Pat Rabbitte (Dublin South West, Labour) | Oireachtas source

Dáil Éireann gave the members of the banking inquiry an almost impossible mission, given the constitutional and legal restrictions in which they had to operate. We owe the Chairman, Deputy Ciarán Lynch, and each member of the too large inquiry team a considerable debt for the remarkable effort, patience and diligence with which they discharged a very difficult responsibility. They have done the State some service for which future economic historians will be grateful. The DIRT inquiry remains the model for inquiry by parliamentary committee. Only Deputy Durkan and myself are left standing from that experience, and we would be the first to say that the inquiry conducted by Deputy Lynch and his team was more complex, more extensive, more contentious and more problematic for several reasons. For the Chairman to have navigated a completed report to dry land is a very considerable achievement.

First out to criticise the report were those who dodged the hard work involved in the inquiry. Bankers considered ideal a few years ago for the post of Central Bank Governor are now considered pariahs whom the inquiry let off too lightly. I heard Deputy Donnelly on radio today starting a hare to run about the Minister for Finance, Deputy Michael Noonan. Sometimes when I hear Deputy Donnelly I think that perhaps all young Deputies in the House should get a few months in McKinsey and Company. It does wonders for one's self-confidence, if not for one's economics or one's attendance at committee meetings. In the 14 months during which I have been a member of the finance committee I recall seeing Deputy Donnelly twice.

It is my impression that the legal advice available to the inquiry erred consistently on the side of caution, but if the inquiry members had spurned that advice the report would never have seen the light of day. Indeed, it is very probable that the immensely valuable public hearings would have collapsed if some of the more simplistic criticisms had prevailed. I will return to this critical issue of inquiry by parliamentary committee.

Let us take as read the failure of the Central Bank, the incompetence of the Financial Regulator and the dereliction of duty and negligence of the Fianna Fáil and Green Party Government. The rot started in the banks. The wild recklessness of Anglo Irish Bank was breathtaking, but how did two conservative banks which, in one guise or another, preceded the founding of the State itself go bust, losing money mainly in their core business of making loans in Ireland? Every bank, Irish or foreign owned, got into serious trouble and had to be rescued by the Irish State or by foreign parent banks. Anglo and Nationwide lost a mind-boggling eight to ten times their capital. There is a wide variation in the scale of the losses. In terms of loan losses, AIB seems to have been three or four times worse than the similar sized Bank of Ireland. The business model of the two banks was and is similar. One building society, Irish Nationwide, was much worse than another, EBS.

I do not yet know if the voluminous back-up papers explain these discrepancies or if there is a bank by bank scrutiny into the sources of these wide variations. Whereas all of the banks were mismanaged, some were recklessly mismanaged to a degree that defies understanding. It must be the case that individual banks did their own investigations of the sources of the disaster. Were these analyses furnished to the inquiry? If not, it is a failure of accountability on the part of the banks and I presume the modern Central Bank has the authority to demand production of these reports.

Dáil Éireann cannot signal approval for the cavalier treatment of the inquiry by the ECB. Given the flaws exposed in the ECB's own architecture, is it acceptable that an occasional appearance in the European Parliament is the only gesture to accountability?

The Government of which I was a member was resolved that there should be burden sharing and we had quantified the value of it. The NTMA estimated, as contained in the memo of 28 March 2011 in the appendices to the report, the financial benefit to the Irish Exchequer at €14.9 billion. The savings made in respect of subordinated bondholders means that the net cost of the ECB veto to the Irish Exchequer was in excess of €9 billion. This was the second occasion on which the ECB stopped a sovereign Irish Government from imposing haircuts on holders of unsecured and unguaranteed bonds issued by banks which necessitated recapitalisation at public expense.

The inquiry is clear that the ECB threatened on both occasions to withdraw approval for emergency liquidity assistance to the Irish banks unless the bondholders were paid in full, which would have shut down our entire banking system. Ajai Chopra of the IMF rejected in his testimony the proposition advanced by the ECB president that haircuts to senior bondholders in Ireland would cause contagion to eurozone markets in senior bank bonds. Subsequent experience in Cyprus, Italy and Portugal would seem to bear out Mr. Chopra's view and, of course, in the bank resolution and recovery directive, burden-sharing is now expressly contemplated.

Mr. Trichet's diktat was punitive for Ireland, but the question of whether the ECB had the legal authority to impose arbitrary costs on the Irish Exchequer in pursuit of broader eurozone objectives remains. The Irish Timesreported in December that the inquiry team wished to recommend that the Government sue the ECB for damages over its actions in 2010 and 2011 but were prevented from so recommending by the inquiry's own lawyers. If that is so, it seems to be an unnecessary intrusion into the domain of politics. Whether an Irish Government should use its statutory entitlement to seek judicial review at the European Court of the actions of an EU institution is a political matter and one that I hope the next Government will consider.

This may be the last working day of the 31st Dáil. It is the last time I will address Dáil Éireann. It has been a unique privilege to have been elected to this House by the people of Dublin South-West in six successive general elections, and I would like to thank those who worked with me here and outside. I did not envisage that my final remarks would concern a banking and fiscal collapse that constituted an existential crisis for the State itself. Thanks to the work of Deputy Ciarán Lynch and his colleagues, economic historians and others will be able to study the lessons to be learned.

I remain convinced that any parliament that does not have the right of inquiry by parliamentary committee into legitimate matters of public interest is a diminished parliament. Properly organised and conducted, it is a natural extension of parliamentary oversight and would improve the performance of Government. Following the failure of the referendum, repeated experience of the costly and slow public inquiry system under the 1921 Act and the difficulties latterly encountered under the Commission of Investigations Act, we have now reached an impasse. What is so unique about our jurisprudence that makes impossible here a form of hearing that is routine in so many other settled parliamentary democracies? Unless we frame another amendment and return to the people, we can never have an inquiry in which there is an adjudicatory finding upon the conduct of a person who was not a Minister, a holder of other constitutional office or a Member of the Oireachtas. The difficulty, therefore, as shown by today's report, is that there is no clear demarcation between an inquiry into policy and an inquiry into culpability. By "adjudication" I mean a simple finding of fact, without any legal effect, whose impact is solely on the reputation of an individual. I draw to the attention of the House the remarks of the retiring President of the High Court, Mr. Justice Nicky Kearns, when he said in December that "judges and courts should not be excessively overactive or interventionist in areas where the boundaries of the judicial and executive function intersect". Mr. Justice Kearns acknowledged that many commentators now seemed to feel successive court interventions had "virtually paralysed" the investigatory process "where accountability for matters of serious public concern is required". The courts, he said, "should never put themselves in the position of realising, all too late, that a particular decision has opened a Pandora's box of unintended consequences".

In his dissenting judgement in the Abbeylara case, then Chief Justice Keane delivered his understanding of Irish law:

The power of the Oireachtas to conduct investigations is inherent in the legislative process. That power is broad. It encompasses inquiries concerning the administration of existing laws [and] defects in our social, economic or political system for the purpose of enabling the Oireachtas to remedy them.

That was the view of the then Chief Justice and I believe, notwithstanding what happened in the referendum, that the next Government should take its courage in its hands, reframe an amendment and go back to the people. It would strengthen the functioning of this Parliament.

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