Peter Mathews (Dublin South, Independent) | Oireachtas source

I have not had an opportunity to look into this Bill in great detail. There is no point in trying to present myself as somebody who has looked into it in great detail, because I have not done so, but I will make some general observations regarding what has happened to the NPRF since the 31st Dáil was formed. In a development I viewed with alarm and regret, as I felt it was the wrong thing to do, the NPRF was raided very heftily in July 2011 to recapitalise the banks in an over-hasty and probably ill-judged view of the capitalisation requirements of the banks, the state of their financial assets and the funding of their balance sheets. The amount of money that was invested in the two pillar banks was in the order of €16 billion. It was really the capitalisation of the banks plus the contribution to the troika funding needed to start the memorandum of understanding arrangements to manage the deficit.

Hitting the NPRF at such a high level was reckless because there could have been at that point creditor capitalisation. The euro system strong-armed the Minister for Finance, the Governor of the Central Bank and the Department of Finance into essentially insisting that the socialisation of Irish-owned banks' losses could justifiably go ahead. That was wrong. Having accommodated that strategy, we have been left in the very defensive and weak position of being unable to insist on or make any progress with regard to creditor participation in the recapitalisation due to the losses.

The loss keeps being referred to as a €64 billion or €65 billion loss and capitalisation, but that amount only represents those losses that have been acknowledged in that way.

There are further losses embedded in the banks that have not been recognised and that are causing the paralysis in the two main banks and preventing them from releasing their customers, households and businesses to a normalised level of liabilities funding. Even the front page of today's edition of The Irish Timesreports on how the banks are being unreasonable in regard to restructuring to repayable amounts the legacy debts on the balance sheets of households and businesses on the basis of the incomes.

The Bill is a behemoth. I glanced through it and it attempts to section off parts of the labyrinth of arrangements and operational management of agencies that are part of the State, including the National Pensions Reserve Fund, which is heavily depleted, with approximately €6.5 billion being put into the new division with new instructions and new boards. That is fine but it presents an opportunity again to make the case supported by the evidence. There are 385,000 people still on the live register; 250,000 people have emigrated; 170,000 households are in deep mortgage distress; SME liabilities amount to €50 billion, of which €25 billion is distressed and probably incapable of being repaid; 90,000 families are on housing waiting lists; and 5,000 people are without homes. That amounts to approximately 1.5 million people and our so-called partners in Europe have not snapped out of their dream to understand it is a nightmare for these people and relief in the order of €50 billion is long overdue to this country. The promissory bonds that represent the losses of Anglo Irish Bank should be extinguished, torn up and mutualised throughout the eurozone. That can be done. It is a matter of will, insistence and fighting for our people. Another €20 billion or €25 billion at a minimum is needed for the two main banks to snap out of their paralysis and deal with their loan books in order that the loans of families and businesses representing at least 750,000 people can be worked out properly and with dignity. It will not be a free and easy ride for those families but it would put them in a position where they can just about honour their debts for the rest of their working or business lives. This needs to be done and the Government parties have an opportunity to flex their muscles and fight for our people.

Deputy Eoghan Murphy conceded that he was grateful that I allowed him to make his contribution because he was in a rush to another meeting and I understand that but there was a rush, for instance, on 9 February 2013 to liquidate IBRC without due consideration and deliberation as to what that moment could have provided in terms of another opportunity to eliminate the promissory notes and consequent promissory bonds. The Labour Party advertisements during the recent election campaign referring to €30 billion less bank debt were misleading. It is not the case. Even €20 billion less is not the case. A sum of €20 billion, which would have been the cashflow obligation over the next eight or nine years, has become a €40 billion cash flow obligation extended over 40 years. It has no business being on the backs of the citizens of Ireland.

The balance sheets of all the licensed deposit taking businesses, including banks and building societies, show without the need for a banking inquiry that at six monthly intervals between 2001 and 2008, liquidity and solvency ratios, loans to customer deposit ratios and the funding of senior secured and subordinated bonds, together with the aggregate of the credit loans advanced by the banks in Ireland, including foreign-owned banks, were six times our GDP by 2008 instead of the loan assets being three times our GDP. What were the directors of each of those institutions doing during those seven years? What were the banks' auditors doing? The financial engineering of the balance sheets went way out of control. The banks manufactured a credit bubble, which is the prerequisite for an asset price bubble. That is a pyramid or Ponzi scheme, which is bound to collapse mathematically. When it collapses, the residual is the loans to households and businesses.

The personalities on the boards of banks and running the banks have changed since 2001 and even since 2008 but we need accountability. Let us gather them together in a place that would accommodate such a revelation, for example, the basketball centre in Dublin, line them up in sections alphabetically, starting with AIB, Anglo Irish Bank and on to Bank of Ireland, Danske Bank and Ulster Bank and so on, and have the people who were in charge of directing the banks explain their balance sheets for each year. They were out of control and when the music stopped in 2008, Bank of Ireland had €61 billion in loans on its balance sheet. That funding in the form of senior secured bonds was short dated compared with some of the loans which had been extended interest-only on a roll-over basis. It was crazy stuff. Dynamite, matches and petrol come to mind.

It is not even the fault of a previous Government. The boards of directors created the credit bubble. There cannot be an asset price boom and bust without credit creation. All the customer deposits were lent but that was not good enough for the directors. They wanted more funds to make more loans and, therefore, they issued bonds. Bank of Ireland had €61 billion in loans on its balance sheet in 2008 and AIB had €42 billion in addition to all the customer loans and the interbank money it had borrowed on a three, six and 12 month roll-over basis. It was mad and it gives us the evidence for a banking inquiry. Let us have the directors of these institutions in those years before us to examine their accounts and to have them explain them. This led to 1.5 million people being affected, including 385,000 on the live register, 170,000 in deep mortgage distress, which equates to 500,000 because there are 2.7 people in each household, 90,000 on the housing waiting lists, who were squeezed out of the madness of the asset price boom and bust, and the 5,000 who have no homes to go to at all and are sleeping on the streets. They deserve to see the curtains rolled back in the basketball centre and to be given explanations. There should not be firing squads at dawn, decapitations, heads on battlements and so on but let us hear what they have to say. Not one person on those boards has been asked to explain the balance sheets, which are the evidence of the creation of the credit bubble. Is that not crazy?

Is it not crazy that the Government wants a committee of inquiry that will be politically balanced so there is Government control of it? People might feel completely at sea at present as to where to begin, until they start boning up, but I have just said where to begin. That would be the best lesson on how to avoid anything in the future.

Without the credit bubble everything else could not have happened. When one creates credit like that, and only the banks did it, one creates the conditions and climate for greed. When I read the newspapers, I read about greedy builders and developers. They could not have been greedy if the greed ingredient, which is credit, had not been created by the banks. Am I right, Deputy Ross?

See this speech in context