Paul Murphy (Dublin South West, Socialist Party) | Oireachtas source

We can date this agreement back to the infamous summit in June 2012. At that summit two clear commitments were made: affirming that it is imperative to break the vicious circle between banks and sovereigns and making a commitment to examine the situation of the Irish financial sector with a view to improving further the sustainability of the well-performing adjustment programme.

I will deal with the first commitment presently.

The second commitment was translated in the heads of the Taoiseach and the former Tánaiste and Minister for Foreign Affairs and Trade, Deputy Gilmore, into a game changer, a seismic shift and a promise that there would be retrospective recapitalisation of the Irish banking system. Taxpayers in Ireland would get back some of the 42% of the total cost of the European banking crisis that they paid. It was something which the media at the time fell for entirely, despite some of us pointing out the reality that was not contained in what was agreed and that it was an element of the kind of dreaming that goes on in the Taoiseach's head, a similar example being the ATM machines and the soldiers. As Deputy Tóibín mentioned, the Government not only has been defeated on it but also has tried to present that as a victory. It never applied for recapitalisation and it has no intention of applying for recapitalisation, and that should be noted now at a time when the Single Resolution Mechanism is being set up, by which time we were meant to have all of this sorted out.

I want to deal with the idea that this breaks the link between the sovereign and the banking sector, or as the former Commissioner for Internal Market and Services, Mr. Michel Bernier, stated, "that taxpayers no longer foot the bill when banks make mistakes". It is simply not true. The big banks and their massive lobbying in Europe to the tune of €120 million a year and 1,700 lobbyists, have shaped the Single Resolution Mechanism and taken any significant punch out of it to serve their interests. This does not mean the public will not bail out banks in the future. Banking union has been used as a mechanism by the big banks primarily to further liberalisation and deregulation throughout the European Union. That is the reason the big Association for Financial Markets in Europe, AFME, welcomed banking union as a vital project which should advance market integration.

The Single Resolution Fund is entirely inadequate. I thought it was best explained by Mr. Wolfgang Münchau who wrote that the ECB will end up as the supervisor of 128 banks which have assets of between €26 trillion and €27 trillion. He wrote:

The bank resolution fund for this new banking union will be built up over 10 years through bank levies. At the end of that period it will have reached €55bn – a mere 0.2 per cent of the asset base. Most of these banks have assets of more than €30bn. In a systemic crisis, in which banks can suddenly collapse, the whole European resolution fund could easily be swallowed by a single moderately sized bank.

If that happens, it is the European Stability Mechanism, ESM, which is funded by taxpayers and will have conditionality built into it, as happened in Spain in the form of the demand for more austerity, that will pick up the can. The Minister, if he had the chance, could point in response to the 8% of liabilities to be paid for by investors, but what about Anglo Irish Bank? It far exceeded 8%. What about the exceptions? What about the various classes of investors who will not be included and who will not have to pay the 8%?

The reality is that we do not have fundamental change and public money will still be used to bail out private banks. The European Central Bank has been further empowered. It is the most powerful unelected and unaccountable institution in the world. It serves the interests of big banks, hedge funds and financial markets. It does not serve the interests of ordinary people. One need only look at the incredible dictatorial role it has played in the European crisis in Greece, Spain and Italy. This simply empowers it further. Those who oppose it should vote against this motion and not go along with it.

The alternative is proper regulation of our banking system, genuinely preventing banks from becoming too big to fail but also fundamentally saying that we do not accept that we run society in the interests of private banks that are interested in maximising profit. The massive resources that exist in the financial sector should be in public hands and used as a public utility, democratically controlled to serve the interests of society to provide funds, loans and so on necessary to provide infrastructure for small businesses and for others who need access to funds.

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