Tommy Broughan (Dublin North East, Labour) | Oireachtas source

I move amendment No. 1:

In page 7, to delete lines 31 to 37.

The amendment seeks to remove the definition of "financial services" imported from the Central Bank Act 1942. This refers to the grave concerns of the membership of the credit union movement about this mighty edifice of banking legislation that the Minister is placing on the backs of the members of this local, vocational and democratic movement. I did not have an opportunity due to my current position in the House to contribute on Second Stage and I am no longer a member of the Joint Committee on Finance, Public Expenditure and Reform.

I congratulate the credit union movement on its remarkable contribution to Irish life over the past 65 years from the day Nora Herlihy and her friends began the most remarkable organisation in the history of the State to the present where it has more than 3 million members, in excess of 400 credit unions and assets of €14 billion. I acknowledge the remarkable people who played a role in the movement, including the great John Hume. I thank the Irish League of Credit Unions, ILCU, the Credit Union Development Association, CUDA, the managers' organisation and the supervisors for the briefings they have given Members and, in particular, I thank the always excellent Oireachtas Library and Research Service.

Two elements stand out in the history of the credit union movement. The first is the tremendous work done in the early decades to combat the nuisance and horror of "loansharking", which was prevalent throughout the country, and the second is the tremendous role women played from day one in creating this local, pooled, voluntary credit organisation, enabling people to begin actively to plan their lives.

This is a critical movement in Irish social and economic life. A number of colleagues who serve on the Joint Committee on Finance, Public Expenditure and Reform, especially my party colleague, Deputy Arthur Spring, raised the fundamental problem of the imposition of this gamut of Central Bank legislation on the backs of the credit union movement on Committee Stage. As Deputy Spring noted, it was not the credit unions that were utterly reckless; it was not the credit unions that gouged our people with ferocious and outrageous interest rates; it was not the credit union administrators who paid themselves hundreds of thousands of euro, if not millions of euro, per annum; it was not credit unions that brought disaster to our country, yet the Minister has sought to impose legislation that has not worked for his so-called pillar banks or the foreign banks that have exited the country. As a member of the Committee of Public Accounts along with the Minister during previous Dáileanna, I witnessed the total failure of financial regulation when people came in front of us and lied as they told us that we had a banking system that was fit for purpose when they had to have known that it was not. The Minister's own Department played a starring role in the grotesque failures that led to the infamous day in 2008.

The Minister wants to place this edifice on the backs of the credit union movement and, through my amendments, I am asking him to desist. A regulation system for credit unions, which worked well down through the years, was based in the Department of Jobs, Enterprise and Innovation. In recent years, a review was carried out by Grant Thornton, a capital assessment review under PCAR was conducted and the loan books of credit unions were reviewed. All of this was done under the 1997 Act, which was major legislation to which both the Minister and I contributed, and this has governed the sector since. Prior to that, Seán Lemass, as Minister, introduced the first system of regulation and invigilation of the credit union movement in 1960.

There is a strong feeling from the Irish League of Credit Unions in particular that the Minister for Finance is imposing a very tight straitjacket on the development of credit union structures with this legislation. Under the old banking regulation, the governance of some of the older credit companies, such as the Educational Building Society, EBS, and other building societies, which worked for ordinary people, failed. They have now been moved into banking structures. The Minister himself pulled EBS into the AIB structure. Areas where people could get cheap credit have now been denied to them.

It has been put to me very strongly that the proposal to apply historic Central Bank legislation from 1942 to 2011 was not considered by the Commission on Credit Unions. Members received a briefing document from former Senator, Joe O'Toole, on the discussions that took place at the commission. It is my information that the Minister's decision to wrap the credit unions around Central Bank legislation was an option that was not specifically discussed at and decided on at the commission. It is also felt the Minister did not consult the credit union movement on this aspect of the legislation. The key point credit union representatives make again and again is that credit unions are not banks. They do not have those characteristics banks have which allowed us to fall into this disastrous economic situation.

The Minister, when a backbencher, asked the key question on the night of the bank guarantee as to whether it was a liquidity or a solvency crisis. Of course, the banks lied to the then Minister and the rest of us. However, Fine Gael and this Minister, Deputy Noonan, went ahead to vote for the blanket guarantee along with Fianna Fáil, the Greens, unfortunately, Sinn Féin and Independents, which has crucified our country.

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