing well and was able to get along. When he had a fourth child, he thought he should trade up to a four bedroomed house for the convenience and comfort of his family. He decided to go to the local bank which knew him well. He wanted to put his existing house on the market, put the proceeds of its sale towards the cost of a four bedroomed house and apply for a mortgage for the balance. He was told the bank would give him a loan for the second house and to hold on to the first house and rent it out.

Foolishly, this individual accepted the advice from the bank which, at the time, he thought was good advice. He ended up with two houses and two loans. He was reasonably well able to meet the repayments for a while but as the recession deepened, he found he could not pay for the second house. His business went into liquidation as work dried up and he found himself in receipt of social welfare payments. He now has two houses with loans costing him approximately €1,500 per month and he can repay neither loan. That was the kind of culture in the banks.

A small company had a loan with a particular bank but it went bust as companies have done over the past few years. It was in arrears on a particular loan to the tune of €300. The bank wanted its money and would not allow the person to add the €300 to the end of the existing loan and give him a bit of time to pay it off. The bank wanted him to take out a new loan thereby effectively penalising him for the small amount of €300. Lo and behold, the bank was on to him to pay it. A man with no identification knocked on his door on a dark evening looking for €300. The bank later confirmed that this individual was acting on its behalf. That is the kind of conduct of banks.

The question is whether that culture has changed. Many of us in this House know that the conduct of banks, in particular in regard to small businesses, self-employed people and mortgage holders, has not changed a whit. Banks are still telephoning people at all hours of the day and night, they are still into maximisation of profit and they still have the same culture.

Anyone who attended the Joint Committee on Finance, Public Expenditure and Reform recently and heard the Irish Bank Officials Association make a presentation will have come away from that meeting with the clear understanding that the culture has not changed. That is the fundamental problem.

The previous speaker said we are closing the stable door after the horse has bolted. There is nothing wrong with that. We should have done so before but at least we are doing it now. She also rightly said that we should learn from experience. The real question is whether the culture and priorities of banks have changed but, of course, they have not. The IBOA presentation showed that clearly. The ECB guidelines to banks have not changed. They still refer to profit maximisation as being the priority of banks. As long as that is the case, we will have serious difficulties in regard to banks and bankers.

There is no doubt that the various provisions in this Bill are welcome but the real question is whether they are sufficient to ensure banks are properly regulated. Legislation on the Statute Book is all very well but it is always down to the implementation of the regulations and the law. In the past there were regulations and laws governing the Central Bank but the political will was not there to ensure they were implemented. Despite the improvement in this Bill, if the political will is not there to ensure these regulations and legal provisions are implemented, we will have the same situation we had previously.

In the past, it was all about light touch regulation. The regulations were there and they will be stronger in the future but will they be effective? They can only be effective if the political will is there to implement them but I am not sure the political will is there. I am particularly unsure of it when I hear that next Tuesday, this Government will pay €700 million to Anglo Irish Bank bondholders. I was astounded when the Taoiseach told us this morning that the reason he will pay the €700 million next Tuesday is not that he believes it should be done but because Fianna Fáil agreed to do so. There was nothing about what he and his partner in government, the Labour Party, said during the general election that the bondholders would be burned and that not a single cent more would be given to the banks. He has now made a statement which is totally illogical that Anglo Irish Bank bondholders must be paid this €700 million because Fianna Fáil agreed to pay it. Is the Taoiseach the Taoiseach and is the Government the Government? I am not at all sure how that fits in with the regulation of banks. It is a view that is very difficult to understand. There is absolutely no logic to it.

We have also been told by various Ministers, including the Minister for Finance, and the Taoiseach that the Greeks have already got a 21% write-down but that they will now get a write-down of anything from 40% to 60% as a result of what is effectively a negotiated default. Apparently, we do not want that benefit at all. Why do we not want it? The inference is that, if we get the same write-down as the Greeks, we will put 35,000 public servants out of work or undertake the same austerity measures as Greece, but the opposite is the truth. If we had the benefit of a write-down, money would be available for job creation and the maintenance and reversal of social welfare rates and cuts, respectively, and the implementation of household charges could be stopped. The money could be used as an engine for growth in the economy, job creation and consumer spending so that we might exit this recession. The suggestion that 35,000 public servants would be put out of work is ridiculous, illogical and unbelievable.

I welcome that the Bill gives the Central Bank further powers, but whether it will be successful is another question. The political will to implement the legal position and the various regulations arising from it is the key to the success of the legislation. Given the Government's comments to date, I am not satisfied that there is such a will.

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