Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

We know the burden fell on the backs of the Irish taxpayers because the majority of the bonds were held by German and French banks who would not countenance it. In the case of Cyprus, the bondholders had to pitch in because many of them were Russian and the Germans and the French did not care about them. The big and the powerful always win.

Our amendment deals with reform of the banking system and the supervision and resolution mechanisms to be introduced. The ECB could immediately help the Irish Government at any stage it chooses. In the period 2010 to 2011, the European Central Bank purchased approximately €200 billion in distressed euro sovereign debt on the secondary market. It is estimated that up to €20 billion was Irish distressed debt. The ECB sold on this debt at a profit - bought at below par and sold for closer to par. The ECB will not give the figures. Professor Honohan runs for cover on this issue and he does not want to discuss it at the finance committee. The ECB made a profit of up to €5 billion on buying Irish distressed debt at a reduced price in the secondary market. The bank has made a profit of €5 million from the Irish taxpayer and it should devise a mechanism to hand that money back to the Central Bank and to the Government. The ECB made money out of our difficult situation.

The banks will face stress tests in the coming year. Former stress tests did not adequately deal with small business debts. Whoever carries out the stress tests on behalf of the European Central Bank must not be a European consultancy firm and must instead have global experience, including in the United States. It is preferable to have tougher stress tests rather than a harmless and soft result. The full unvarnished truth is preferable.

The promissory note deal was replaced in due course by these bonds. There was no mention of unilateral default or anything of that nature. They asked for discussions with the European Central Bank. What might not seem possible today will inevitably come to pass. The promissory notes were dealt with and were replaced with these bonds. People regard the bonds as sacred cows which cannot be touched. I am not suggesting they can be torn up but in the fullness of time, those bonds can be renegotiated. It is not sensible to say it can never happen because one can never say never in politics or economics. The economic realities will always decide the outcome of these issues. The Government must always leave the door open for future renegotiation. It happened with the debt and it will happen in the future. What was not possible in a business five years ago is possible today.

The deal we achieved on the bonds is postponing €25 billion debt to the year 2020. Our debt is still there and the interest is piling up. We will not have to pay it this year but we will pay for it in the future years. Despite this, some people think it is a good deal.

It must be identified how many European banks will undergo proper stress tests under the supervisory mechanism. The European bank resolution process is not yet in place. The officials attended the finance committee two weeks ago. It was very obvious to me before they went to Europe that we were a long way from agreement. Those who were responsible for reckless or careless trading must be properly dealt with.

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