Wednesday, 1 October 2008
Credit Institutions (Financial Support) Bill 2008: Committee Stage (Resumed) and Remaining Stages
In section 1 the Minister for Finance introduces a definition of "financial support" which includes a loan, a guarantee, an exchange of assets and any other kind of financial accommodation or support. So far in the debate it has been indicated the Bill will simply extend a guarantee from the State to the banks' depositors. However, in the Bill the Minister is taking power to provide much more than a guarantee. Under this definition, the Minister is providing for any kind of financial accommodation or support. Why is the Minister extending the definition from the guarantee? If he is offering support of a financial nature that is not in the nature of a guarantee such as straight cash, taking a preferential shareholding or some other vehicle he envisages under this definition, how will the DÃ¡il become aware of it? If the Minister draws down funds for this purpose, it will be from the Central Fund and will not come before the House through the normal course of a Vote in which the DÃ¡il could debate it. Why has it been decided to extend the definition? If he does take up these wider powers, how will the DÃ¡il be informed?
While I do not want to appear obtuse, the Minister indicated that the EU-backed elements on the liability side will always be there as a buffer. I may be incorrect but my understanding is that of the â¬520 billion of assets, the European Central Bank has taken an equivalent amount of the best assets.
Yes. If that is the case, will the Minister explain how the â¬520 billion assets, which he claims are available, can be if the European Central Bank has pre-empted some of them? There seems to be an element of double-counting in building up to the â¬80 billion buffer.
Can I have clarification about the times allocated for debate? We understood from the discussion between the Whips that there was to be a maximum of ten minutes on section 1 in order to allow the moving of the Labour Party's amendments on section 2, particularly amendment No. 2. Is that now interpreted as an open debate on section 1 which may use up the time allocated for section 2? That was not the understanding we were given by the Whips' agreement.
In that event, I will beg the Ceann Comhairle's indulgence to move the section 2 amendments because it is important they are brought to the floor of the House in the spirit of democracy and the co-operation which we happily offered to the Minister earlier.
I also raised Deputy Richard Bruton's points on section 1 earlier. It is important for the Minister to remember he is taking powers not just to give guarantees but to allow himself take equity, loans, debentures, near-equities or other types of interests in banking companies. The Minister must respond to these issues.
I wish to speak about amendment No. 2 in the name of the Labour Party, which proposes that any financial institution that applies for the guarantees under this Act shall "agree not to offer to any of its officers or employees any share options during the currency of financial support and to limit the gross annual earnings of any of its officers or employees to not more than the gross earnings of the Minister for Finance during that period".
I am sure the Minister remembers Tom Wolfe's novel about financial greed and the Gordon Gekko motto that greed is good. The masters of the universe have become accustomed to earning extraordinarily large salaries. We know that the managing director of Irish Life and Permanent earns an annual salary of â¬1.4 million. In AIB, the figure is â¬2.1 million; Anglo Irish Bank, â¬3.3 million; Bank of Ireland, â¬3 million; and Irish Nationwide, â¬2.3 million per year. As the Irish taxpayer steps up to the plate to guarantee the borrowings of the Irish banks and, by extension, to underwrite the capacity of the banks to lend, why is the Minister not prepared to say to the Irish taxpayer that he will cap the remuneration packages enjoyed by these people? Many people regard that kind of remuneration, referred to as compensation by the recipients, to be obscene and, in the context of where the banks are now, completely unjustified and simply not appropriate any more.
The bonus culture, with wild deregulation, is what has led the international financial system, including the Irish financial system, unfortunately, to the position in which it now finds itself. When Lehman Brothers went to the wall the average bonus for thousands of its employees was $245,000 per year. Why will the Minister not accept the Labour Party amendment?
If a bank was a delinquent teenager engaged in anti-social behaviour it would be given an ASBO. What about undermining the finances of a country? How anti-social is that kind of behaviour? Would such a teenager get an ASBO?
If a teenager was delinquent in terms of not attending school, he or she would be asked by a juvenile liaison officer or a teacher to enter into a contract to be of good behaviour. We are asking the Minister, as the head teacher vis-Ã-vis the banks, to say to the directors of the banks that he is not grounding them but putting a cap on their earnings because he wants to stop the kind of reckless behaviour that some banks indulged in. That behaviour was based on the premise that the more risks they took, the more rewards they get. If bankers sold financial products of dubious merit or bundled them and sold them on, the consequence was that their bonuses increased. Nobody examined whether those products had any end value. In the United States, such complex financial products have proven, in many cases, to be worthless. Why does that matter? It matters in the sense that ordinary people all over the world have their money in banks and depend on the security of such banks for the security of their savings, their employers depend on the credit facilities of banks to pay their employees and, as we all know, young people in Ireland depend on credit from banks to get a family home.
If the bonus culture is allowed to continue as it has operated to date and if the people to whom I refer are allowed to continue to receive extraordinarily large salaries or compensation, where is the incentive for them to change their behaviour? The Minister indicated earlier that he felt that the Labour Party proposal might be difficult to implement. In the context of the Irish taxpayer giving a â¬400 billion guarantee, which could increase to â¬460 billion, why are we afraid to ask these guys to make a sacrifice, to bring themselves down to the level of the mere Minister for Finance of the country? I do not know exactly what the Minister's salary or compensation is, but I believe he earns in the region of â¬250,000 to â¬300,000 gross per annum.
Would it be such a hardship for some of these executives to come down to that level?
The important point is that such a provision would send out a signal that the historical era of free booting banking, reckless risk-based investment and the bonus culture is over, that we have turned a page and are now entering a different historical era in which banking concentrates on sound economic propositions and activity that creates employment and homes for people. That would be a very important signal to send out from this House tonight. In that context, I hope the Minister will consider the Labour Party amendment. We are trying to support the Minister here and I hope that in dealing with recalcitrant bankers, such support will be accepted by him.
The Minister referred to the National Treasury Management Agency, which could provide the framework by which the Minister could implement the Labour Party proposal. The chairperson and chief executive of that agency manages our national debt, arranges bonds and has a multitude of responsibilities in the financial area. Why not set up a simple review mechanism, through the agency, so that it can report on an annual basis to the Oireachtas Joint Committee on Finance and the Public Service or some other forum, on the structure of the compensation scheme for the senior executives of participating institutions. In that way, the public could be advised of how the delinquent teenagers are getting on with regard to their good behaviour contracts.
I commend the Labour Party amendments to the Minister. My party also intends to support amendment No. 4, but I assume Deputy Bruton will speak on that. I recommend that the Minister take a brave stand on remuneration and do what taxpayers all over Ireland would wish.
I will be brief. My amendment deals with banks which are currently facing difficulties and have many intensive care loans. We are told that estimates have been made of how many loans are non-performing. It is very important, now that the taxpayer is effectively the guarantor for deposits, that we have some solid assurances that work is being done within the banks to restructure their loan books. The Minister correctly said that if a bank is currently seeking capital it is very difficult to get a rights issue. On the other hand, we have seen that very significant sums can be saved for restocking the banks by stopping dividends, for instance. The dividends in recent years have been as much as a billion in some major banks and that can contribute very significantly to rebuilding the capital base. If banks who have the benefit of this guarantee have a difficulty in their capital base, we the taxpayers will be in line to try to deal with the mess. We need to have assurances that the banks are applying rules in relation to putting money into capital that is correct and appropriate. If banks have impaired capital bases which need to be restored, they should not be paying dividends or bonuses. They should be curbing the pay of senior executives so that we can do everything to repair the capital base and ensure there is not a solvency issue that is being left unattended, confident in the knowledge that the liquidity problem has been solved. We have to be confident that the solvency issues are high priority and that everything reasonable and appropriate is being done.
The purpose of our amendment is to put the Minister, his appointee to the board and the regulator in a position to restrict the payment of dividends, bonuses and any other moneys, including remuneration. While I might not be as prescriptive as Deputy Burton in her amendment, I fully understand the sentiment. We need to see the banks rolling back their pay settlements for senior executives in the light of the very grave situation which has led to this extraordinary action.
I would like to support amendment No. 2 tabled by Deputy Burton, but I would have a problem with the possible outworking of it. Most of these payments are performance related or market related. The banks have been doing very well and that was the pretext for organising to pay themselves such very substantial salaries and additions. Clearly the market has dipped but it will come back again on foot of this backing by individual and business taxpayers. Would it not be ironic if that bounce experienced by the bank and the additional market share were to enable the continuance of these very substantial payments? That is a worry. On the other hand, the executives of many of these institutions might not remain for ten minutes after the coming into operation of such a salary scheme. If the best people at the top were to be lost, clearly that would inhibit and damage the institutions which we are trying ensure will work well. The other side of that coin is that some of these executives have presided over some of the carry on which has led to the crisis and I would shed no tears to see some of them go from the financial institutions which have impacted negatively on the economy. The Minister might be in a position to tell us of any inquiries taking place by the regulatory authority, the Central Bank or the Garda fraud squad into some of the very dubious practices which clearly have been occurring in those institutions for a very long time.
I welcome the opportunity to speak on amendment No. 2 on the conditions on any applications for financial support. This also deals with the gross annual earnings of officers and employees. This is an important development because it is part of the broader debate. There are those in this House who do not accept that, but I strongly contend that it is part of the debate. The payment of obscenely high salaries to people who do not deliver should be challenged. Such people should be reminded of their responsibilities and amendment No. 2 is very important in this context. The game is up, lads, and regulation is the only game in town. Banking should be about more than profit. It is about people, housing, mortgages and employment. I ask the Minister to keep a close eye on these people. I welcome the Minister's reaction in recent days to the current crisis and I commend the decisive way he has handled it. I believe that internationally it will be respected. He gave the solid performance which was needed over the past few days.
I have always had a problem about the payment of hugely inflated salaries, many of which are higher than the salaries of elected people in this State. I believe there are already whisperings that people from the banking system who have negotiated this deal have got a good deal for the bankers. I have concerns about this and I urge the Minister to make sure that bad practice is not rewarded. I refer to the gross earnings mentioned in the amendment and I urge everyone to think of the people crucified by the banks over the years, mortgage holders and low income families. These are the real people in this affair and they should not be forgotten in this debate.
The Minister stated that this guarantee is not free and that the taxpayer who ultimately underwrites this support will be remunerated for the value of the support provided and will get value for money. These are key issues and I urge the Minister to stick to that agenda. I welcome last night's statement from Deputy Arthur Morgan demanding a State bank. I urge the Minister to consider that proposition, which has huge potential to contribute to the development of our economy. Right-wing economics have not worked in the past and will not work in the future. We need sensible and radical ideas. We need banks and institutions which will make money for people and look after their interests. I commend amendment No. 2.
I want to address amendments Nos. 2 and 4. I agree with certain of the sentiments in both these amendments, but the wording is such that I would be almost compelled to vote against them. Deputy Burton should remember it is not just high-flying executives of the banks who have share options but hundreds, if not thousands, of ordinary employees in the banks who are motivated to work harder and more efficiently by these share options. It would not be fair to punish ordinary employees and say they cannot have any share options as a result of what has happened. Therefore, I would not be in a position to support the proposal in this regard.
I agree with Deputy Burton that the time has come, in a general sense, to consider the higher levels of remuneration in the banking system. In the United States, in particular, we have witnessed obscene levels of remuneration. Although I agree with the Deputy's sentiment, this is not the time or place to address this matter because it requires further review. Her proposal is not well thought out enough and we should, therefore, oppose it.
On amendment No. 4, I do not really disagree with the proposed new section 2(1). However, I do disagree with the proposed section 2(2). One does not want to strangle the banks. People buy bank shares in the first instance to have a pension on their retirement. A dividend for a common or garden investor is an essential part of the investment. One will seen that one financial institution recently cut its dividend in half to do just what Deputy Bruton is proposing, that is, to recapitalise. Of course it makes sense but it does not make sense for the DÃ¡il to prescribe to banks what they can and cannot do. The Minister indicated clearly that the financial institutions concerned will be paying for the guarantee, which is the correct approach. The Minister stated â I accept his word on this and it will become evident in the future â the credit institutions will pay in proportion to the strength of the guarantee. This is the way it should be done and it is totally wrong of Deputy Bruton to suggest that the payment of dividends be more or less suspended for the period in question. Doing so could have the effect of destabilising the share price of the company on the international markets. I ask him to reconsider his proposed amendment.
The word "historic" is overused but it is quite clear that what we are doing is historic, as is what is happening on Capitol Hill. Some things will never be the same again. What Deputy Burton's amendment and that of Deputy Bruton reflect is the concern across the world over the situation in which excessive greed on the part of the leadership of some financial institutions has landed the global financial system. A survey of chief executive officers of financial institutions in the United States showed that a typical chief executive officer earns in one day what an average worker earns in a year. This must not continue. Chief executives of some banks that went down in the United States were earning a salary of $250,000 and walking away with a per annum bonus of $23 million. This is the kind of dynamic that has driven the greed that has landed us in our current position. Regardless of how the amendments are framed, they reflect widespread concern over an issue that must be brought under control.
I support Deputy Bruton's amendment. The additional point contained therein is critical in respect of the sick loans on some of the books of our own banks. If the Minister does not insist that they be teased out with the regulatory authority, we will be back where we started.
Let me refer to two of the definitions in the legislation, one of which was dealt with by Deputy Bruton, namely, that of "financial support". The meat of this Bill is in section 6. It is the section that will make financial support possible, if deemed necessary. When the Minister launched this debate, the Taoiseach spoke to the House and referred to shareholders bearing the brunt. He implied the ECB was the next port of call, followed by the sector. He stated nothing would redound to the taxpayer as the sector would pick it up. I have never been quite able to get my head around that.
The definition of "financial support" no longer relates only to the question of the guarantee. We were told we were the guarantor of last resort but it now appears financial support can mean a loan, equity or something else. I am not necessarily concluding that the Minister should not have scope in this area, but he has not been very forthcoming with us about what he knows. I suspect we will learn a lot more about this matter immediately around the corner. If the Minister is contemplating changing the architecture of the Irish banking system, or if he knows there is a merger in the offing and needs the desired flexibility, he should tell us about it.
On the definition of "credit institution", I am not opposing the Minister's adding to list of six institutions. However, I would like to know whether any work has been done in the Department on the criteria because money is flowing into our banks from Britain and even New York. It is a very serious matter to be disadvantaged not just in terms of that incoming money, but also in terms of money on deposit flowing out to one of the protected banks. This constitutes a real issue. It seems the Minister has not worked this out yet, which is fair enough, but we need some kind of indication as to the criteria that will be brought to bear in the circumstances I have outlined. There is a serious issue of competitive disadvantage at play and the Minister should give us some idea of his thinking.
I support strongly amendment No. 2. Contrary to what Deputy Mulcahy stated, this is the time for action â there is no other time. We are giving now what we are giving to the institutions and we will go out of the House with no credibility if we do not tackle the issue of exorbitant salaries and send out a clear message in this regard. I noted today that some executives are earning â¬9,781 per day. How can we justify that? The second of the top three was earning â¬8,493 and the third was earning â¬6,301. We cannot have any credibility if we do not put a considerable cap on the expenses and salaries of those people. We cannot sell this to ordinary people.
With regard to the remuneration of chief executives and board members, raised by Deputy McCormack and which is the basis of the amendment tabled by Deputy Burton, I make it clear to the House that it is my firm intention that the scheme setting out the terms and conditions for banks availing of the guarantee will deal with the issue of remuneration. It is important I am not misunderstood on this point. I am not saying I see an appropriate role for the State in interfering in the commercial decision-making of any commercial body provided that decision is subject to appropriate corporate governance.
The reality is that, heretofore, finance and banking professionals have been highly valued and remunerated by the market. Financial institutions as a whole in Ireland, both domesticââ
Financial institutions as a whole in Ireland, both domestic and those in the Irish Financial Services Centre, need highly experienced, skilled and expert people to succeed. Success must be built on a sustainable basis. Rewarding excessive and imprudent risk-taking by executives is at the heart of the serious problems that have emerged in the international financial system. For the future, sensible and long-term sustainable remuneration policies must be part and parcel of how financial institutions go about their business in Ireland.
As the time permitted for this debate has expired, I am required to put the following question in accordance with an order of the DÃ¡il of this day: "That sections 1 and 2 are hereby agreed to in Committee and amendments Nos. 2 to 4, inclusive, are hereby negatived."
The Dail Divided:
For the motion: 73 (Dermot Ahern, Michael Ahern, Noel Ahern, Barry Andrews, Chris Andrews, Seán Ardagh, Bobby Aylward, Joe Behan, Áine Brady, Cyprian Brady, Johnny Brady, John Browne, Thomas Byrne, Dara Calleary, Pat Carey, Niall Collins, Margaret Conlon, Seán Connick, Mary Coughlan, John Cregan, Martin Cullen, John Curran, Noel Dempsey, Timmy Dooley, Michael Finneran, Michael Fitzpatrick, Seán Fleming, Beverley Flynn, Pat Gallagher, Paul Gogarty, John Gormley, Noel Grealish, Mary Hanafin, Mary Harney, Seán Haughey, Jackie Healy-Rae, Máire Hoctor, Brendan Kenneally, Michael Kennedy, Séamus Kirk, Michael Kitt, Tom Kitt, Brian Lenihan Jnr, Conor Lenihan, Michael Lowry, Martin Mansergh, Finian McGrath, Mattie McGrath, Michael McGrath, John McGuinness, John Moloney, Michael Moynihan, Michael Mulcahy, M J Nolan, Éamon Ó Cuív, Seán Ó Fearghaíl, Darragh O'Brien, Charlie O'Connor, Willie O'Dea, Noel O'Flynn, Batt O'Keeffe, Ned O'Keeffe, Mary O'Rourke, Christy O'Sullivan, Seán Power, Dick Roche, Eamon Ryan, Trevor Sargent, Eamon Scanlon, Brendan Smith, Noel Treacy, Mary White, Michael Woods)
Against the motion: 67 (James Bannon, Tommy Broughan, Richard Bruton, Ulick Burke, Joan Burton, Catherine Byrne, Paul Connaughton, Noel Coonan, Joe Costello, Simon Coveney, Seymour Crawford, Michael Creed, Lucinda Creighton, Michael D'Arcy, John Deasy, Jimmy Deenihan, Andrew Doyle, Bernard Durkan, Damien English, Olwyn Enright, Frank Feighan, Martin Ferris, Charles Flanagan, Terence Flanagan, Eamon Gilmore, Brian Hayes, Tom Hayes, Michael D Higgins, Brendan Howlin, Paul Kehoe, Enda Kenny, Ciarán Lynch, Pádraic McCormack, Shane McEntee, Dinny McGinley, Joe McHugh, Liz McManus, Olivia Mitchell, Arthur Morgan, Denis Naughten, Dan Neville, Michael Noonan, Caoimhghín Ó Caoláin, Aengus Ó Snodaigh, Kieran O'Donnell, Fergus O'Dowd, Jim O'Keeffe, John O'Mahony, Brian O'Shea, Jan O'Sullivan, Willie Penrose, John Perry, Pat Rabbitte, James Reilly, Michael Ring, Alan Shatter, Tom Sheahan, P J Sheehan, Seán Sherlock, Róisín Shortall, Emmet Stagg, David Stanton, Billy Timmins, Joanna Tuffy, Mary Upton, Leo Varadkar, Jack Wall)
Tellers: Tá, Deputies Pat Carey and John Cregan; Níl, Deputies Paul Kehoe and Emmet Stagg.
Question declared carried.
I move amendment No. 5:
In page 2, before section 3, to insert the following new section:
3. The Minster shall at all times in the operation of this Act be cognisant of the broader competitive environment along with the business needs of all banks with substantial operations in Ireland.
This amendment relates to banks operating in the jurisdiction which are not covered by the guarantee. We have had a considerable debate on the matter during the course of the day and I do not want to dwell on it. I wish to ask the Minister two questions about his intention to consider applications from banks outside of the six covered.
We are on amendment No. 5 which relates to banks operating in Ireland which are not covered by the guarantee. Will the Minister indicate the nature of the ring-fencing process that he envisages? Will he shed some light on how he hopes to set criteria for applicants which might seek this cover and how he will ring-fence the cover to ensure the taxpayer will not be exposed to guarantees that extend beyond the operations of these banks operating within the jurisdiction? Deputy Rabbitte and others have raised that issue.
While the Minister may not be in a position to answer the first question, he will certainly be in a position to answer the second, namely, whether the criteria and the ring-fencing approach will be set out in the scheme that will be brought to the House some day next week in order that we will know at that stage the details of how the banks that may be covered by the scheme but which are not among the six will be covered?
As we are dealing with sections 3, 4 and 5, I wish to ask the Minister about a provision in section 4, whereby the Central Fund will meet the payments the Minister may have to make. That will mean they will not be voted on by the House. If, for example, the Minister is availing of some of the wider forms of financial support, other than the guarantee outlined in the Bill, such as taking preference shares in some restructured entity or some other approach, how will the House become aware that has occurred and will there be an opportunity for it to debate the situation that has arisen, such that the Minister is taking preference shares or equity in any other shape or form? Dramatic things can happen where there is restructuring. For example, in the context of a merger, the Minister could find himself being asked to take responsibility for a certain portion of non-performing assets. We would like to know how that will be dealt with in terms of debate and what report-back there will be to the DÃ¡il.
My final question relates to section 5. It is extraordinary to see such a section included in any legislation, as it gives power to the Minister to do anything that appears "necessary or expedient" to deliver his objectives in the Bill. Why does he consider it necessary to have such a belt and braces provision? Is there a particular power he may have to use the section to invoke that has not been provided for elsewhere?
Section 5 is truly extraordinary. It gives the Minister enormous powers, with only very limited reference to the DÃ¡il. It provides that the Minister may, in respect of any difficulty that arises in the operation of the Bill during the two-year period, make regulations to do anything that appears necessary or expedient in bringing the Bill into operation. I assume this would apply in the event that something went seriously wrong with the guarantee scheme or with one of the parties covered by the guarantee scheme. The various court cases to which Deputy Shatter referred indicate that the courts might take a dim view of the types of powers the Minister proposes to assign to himself under this legislation.
We have spoken about the end of the era of absolute deregulation in the banking system and of the activities of freebooting international institutions. However, in the changed circumstances in which we find ourselves, it is not the Minister's job simply to protect the free market depredations of banks which may have acted wrongly and recklessly and, in the process, to close out the DÃ¡il from debating their behaviour. However, that is what he seeks to do in assigning these powers to himself.
My amendments Nos. 6 and 7 propose that, rather than referring to another Minister should he so wish, the Minister for Finance should consult the DÃ¡il for reference purposes. We suggest that the appropriate Oireachtas body for this purpose is the Joint Committee on Finance and the Public Service. There are a large number of Oireachtas committees and this would be an important job for this particular committee. The Minister's appointment is held to the Cabinet and Government. It is the latter which proposes legislation but it is the Oireachtas which enacts it. However, the Minister is seeking in this section to short-circuit the entire process. More importantly, he is seeking effectively to have an operation behind closed doors. That era of banking is over.
Yes. The Minister and his party must come to realise that the business of trying to protect banks who have engaged in delinquent behaviour should end. The legislation already provides the institutions in question with extraordinary guarantees but, in this section, the Minister is seeking to offer a further extraordinary shield of protection and privacy to banking institutions which may have been delinquent. The Minister should, together with his officials, reconsider the extraordinary powers he is taking unto himself.
Section 5 affords the Minister truly extraordinary and sweeping powers to make regulations to do anything that appears necessary or expedient. My amendment No. 8 seeks to ensure that the Houses of the Oireachtas will at least have an opportunity to debate the regulations in question. The amendment proposes to amend subsection (3)(c) to specify that the Houses must not only pass but debate and pass the relevant resolutions. Every Member is acutely aware of the quantity of legislation increasingly being put through the House without debate or with little debate and a guillotine. Given that this legislation will apply only for a two-year period, it would be an excellent experiment to attach this requirement to hold a debate. In debating the proposed resolutions, Members would have an opportunity to tease out the issues. The public could be satisfied that such a debate would ensure that quality-proofing is applied to all such proposals. I hope the Minister will consider this amendment.
There can be no question but that the outworking of the terms of this Bill â the implementation of the powers to be vested in the Minister â will be our only opportunity to have full access to and exposure of the detail of the Bill's intent and that of the Minister. Under section 5, which provides for regulations dealing with the general implementation of the Act, it is proposed that the Minister, in making regulations under this section, can do so only with the approval of each of the Houses of the Oireachtas. Every Opposition Member knows that the debate that has taken place yesterday and today, and which will conclude tonight, is likely to be the last time we will have a chance to thoroughly examine what is proposed. However, the Minister still holds key and critical cards which he will not place on the table.
There is only one way that we can guarantee that we will not see, at some time in the future, an Order Paper that contains a motion seeking to take X, Y and Z resolutions from the Minister without debate. That has been the pattern heretofore and it is exactly how it will work out in this case unless it is enshrined in the legislation that a debate is essential in coming to the determination of each House's position in regard to the proposition involved. Before we pass any of the resolutions concerned, it must be guaranteed within the legislation that a full debate will take place in this Chamber. The only way that can be guaranteed is by accepting Deputy Morgan's amendment No. 8. I appeal to both Fine Gael and the Labour Party to recognise the importance of retaining the right of full scrutiny in regard to the outworking of the legislation and the Minister's intent in the future. I hope the Minister will accept the amendment. That would be the most appropriate response to the proposition. If he does not do so, I expect Deputy Morgan will press his amendment.
The first part of section 5 is effectively a sunset clause. Why is a timeframe of two years specified? Why is it not one year or three years? I especially ask this question in the context of the Minister's approach to Brussels. Is the intention to convey that the legislation is to deal with an emergency and is for an emergency period only? We have made several attempts to discover from the Minister the tenor of his exchanges with the European Union on this matter. It seems the relevant Commissioner is less than pleased with individual states taking decisions they feel they must take. The Minister has given no indication of the actions for which he got the nod or otherwise. Is it the case that the legislation would be classified as the provision of state aid if it did not contain this sunset clause? Why was a timeframe of two years chosen?
I wish to return to section 5(1) and the issues I previously raised with the Minister. It is an extremely odd section in terms of how it is phrased. It states:
The Minister may, in respect of any difficulty that arises in the operation of this Act during the period of 2 years beginning on the relevant date, make regulations to do anything that appears necessary or expedient for bringing this Act into operation.
It seems the Minister assumes the Act will come into operation immediately.
For this section to actually work, the final wording should read "to achieve the objectives of the Act". In the context of the breadth of powers the Minister is giving himself, it is extraordinary that a contradiction is built into this. The Act will already be in operation but then something additional must be done to bring it into operation. There is a technical problem with the way that section is phrased. I suggest that the Minister look at it between now and Report Stage. A very minor amendment is required.
Section 5(2) seems to create the possibility that the Minister could amend the Act by way of regulations. I refer to the breadth of the powers contained in that section. I have already raised certain constitutional issues with the Minister and heard his response to what I said. I still believe there is a difficulty, although the Minister indicated that difficulty does not arise because he will not make a statutory instrument. However, he will introduce a scheme and can impose particular conditions on banks. We raised this before in regard to section 6.
Under section 5, the Minister is also giving himself substantial discretions. He referred to section 6 previously. What constitutional advice has he received about section 5(1) and (2)?
I have much sympathy for the Minister as it is difficult to bring in emergency legislation. There is always the doubt, despite the excellent advice from officials, bankers and regulators, that in the middle of the night when one is tired, one will forget something. It is very important section 5 is included in the Bill because, effectively, it means that if one forgets something and something is required to implement this, it is better to have the power to do it, otherwise we will all be back here for another week. I have much sympathy for the Minister and I support the section.
The Minister gave a commitment to Deputy Bruton earlier that he would introduce an amendment in the Seanad. The formula for affirmative regulation is readily available. His officials could produce that in 30 seconds. He should amend the Bill in this House, otherwise it will have to come back here from the Seanad.
The reason we are doing it this way is that the Seanad is sitting later this morning and the Bill could not be dealt with by the Bills Office in time for the Seanad if we were to amend it here. We will be back at 10.30 a.m. to deal with the Bill if the Seanad chooses to amend it.
On Deputy Shatter's point in regard to section 5, Deputy Bruton should note also that the regulations under section 5 must be approved by the Oireachtas. The section must be construed in accordance with the Constitution because it creates law making powers and, therefore, cannot be used to repeal the provisions of the Act. That is constitutionally clear. As Deputy Noonan pointed out, there is nothing unusual in having a supplementary clause of this type. However, I will arrange for my officials to examine the specific technical drafting issue raised by Deputy Shatter to see whether it can be addressed. I will try to come back to that particular issue on Report Stage if Deputy Shatter so wishes.
Deputy Bruton asked me what factors would be taken into account in regard to any application for extension of the guarantee. Clearly, the first and most important factor is the factor in the legislation itself which is that relating to financial instability, or the stability of the financial system in the State. That is the fundamental factor. Legal advice must be obtained on all the different aspects of this issue, both under domestic and European law.
Deputy Rabbitte raised a very important question in regard to the two year time period. That period of time was arrived at on Monday evening having had regard to all the evidence available to us on what period of time was appropriate for this guarantee. Deputy Rabbitte will understand that in matters connected with an assessment of banking, the scope for prior disclosure by the State to the authorities in Brussels is somewhat limited. I arranged for the relevant Commission officials to be briefed on this matter as soon as the Government made its announcement on Tuesday morning.
However, the issue raised by Deputy Rabbitte was the duration of the guarantee. Again, the Government arrived at a decision on that following advice from the Attorney General and having regard to the assessment we made of the threat which then existed to the financial stability of the sector.
As the time permitted for this debate has expired, I am required to put the following question in accordance with an Order of the DÃ¡il of this day: "That sections 3, 4 and 5 are hereby agreed to in Committee and amendments Nos. 5 to 8, inclusive, are hereby negatived."
The Dail Divided:
For the motion: 74 (Dermot Ahern, Michael Ahern, Noel Ahern, Barry Andrews, Chris Andrews, Seán Ardagh, Bobby Aylward, Joe Behan, Áine Brady, Cyprian Brady, Johnny Brady, John Browne, Thomas Byrne, Dara Calleary, Pat Carey, Niall Collins, Margaret Conlon, Seán Connick, Mary Coughlan, John Cregan, Martin Cullen, John Curran, Noel Dempsey, Jimmy Devins, Timmy Dooley, Michael Finneran, Michael Fitzpatrick, Seán Fleming, Beverley Flynn, Pat Gallagher, Paul Gogarty, John Gormley, Noel Grealish, Mary Hanafin, Mary Harney, Seán Haughey, Jackie Healy-Rae, Máire Hoctor, Brendan Kenneally, Michael Kennedy, Séamus Kirk, Michael Kitt, Tom Kitt, Brian Lenihan Jnr, Conor Lenihan, Michael Lowry, Martin Mansergh, Finian McGrath, Mattie McGrath, Michael McGrath, John McGuinness, John Moloney, Michael Moynihan, Michael Mulcahy, M J Nolan, Éamon Ó Cuív, Seán Ó Fearghaíl, Darragh O'Brien, Charlie O'Connor, Willie O'Dea, Noel O'Flynn, Batt O'Keeffe, Batt O'Keeffe, Mary O'Rourke, Christy O'Sullivan, Seán Power, Dick Roche, Eamon Ryan, Trevor Sargent, Eamon Scanlon, Brendan Smith, Noel Treacy, Mary White, Michael Woods)
Against the motion: 67 (James Bannon, Pat Breen, Tommy Broughan, Richard Bruton, Ulick Burke, Joan Burton, Catherine Byrne, Paul Connaughton, Noel Coonan, Joe Costello, Simon Coveney, Seymour Crawford, Michael Creed, Lucinda Creighton, Michael D'Arcy, John Deasy, Jimmy Deenihan, Andrew Doyle, Bernard Durkan, Damien English, Olwyn Enright, Frank Feighan, Martin Ferris, Charles Flanagan, Terence Flanagan, Eamon Gilmore, Brian Hayes, Tom Hayes, Michael D Higgins, Brendan Howlin, Paul Kehoe, Enda Kenny, Ciarán Lynch, Pádraic McCormack, Shane McEntee, Dinny McGinley, Joe McHugh, Liz McManus, Olivia Mitchell, Arthur Morgan, Dan Neville, Michael Noonan, Caoimhghín Ó Caoláin, Aengus Ó Snodaigh, Kieran O'Donnell, Fergus O'Dowd, Jim O'Keeffe, John O'Mahony, Brian O'Shea, Jan O'Sullivan, Willie Penrose, John Perry, Pat Rabbitte, James Reilly, Michael Ring, Alan Shatter, Tom Sheahan, P J Sheehan, Seán Sherlock, Róisín Shortall, Emmet Stagg, David Stanton, Billy Timmins, Joanna Tuffy, Mary Upton, Leo Varadkar, Jack Wall)
Tellers: Tá, Deputies Pat Carey and John Cregan; Níl, Deputies Paul Kehoe and Emmet Stagg.
Question declared carried.
This section is the main meat of the Bill and there are several amendments to which I wish to speak. I will deal with them as quickly as I can. Amendment No. 10 arises from concern that the Minister, in defining the guarantee and the types of deposit to be guaranteed, appears to extend the definition in the Bill compared to what he said in the press release he issued yesterday. In other words, he is saying the financial support and other guarantees may be made in respect of borrowings, liabilities and obligations of any credit institution. This is wider than the definition we saw previously. We want an assurance that this does not reduce shareholders' equity that would act as a buffer to protect taxpayers. We want reassurance as to why this wider definition of what financial support can be given.
We endorse amendment No. 12 in the name of Deputy Joan Burton and me. I admit she was author of the amendment. It is a good idea that there be a report to the Public Accounts Committee on the operation of the Bill. This would provide reassurance that it is operating as the DÃ¡il hopes and that the schemes, regulations and conditions we have made were not only approved but over time have worked in the way intended.
Amendment No. 14 in my name â Deputy Burton put forward a similar amendment â looks at the provision the Minister appears to make that he can provide guarantees on a non-commercial basis. This debate has been based on the understanding that the guarantee will be provided on a commercial basis, but he now he appears to be giving himself the power to decide that in some instances it would not be a commercial guarantee. I cannot understand the reason for this. To satisfy State aid rules the Bill must pass, and the Minister could not provide for a situation where support of this nature would be provided on a non-commercial basis. Therefore, I seek to delete the option of non-commercial terms being offered in this instance.
The Minister has agreed that a scheme will be laid before the House. He also seems to indicate that apart from the general scheme, there may be individual separate agreements. Presumably, these would be agreements negotiated with individual institutions. I understand there may be confidentiality attaching to elements of some agreements, but I am uneasy about the fact that there may be wholesale departure from the general scheme through individual agreements. Will the Minister explain the reason for individual agreements? We should be entitled to see a broad outline of the areas in which an individual agreement will differ from the general scheme if this is to be part of the rolling out of the Bill.
I welcome the Minister's indication that he will produce an amendment in the Seanad that will provide that the scheme will come to the House with the opportunity for debate and approval. I understand he will produce a draft that he will table in the Seanad before the Bill returns to the House in the morning. Will he indicate or read to us the terms of that scheme? I hope we will have time in the morning to satisfy ourselves on that.
In amendment No. 23 I have raised an important consideration. In the scheme he outlined earlier, the Minister said it would involve the basis on which charges were to be made and the conditions under which admittance to the scheme was granted. If that is all the scheme contains, it only tells us what the terms are for an institution to get in the door of the guarantee. It does not tell us about their obligations when inside the door and covered by the taxpayers' guarantee. My amendment seeks to ensure the scheme includes some of the other elements outlined by the Minister as to how the new regulatory approach will apply now the taxpayer is guaranteeing the deposit. If the taxpayer is guaranteeing the deposits raised, we need assurances with regard to how the moneys will be used. We must be assured it will not be used for building property in eastern Europe or for gambling on derivatives, but, as the Minister said, for enterprise in Ireland. It must be used in a proper way and we must have codes of practice in place with regard to risk. When the Minister presents his scheme, it should pin down the wider terms and I hope he will indicate that is the intention.
Amendment No. 26 is at the core of what we have asked. I welcome the Minister's indication that he is positively disposed to having a public interest member on the boards of the banks covered by the scheme. We want to see such a person there riding shotgun for the public interest. We also want to see that person or someone else on the risk assessment committee. The reason is that it is conceivable that a bank familiar with property dealing could decide, now that it has access to funds, that it should go into property development in Poland or Bulgaria on the back of taxpayer guaranteed deposits. That would not be in accord with the intention of this legislation. It is important to pin down the terms of the scheme and that is the purpose of our amendments.
I left out amendment No. 16, which proposes to delete the words "Without prejudice to the Minister's discretion, all" and to substitute "All" so that it reads "All financial support will be recovered" from the credit institution. Why is there a need to include the retention of discretion by the Minister? If the scheme is to get through the state aid rules, it is difficult to see how the Minister can retain discretion to not recoup the support he provides. To protect the taxpayer and ensure the legislation is robust and will withstand any examination under state aid rules, the deletion should be made.
This section is the heart of the Bill. It seeks to give the Minister extraordinary powers for the kind of scheme drawn up, whether and what will be paid by participants for the scheme and what the scheme will consist of. We have heard the Taoiseach and the Minister talk about it as a guarantee scheme but the section makes it very clear that it extends over a whole range of potential assistance, not just guarantees but injections of capital, equity stakes and other investments, including loans to the affected companies.
The difficulty is that, for instance, in section 9 on page 4 of the Bill we have essentially the recreation of something which most people will probably only have heard about in economic history textbooks, a kind of FÃ³ir Teoranta approach. Thirty years ago if companies were failing â it was a difficulty at that time â the State could go in and effectively take a kind of debenture or loan capital in the company which would pay a rate of interest. In many cases the capital advanced was never recovered and neither was the interest on the loan because the institutions were never able to pay. The Bill provides that the Minister may subscribe for, take an allotment of or purchase shares or any other securities. There are echoes of the FÃ³ir Teoranta model of very long ago. I do not know whether this was an inspiration. I know that homage was rightly paid to Dr. Ken Whitaker on the anniversary of the economic plan and I wonder if there was some conversation about what used to happen in times gone by.
The Labour Party's amendment No. 12 provides for an oversight board consisting of three persons appointed by the Committee of Public Accounts of DÃ¡il Ãireann who are persons of international expertise and repute who would report every six months to the Committee of Public Accounts on the operation of the Act. That kind of oversight is essential unless the Minister or his successor is not to run riot or be run over by the financial institutions which are getting this fantastic guarantee. It is a tremendous guarantee that is being advanced and I costed it at between â¬1 billion and â¬12 billion in terms of the two year guarantee and the assets which the Minister has described as being subject to the guarantee. We want some oversight and I will be tremendously disappointed if the Minister is unable to respond to this request. The Labour Party is presenting this amendment and Fine Gael is supporting it. The Minister has shown himself very disinclined to accept anything from the Opposition. He would be well advised to take this on board.
Our amendment No. 13 deals with the obligations of a credit institution to take all measures to avoid abuse of the financial support in accordance with the detailed scheme. There must be effective oversight mechanisms. What is to prevent some of the beneficiary institutions using the status and security of the guarantee to gamble recklessly again in their lending practices and the financial instruments in which they trade and speculate? We do not want the word "may" in the legislation; we want "shall". I remind the Minister that the last time a Fianna FÃ¡il Government came into the House with a deal worked out with outside organisations, it was in relation to the redress scheme. Religious orders were to pay â¬127 million or â¬128 million, which was to be equally matched by State liability. In the end the State paid to the tune of almost â¬1 billion. Fianna FÃ¡il has form on this, an arrangement worked out for an apparently good purpose which was generally supported in principle by many of the parties to assist the victims who were the object of the redress scheme. In the end it was the taxpayer who paid for the scheme, although we were told that the religious orders would contribute significantly. We want the taxpayers' interest protected and that is the purpose of these amendments.
Our amendment No. 14, which Deputy Bruton has also put forward, seeks to delete the provision for non-commercial terms which the Minister has included. It is not unreasonable to delete that provision, given that he has said that the terms on which the guarantee will be provided will be commercial terms. Amendments Nos. 20, 21 and 22 are grouped. It is provided that a draft shall be laid before each House of the Oireachtas and shall not be made unless resolutions approving the draft are passed by each House. That is removing the annoying references and replacing them with positives. Fine Gael amendment No. 21 is similar, as is No. 22. It would be outrageous if the Minister were to refuse to accept amendments which represent the views of both Labour and Fine Gael.
Amendment No. 24 provides that it shall be a condition of an application that in the event that any of the participating institutions get financial support, the applicant shall issue shares to the Minister for Finance to a value equivalent to the amount paid by the State under the financial support scheme. This is the Swedish model. It has been acknowledged in the Wall Street Journal, the Herald Tribune, the Financial Times and around the world that the model voted in and adopted by the centre right and the centre left in 1992 when Sweden was in great difficulty rescued not only the Swedish banks but the Swedish economy from a bubble of a collapsed housing construction boom which had ricocheted and was threatening to destroy the Swedish banking system. It has received the widest of accolades and equity was part of it. We are urging the Minister to include it because effectively it draws in the financial institutions to behave responsibly and help to recover the financial system from the danger that it is in and thus help our economy and ultimately the construction sector to recover.
Amendment No. 25 refers to the interest rate to be applied. I also refer to amendment No. 26 tabled by Deputy Bruton. The Labour Party strongly supports the notion of appointing somebody to the risk management side of these various bodies.
A late amendment, No. 19a, which some Deputies may not have seen, was broadly accepted in a number of discussions today. It provides that in making a scheme the Minister may require credit institutions to make particular provision to meet the credit requirements of persons on low incomes and that the Minister shall consult the money advice and budgeting service in this regard. Many ordinary people are facing foreclosure on their mortgages. These will be the little victims of the credit crunch. We are asking the Minister to bring forward a scheme whereby account will be taken of the interests of people who may default on the mortgage on their family home. Given the tradition of the Minister's party and of his family, I will be astonished if he cannot accept the amendment in the name of the Labour Party to protect the most vulnerable victims of the credit crunch. If he does not do so, he will protect the high rollers but not the little people. I would say "Shame on the Minister" if that were so.
I have four amendments on this section. I will deal with the first fairly substantially and the others very fleetingly. Amendment No. 11 seeks to restrict the risk to Irish taxpayers from credit institutions which are headquartered in this State. There appears to be some level of confusion in relation to this matter and I look forward to some clarification from the Minister. The Government statement issued yesterday at 7 a.m. referred to institutions which are headquartered in this State and that is fine. That was repeated throughout the day by the Taoiseach and last night in the contribution by the Minister, Deputy Gormley. I tabled the amendment because the Irish taxpayer is exposed to enough risk in terms of those institutions headquartered in the State rather than extending that risk to institutions headquartered outside the State. I appreciate the comments by the Minister earlier but I would like some further clarification. If he is now going to consider extending that cover to institutions which are headquartered outside the State, what criteria will apply? It is clear that banks have been able to circumvent some of the scrutiny measures in place by the Central Bank and bring matters to the point we are at now. Given the ability of the banks to evade regulation, how can we be sure that they will not be able to circumvent whatever rules will apply in this new circumstance to transfer some risk from a headquarter branch to a branch in this jurisdiction? This would mean that Irish taxpayers would be underwriting risk that they should not carry.
The Minister might elaborate on his comment regarding the Competition Commissioner, Neelie Kroes, who is talking about coming after us and all sorts of carry on. Has the Minister a position on that? Poor Neelie might be just upset that she was not consulted at the beginning.
We know that schemes along the lines of this one have been introduced by the Dutch, the Belgians and the French and Luxembourg Governments covering institutions in their jurisdictions. Can the Minister confirm that he has taken the advice of the Attorney General and that his officials have examined what happened on those occasions and if they are comparable in any way with what is happening here? This might ensure that there is no difficulty with the EU in that regard.
My amendment No. 15 seeks to add the words "within the confines of the Irish national interest" to subsection (4) following the reference to the terms and conditions which the Minister sees fit. This is intended to concentrate the Minister's attention and to reduce the wriggle room.
Amendment No. 18 seeks to insert the following subsection:
"(5) The Minister shall, on the passage of this Act, introduce a credit institution levy for the purpose of reducing the liability of the Government in respect of its financial guarantee.".
This is self-explanatory.
My final amendment is No. 19 which states:
In page 3, subsection (4), between lines 22 and 23 to insert the following paragraph:
"(a) The State, through a scheme, shall recoup its investment at the earliest possible time, together with a consideration commensurate with the level of risk carried by the Exchequer in each case."
This is to ensure that the taxpayer is guaranteed some reasonable return on the risk taken, not some superficial but a substantial return commensurate with the risk carried by the State.
I wish to comment on some of the proposed amendments. The key concept in section 6 is flexibility on the part of the Minister for Finance. We are dealing here with six financial institutions, and potentially more than 30, which will have various obligations and share structures. It is fallacious to think that we can devise a "one size fits all" approach to assisting these institutions. It is essential that the legislation should give the Minister the flexibility to deal with every institution and every situation in its individuality. Yes, he must report to the DÃ¡il and be subject to DÃ¡il approval, but he should not be hidebound.
Some of the comments by Deputies Burton and Bruton were not necessary. Many of the points they made are already covered in the subsections. For example, section 6(6) provides that the conditions under which the Minister provides financial support may include conditions regulating the commercial conduct of the credit institution or subsidiary to which the support is provided, and in particular may include conditions to regulate the competitive behaviour of that credit institution or subsidiary. Subsection (7) goes on to provide that the credit institution must fulfil the requirements imposed by the Central Bank or other authority, including those in relation to the conduct of its business. Those phrases are wide enough to encapsulate many of the points made by the two Deputies in the past few minutes. Some of their amendments are completely unnecessary. Subsections (6) and (7) of section 6 provide enough flexibility for the Minister to incorporate exactly what has been sought.
Another example is subsection (9) which provides that the Minister may subscribe for, take an allotment of or purchase shares and any other securities in a credit institution or subsidiary to which financial support is provided under this section on such terms as the Minister sees fit. That appears to cover absolutely the proposal made by Deputy Burton with regard to the State taking a shareholding in a credit institution. I do not believe her amendment is necessary.
Amendment No. 12 in the names of Deputies Joan Burton and Richard Bruton calls for three experts to report every six months to the Committee of Public Accounts. We have the Central Bank and a financial regulator. Why are they not capable of reporting to the DÃ¡il or to any oversight committee set up by the DÃ¡il?
Are we to set up another tier of expertise? We have people of the highest ability in the Central Bank and in the Financial Regulator's office and I will be damned if we are going to hire more people. It is an insult to these people to say they are not capable of providing expertise.
I agree with the proposal in amendment No. 21 tabled by Deputy Richard Bruton. There is no provision in the Bill that individual agreements should be laid before the House. I accept that there might be problems with confidentiality but, subject to that consideration, I believe individual agreements should be laid before the House. The proposal in amendment No. 24 is completely covered by section 6(9). For that reason I oppose it.
In deference to other Members who wish to speak, I will be very brief. The Minister's description of his intentions to create a new culture in banking will be tested entirely by his attitude to amendment No. 19a, which simply asks the Government to address its concern to those who have been the victims of irresponsible lending and promotion of lending by banks.
Section 6(4) contains some extraordinary language, "all financial support provided shall so far as possible ultimately be recouped from the credit institution or subsidiary to which the support was provided". The taxpayer is entitled to some minimal protection. The use of the word "ultimately" seems to contradict some fundamental in the section. It should be clear that the Minister's powers to make regulations as they are in section 5(1) are entirely limited to the two-year period. Section 6(3) states that any financial support shall not be provided for any period beyond 29 September 2010. What about outstanding liabilities after 29 September 2010? If there were an ordinary debt, one might think that the statute of limitations might provide for that and there would be six years to recover what had been advanced. If it were given under his own seal, it would be 12 years. What is the meaning of "ultimately"? What is really said is that having advanced any assistance, supported by the taxpayer, going beyond a guarantee, it might or might not ever be recovered. The Minister is precise in the limit of his own powers in section 5 but entirely vague in using "ultimately" and "so far as possible" regarding the recovery of assets advanced in the name of the taxpayer.
I refer to amendment No. 14 which relates to section 6(4). The guarantee must be at the commercial rate, a point about which I feel very strongly. There must be no cost to the taxpayer. The Taoiseach stated yesterday that any losses incurred by individual banks would be dealt with by way of levies on the banks. Is there legislation to allow this to take place? If not, does the Minister propose to introduce such a measure under section 5? As section 6(4) stands, there will be a cost to the taxpayer if a bank runs into severe trouble.
The Minister has said he is willing to accept the view expressed in amendment No. 21 and allow proposed measures to be debated rather than laid before the Houses. A due diligence procedure should be carried out in respect of the relevant banks, specifically to find out the prudential value of their loan book. Solvency is a key element. The Minister speaks about liquidity, but we must deal with solvency as well. When the markets have normalised, it is extremely important that the banks should be required to be capitalised to bring their tier one ratios above global norms. I would welcome the Minister's comments.
There are people already in danger of losing their houses. We have been talking about this Bill as if it were imposed on us by global events and no other factors were at play. Reckless lending is also a factor. I had a case recently of a young couple who, when they signed for a 100% mortgage, were invited to subscribe for a loan for a car. My colleague, Deputy Jack Wall, instanced at a parliamentary party meeting today a number of live cases of threatened repossessions. The community welfare officer believes he has a statutory obligation to ask for the original loan contract. If that document shows any imperfection, such as the customary practice, whether we like to admit it or not, of puffing up income for the purposes of securing a loan, the community welfare officer may offer no assistance on the mortgage repayments. That means repossessions are, inevitably, piling up. If and when these sections are invoked it is an entirely reasonable proposition for the banks concerned to be required to make an appropriate contribution to support the calls because, unfortunately, they will be invoked more and more in the months ahead.
I invite the Minister again to talk about financial support. A definition was given earlier and we were curious as to why it was widened but this section gives the Minister the opportunity to deal with this important matter. Congressional oversight is a big issue in the American controversy. The Treasury Secretary tried to bring in a scheme that avoided any form of congressional oversight and he was voted down. It would be good for this House and would make its workings more relevant if there were a small number of Deputies who developed a specialism in banking and finance and in front of whom these people could appear on a regular basis, thus making them amenable to oversight and ensuring they dealt with questions which have been in the mind of many Members of this House for a very long time, even going back to before this storm broke.
Deputy Bruton's point about the dilution of the shareholder buffer is very important. I do not know how the Minister will respond to that amendment. It is all very well saying there is â¬80 billion to play around with before resorting to the unfortunate taxpayer but it is important that the dilution to which he referred is clarified. On the question of a beneficiary resorting to nefarious activities the Minister says we are going in deep. I will not rehash the arguments about the necessity for rigorous regulatory monitoring, supervision and control but it is in the nature of banking institutions that once the storm blows over and they are secure they will, in some instances, resort to the same nefarious practices that got us into this situation.
If the Minister does not accept this or other amendments he might give the House some idea of what he has in mind by the addition of those two words.
The success of this piece of legislation will be achieved if it is never used; that is the whole purpose of the exercise. The most important thing to build into the legislation is a provision whereby, if it is used, any money paid out will be repaid with interest
That is my simple proposition. I hope it is never used and, to date, there have been signs it will not have to be used but whoever gets money should pay it back. I had the same query as Deputy Higgins on the timescale. Whether it be two years or five years the money should be paid back with interest.
To keep everybody happy, if subsection (15) was amended to provide for a report to be made to both Houses after 12 months, which was to have been six months, a provision should also be made for a report to be passed on to the Committee of Public Accounts or the Joint Committee on Finance and the Public Service, for them to debate and report back to this House. If the Minister amended the subsection a lot would be achieved and it would keep this House involved in the overall process.
This section is the nub of the Bill. I voice my support for amendments Nos. 12 and 26. Some sort of oversight is the least that could be asked for. I do not accept it would create a new quango or layer of bureaucracy â we use consultants all the time.
Amendment No. 26 will, as Deputy Barrett said, hopefully never be used but, in the event that it is used, any public money which is spent must be scrutinised. The Minister has said he is willing to consider including outside institutions with banking operations in this country. In the event of an Irish institution with subsidiaries abroad getting into financial trouble or collapsing, putting a burden on the bank here â and there is a precedent in this case â would the protection mechanism proposed by the Bill overlap? Will it be necessary to use the provision in that case?
I will make three points on section 6(2). It is very important the banks be obligated to report negative moves as soon as the information becomes available, both to the regulator and the Central Bank. If they do not do so they should be penalised. Banks should also be obligated to rotate their auditors more frequently, at least every two years which is not the case at the moment. Auditors should have to report to the regulator on a more frequent basis than at present, perhaps every two or three years. The Minister should include such obligations when he draws up the scheme.
I do not want to return to issues I raised earlier but, in connection with section 6, could the Minister explain to the House what happens if, once this legislation becomes operative, a foreign bank outside the State moves to take over one of the banks which will be covered by the legislation, in circumstances in which the proposed merger or acquisition is not necessary to maintain the stability of the financial system under the terms of section 7? Given that all the financial institutions in question trade on the stock market will he address that issue? A bank elsewhere could see a substantial advantage in making a bid to take over an Irish bank and back itself in to the guarantees we give by relocating their central operations in this State. What protections would exist in that context? What would happen if one of the major American banks in financial difficulty made a takeover bid for Bank of Ireland or AIB, deciding to operate from and base its main office in Ireland while turning its American operation into a subsidiary? Would we have to provide cover for a bank that has had no involvement in, and nothing to do with, our economy, in circumstances where the economy does not depend on its survival but on that of the bank it has moved to take over? What consideration has the Government given to such a move being made on the stock market in the days following the enactment of this legislation?
Deputy Bruton and Deputy Rabbitte asked about the definition of financial support, which is very widely drawn in the definition clause in the Bill. Financial support includes a loan, a guarantee, an exchange of assets and any other kind of financial accommodation or support. The purpose of the legislation is to give, in the public interest, powers to the Minister to maintain the stability of the financial system in the State. The envisaged method on foot of this legislation for immediate implementation is the scheme that will be submitted to the Oireachtas in accordance with the amendments tabled by Deputies Burton and Bruton.
The precise issue of wider powers arises because it is important that the legislation provides for the exercise of wider powers should the circumstances require it and that is why a wide definition of "financial support" is provided for in the legislation. If any such support were to involve recourse to the Exchequer, it would be essential for the House to divide and for appropriation of the relevant funds to take place for that to be effective. Under section 8, the Government has power to transfer a function of the Minister for Finance to the National Treasury Management Agency by order to exercise commercial operations of the type described as "financial support". That clarifies the functions of the NTMA in that regard. There is a view that the agency can carry out operations with the banks as matters stand but, to put the matter beyond doubt, especially in the context of financial instability, the agency can be assigned that function by the Government, although formally it is assigned to the Minister of Finance. I would not dream nowadays of doing any such thing because I do not have the relevant officers in my Department. They work for the NTMA on issues relating to public debt, bonds and securities and the management of funds.
The issue of making a report to the Committee of Public Accounts was also raised by Deputy Bruton. There is nothing to stop that committee or the Joint Committee on Finance and the Public Service examining the report prepared under the legislation. It is perfectly open to them and I do not understand why it is necessary to specify parliamentary procedures in a broader way in the legislation. It is equally open to both committees to retain expert advice, if they obtain the relevant sanctions from the Houses of the Oireachtas Commission to examine and evaluate such a report. I do not understand why it is essential to write it into the legislation. That trespasses on Parliament's prerogatives in the matter. It is a matter for both committees if they wish to evaluate the report to seek such assistance and to make such arrangements in that regard.
I refer to the issue of the scheme and individual agreements. The scheme will be submitted to the Houses of the Oireachtas and the individual agreements will be commercial in character and, therefore, confidential. I envisage considerable difficulties in furnishing them to the House. The scheme will outline the nature of the agreements that can be arrived at. Deputy Bruton asked for a citation of the amendment I propose to move in the Seanad. It provides that where the Minister proposes to make a scheme under section 6(4), "he or she shall cause a draft of the proposed scheme to be laid before each House of the Oireachtas and he or she shall not make the scheme unless and until a resolution approving of the draft has been passed by each such House". The scheme will be submitted to both Houses where resolutions will be tabled and approved. That was agreed during this debate. I intend to table that in the Seanad and if the House accepts the amendment, it will return to this House for consideration later.
Deputy Bruton is seeking to appoint someone to the risk assessment committee. I am satisfied the Minister has adequate powers to impose such conditions as he or she thinks fit on any financial support provided. I can require the recipient of financial support to allow an observer to sit on any of its committees as a precondition of availing of such support. The amendment provides that someone "shall" be appointed, which limits my flexibility under the legislation to do many things. How the lending practices of institutions that benefit from this guarantee from the State are managed is a core issue and it was referred to by many Deputies. It is essential we do not trammel in any way our powers to monitor this position or to appoint people to sit on or observe committees or access records. The scheme and the agreements completed on foot of it will be precise in this regard.
The legislation is not formulated that way. It allows any terms or conditions to be imposed on foot of the schemes in the contracts. We need as much as we can in regard to these entities.
The amendment provides that a person "shall" be appointed to the risk assessment committee and a person "shall" be appointed to the board. I have outlined my view on this. With regard to the risk assessment committee, an observer can be required to attend. I want to take a wide variety of measures to ensure no risk attaches to lending practices.
The mandatory character of the amendment limits the position rather than helps it. With regard to the boards, I have made it clear somebody should be on the board in the public interest. The details of that must be worked out with the relevant institutions. They have either charters, constitutions, founding documents or articles of incorporation. Clearly, that cannot be imposed on a standard basis by the Oireachtas through legislative amendment tonight but I accept, under the powers provided to the Minister under the legislation, I can require this of the banks in the discussions I will have with them on the implementation of the scheme.
Deputy Bruton tabled an amendment relating to the Minister's discretion regarding such conditions and he proposes the deletion of the words "so far as possible". I do not propose to accept amendments Nos. 16 and 17. The spirit of amendment No. 16 is strongly in keeping with the Government's policy objective. It may not be possible in every circumstance for the relevant financial institution to make good the financial support provided. This may preclude the Minister from giving a guarantee to an institution in the interest of financial stability in circumstances where there is doubt that the credit institution will have the resources to repay. If the financial institution is unable to repay, as a matter of policy it is the stated intention of the Government to introduce a levy on the banks collectively. Deputy Barrett made a good point. The purpose of the legislation is to ensure banks survive and not to ensure they fail. Many contingencies are being understandably canvassed in the debate but the purpose of the Bill is to ensure banks succeed and this period of instability is removed.
I refer to Deputy Burton's amendments. She proposes that the obligations of a credit institution seeking financial support shall include an obligation to take all measures to avoid abuse of the financial support in accordance with the detailed scheme. That is unnecessary because it will be dealt in the scheme. Deputy Burton proposed an expert oversight board that would report to the PAC every six months. I have outlined my opinions on the functions of the PAC, but I was taken by Deputy Rabbitte's suggestion that we should consider having an informal committee on banking. At least, that is what I took his meaning to be.
I have not proposed the establishment of such a committee. A member of the Deputy's party put forward the idea and I indicated that I would be receptive to it. When we discuss banking matters, it is important that we have some forum in which to do so with candour in the House.
In the term "commercial or other terms", the deletion of the words "or other" in section 6(4) would mean that the Minister was precluded from providing financial support on other than commercial terms in circumstances of grave financial instability. This could impact on the Minister's role in maintaining financial stability and, therefore, I cannot accept the amendment.
On amendment No. 19a the issue raised by the Deputy is important. It must be a priority for public policy to ensure that all have access to credit. This ensures that people do not find themselves needing to resort to the services provided by licensed moneylenders.
Having said this, section 5 provides for the preparation of a scheme relating to the issues encompassed by subsection 4 on the terms and conditions relating to the granting of the guarantee. The Minister is given a wide discretion in respect of these conditions, but it is difficult to see how a commercial guarantee could be conditioned by references to actual lending practices.
As the time permitted for the debate has expired, I am required to put the following question in accordance with the Order of the DÃ¡il of 1 October 2008: "That section 6 is hereby agreed to in Committee and that amendments Nos. 9a to 17, inclusive, and 19a to 28, inclusive, are hereby negatived."
I want to raise some questions regarding the merger legislation. I cannot understand how the Minister would want to override competition law where circumstances arise, where perhaps a consolidation is occurring that is in the interest of the financial system's stability. What is not clear is why the Minister is not making provision for some role for the DÃ¡il in such an event. A merger of that nature would be a considerable and momentous event. Most likely, the situation would entail the State taking on some part of the liabilities. In some of the consolidations in other countries, the state had to take on some responsibility for non-performing assets to attract another institution to take up the role envisaged for them.
It is possible that the consolidations, mergers and acquisitions that would occur here would have considerable implications for public policy as well as for the competition dimension. There must be some relationship to the DÃ¡il. For example, at no point whether in issuing a certificate or in consulting on notification does there seem to be a more public opportunity to consider the action taken under these provisions. Since they are so particular and the powers have been taken in a situation in which the Minister will certify that the financial stability is in jeopardy, there must be an opportunity for a wider debate here. It would be unthinkable not to have a debate in those circumstances. While I accept the necessity for this section, will the Minister indicate whether there is scope for a role for the DÃ¡il?
On section 8, will the Minister outline what he envisages the role of the National Treasury Management Agency to be in these circumstances? In the normal course of events, the NTMA has purchased securitised mortgages as a simply commercial arrangement presumably, on behalf of the pensions reserve board. Given that it already plays a role in taking up securitised mortgages, it would be worthwhile for the Minister to outline to the House the role he envisages for the NTMA. Will that role be protected in the same way as the Minister's role? He will have detailed powers of supervision, but will they continue to be exercised when practical operations have moved elsewhere? Will there be joined up thinking and operation when that occurs?
There will be much work for lawyers in this legislation. Under section 7, which addresses mergers and acquisitions, power will lie with the Minister rather than the Competition Authority. Has the Minister heard from the authority, which is normally aggressive in defending its territory?
Section 8 addresses the role of the NTMA, which has done a good job in its management of the national debt. However, the Minister indicated that he only intends levying a charge in respect of the guarantees being offered in the event of the guarantee being drawn down. Irrespective of whether this is his intent; it was the implication in his note. The provision of the guarantee imposes a cost on the taxpayer because it has a contingent liability note to the national debt, raising the cost of Government borrowing. Will the Minister clarify whether the NTMA will levy a charge?
One of our amendments ruled out of order by the Ceann Comhairle would have made a provision for the charge to be known as the "credit institutions guarantee charge". It would have ensured that, from the moment the legislation was in place, the taxpayers would charge for the guarantees so that they could recover the cost of the guarantee. The Minister's response was distinctly at odds with the notion he and the Taoiseach set out, namely, that the Bill would ultimately incur zero cost to the taxpayer. Will a charge be levied by the NTMA from tomorrow or the day after when the Bill has gone into full provision? That is something we need to know.
This session includes the Report and Final Stages of the Bill. We have tabled a whole series of reasonable amendments to the Minister's Bill which have sought to protect fundamentally the interests of the Irish taxpayer. They have sought to provide a basis for reform of the behaviour of those within the banking industry who have proved to be reckless with other people's money. We gave two examples, recklessness in relation to the construction industry and lending for land speculation. There was also recklessness in trading in products, many of which have turned out to be worthless. In terms of Irish banking, much of which is solid and profitable, this is the area where the losses, poor credit risks and poor loan books have built up.
The Bill contains many instances of the phrase, "The Minister may.....". There is very little to the effect that "The Minister shall.....". When we reflect on the redress scheme the Minister's party presented, we recall that we were told the religious orders would pay a significant amount, and that the burden on the taxpayer would be relatively modest. That turned out to constitute, as Deputy Rabbitte and I discovered on inquiry, an enormous burden on the taxpayer and a relatively small burden on the religious orders. I hope we are not heading down the same road, where the banks will get a tremendously attractive proposition from the State, for a relatively light charge, with the taxpayer again left holding the baby, as has happened so often.
Nothing the Minister has said in the course of the debate has offered us any great level of reassurance. We set certain standards and when the leader of the Labour Party, Deputy Eamon Gilmore, spoke yesterday, he said he would expect the Bill to seek consciously to protect the interests of taxpayers. We said we would seek to change the reckless behaviour of banks and put in place a monitoring system within the new financial structures because the days of buccaneering, freewheeling, light financial regulation are over. We are in a new historic phase, yet the Minister still seems unable to believe that the financial regulation model applied with a light hand for the past 20 years is out of date and over.
In the context of the Minister's failure to meet, in any way, the legitimate requirements of the Opposition to protect the taxpayer, we are supporting him in bailing out some banks in order to protect the Irish financial system, on which people's jobs, homes, security and mortgages depend. However, we do not want this to be cost free and without appropriate protection for the interests of the taxpayer. On that score, the Minister has failed the test set by the Labour Party and we shall not be voting for this Bill.
While we certainly recognise that urgent action is needed to thwart the threat to the entire Irish economy, it is unfortunate that the banks will enjoy considerable relief on foot of the action about to be taken. It is clear that this Bill is far from perfect, as evidenced by the number of amendments tabled by the three Opposition parties. It is most unfortunate that those amendments are not acceptable. The time constraints were such that we did not even get to address many of them which sought to clarify some very important areas, not least the issue of banks headquartered inside and outside the State.
The House needs to recognise that new and better regulation is required to deal with the financial and credit institutions. This is absolutely necessary and very urgent, not just in this State but internationally. It is important that such regulation is implemented and that an appropriate body is either established or amended for this purpose because clearly the controls in place at the moment are not sufficient to police these institutions. They are simply dancing a jig around them, which is completely unacceptable. I hope that some overseeing body with full implementational capacity will be put in place to deal with that situation.
The legislation going through the House this evening is critically important for those people who are victims of prolonged Government mismanagement for upwards of ten years and who fell prey to financial institutions that conned, misled and fed them far more money than they could afford to repay. These people need to be protected as well. There are probably thousands of them, right across the State, ill at ease in their beds tonight and in fear of losing their homes. That needs to be addressed as well and I hope the Minister will invest as much time in producing a deal to address the needs of these people as he has in constructing the scheme that is before the House.
I shall be very brief. One suspects that when this hurricane blows itself out the architecture of banking in Ireland and elsewhere will be very different from what we have known in the past.
I want clarity from the Minister on this section, to which there are no amendments. It provides for the exceptional situation where the Minister considers it necessary to intervene and where, in such circumstances, normal competition law does not apply. In circumstances where mergers are contemplated, presumably the Minister will confirm that normal competition law applies and that this provision relates only to circumstances where the Minister feels it necessary to intervene for the stability of the financial system, or whatever. What about the situation that arises when the hurricane blows itself out? A major bank in the neighbouring jurisdiction, say, decides to purchase one of our smaller banks and to headquarter itself in the Republic of Ireland â although its business outside this jurisdiction would be many times larger than what it does here. Will such a bank have the benefit of the indemnity we are providing here? Will it have the benefit for borrowings and liabilities in another jurisdiction where those moneys might be put to work? It is important to know the Minister's thinking in that regard.
I hope he is not going to leave because Members of the Seanad, who are on double time, will be very upset if he does not pay them a call later tonight.
I had, but the problem is that the Order of Business provides for another 30 minutes and the Minister has indicated he wishes to speak. The Minister has indicated he wishes to speak and I am obliged to give him that opportunity. Approximately ten minutes remain.
Deputy Shatter raised a question which was subsequently raised by Deputy Rabbitte during the last section about a domestic credit institution under this legislation which was taken over by a bank from another jurisdiction and became a wholly owned subsidiary of that jurisdiction. He asked whether it would continue to benefit from the guarantee scheme envisaged in thisââ
Yes, equally in that circumstance. As noted by Deputies, the crucial, fundamental point in this legislation is in section 6, that financial support "may" be provided in a formal manner determined by the Minister. The Minister is not required to provide financial support under this legislation. A scheme will be brought to the Houses for discussion and, if approved, it will be implemented in the form of individual contracts with particular banks. However, I assure Deputies that those contracts will give the Minister the right to back out at any time. This would be the normal commercial element in such an arrangement. That is the conclusive answer to that issue, which is a legitimate issue of concern.
Deputy Shatter also raised a technical issue on section 5(1). This has been examined by the Parliamentary Counsel, who is satisfied that the provision relates to regulations to resolve difficulties in operating the Act related to a specific intervention in a specific banking instability position in one institution.
Deputy Bruton asked me to outline the role of the National Treasury Management Agency regarding this legislation. The function of the agency is to provide the Minister for Finance with expert advice on financial transactions, the investment of money, the taking of securities and the issue of bonds. Were the Minister to have to exercise some of the powers referred to in this legislation above and beyond the guaranteed powers, where it is intended to bring forward a definite proposal, the NTMA would have a role in advising the Minister or exercising the powers directly regarding a troubled institution. The NTMA will play a crucial role in the operations carried out in that regard under this legislation.
Regarding the position of the NTMA liaising with the Financial Regulator, the NTMA reports directly to the Minister, aside from the Department. This is an aspect of its founding legislation which has always been there because its functions were always in the Department and there has always been a direct relationship between it and the Minister. I have no doubt that the NTMA would liaise with the Financial Regulator in the same way as the Minister can in the presence of the Chair. A practical working arrangement for on-the-ground operations might be essential in circumstances where the NTMA was carrying out operations. Reliance on the Financial Regulator is of more fundamental importance in the guarantee scheme we are bringing forward than in the kind of un-contemplatable operations in which the NTMA might be engaged.
Regarding the question on section 7, the modification of the competition provisions, there is no reference to the DÃ¡il. One of the obvious reasons for that, as we have seen in the recent European crises, is that some amalgamations and mergers have taken place over the course of a weekend or overnight. Very rapid responses have been required in the current financial crisis and that is why section 7 has been inserted in the legislation.
The Minister has power to subscribe for shares in a credit institution in the event that financial support is granted. Based on the Swedish model, Deputy Burton proposes that share subscription should be mandatory in all cases where financial support is granted. I cannot accept the amendment because it is important to retain ministerial discretion in an individual case where we may assess a credit institution's instability as temporary. However, were there evidence of permanent instability in an institution, the course of action proposed by the Deputy would be the policy of the Government.
Not necessarily. I am answering the question in Deputy Burton's amendment, that it should be mandatory to take shares. I am outlining circumstances in which we would take shares. I am also suggesting there could be a temporary shortage of liquidity where the taking of shares might not be essential and where a more valuable consideration could be obtained, The crucial point is that if an institution has hope for recovery, the Minister can get something more valuable. We are discussing scenarios I do not envisage happening under this legislation but it is important the Minister has power to deal with them.
Deputy Rabbitte raised the question raised by Deputy Shatter and I have dealt with that issue. I will try to deal with most of the queries raised but perhaps some minutes remain.
We are at a crossroads and the Minister is in the driving seat of a vehicle facing a number of choices. He can use the powers that will be vested in him as a result of the passing of this legislation wisely by ensuring a new route is embarked on regarding regulation of the financial sector, banking and other institutions. That is one of the real products that can result from the passage of this legislation. Over the past 48 hours we have heard account after account of the various excesses and abuses that have been the practice of the banks and other financial bodies in this State over many decades. That must end. A new beginning must be embarked on. I hope the Minister will have the courage to ensure that is the route we take. It is essential. There are many outstanding questions on the real outworking of this legislation. However, in consequence of what we recognise as a most serious situation facing the economy of this State, there must be a courageous response.
However, the Sinn FÃ©in Members will support the Minister in the passage of this legislation and we hope in the exercise of our democratic responsibility we will have the opportunity to ensure the transparency and accountability to this House that we sought in amendments presented in respect of the outworking of the powers now to be vested in the Minister and his colleagues.
This is an enormous change and this debate has been worthwhile. I welcome the concessions given by the Minister in respect of bringing the scheme before the House for positive approval. I welcome his indication that he will seek to put someone on the board and that there will be proper supervision of risk assessment. Misgivings remain and there are amendments I would have liked to have seen made. It appears that details I hoped would be in the scheme when it is presented next week will not be included and we must take it on trust that the Minister, along with his advisers and the Financial Regulator, will develop the appropriate controls and apply them effectively.
Fine Gael will support this legislation. It is vital to the stability of the banking system. We hope the moves taken by the Minister will have the desired effect. Concerns remain and these must be carefully managed. This is not finished business, but we give our support to this and wish the Minister well in the operation of the legislation.
Deputy Burton raised a matter that I should have dealt with in my previous reply. The guarantee given under the scheme will be commercially valued and is a commercial transaction. Deputy Burton detected some confusion in my remarks in respect of that guarantee and another guarantee. The guarantee referred to in the interpretation section can be a wider guarantee supported by Central Bank security in an operation in which the Minister or the NTMA were engaged in the reconstruction of a bank or a specific institution in difficulty. That is the aspect of the legislation in respect of which I do not contemplate exercising powers but it is included for that purpose.
I thank the Members for their attendance and the interest they have shown in this legislation. I appreciated the agreement between the parties to proof the different sections of the Bill. Often, in these exercises so many sections are never considered and there is always a hazard in rushed legislation. At least, we have had the opportunity to tease out the implications of each section. I am grateful to the spokespersons for facilitating a discussion of that character on the Bill. In general, I will listen to the concerns reflected by Deputies and I will ensure the scheme reflects the concerns in so far as a scheme under this Bill can. I thank Members for their co-operation in this matter.
As the time permitted for the debate has expired, I am required to put the following question in accordance with the Order of the DÃ¡il of 1 October 2008: "That sections 7 to 9, inclusive, are hereby agreed to in Committee, the Title is agreed to in Committee, the Bill is accordingly reported to the House without amendment, Fourth Stage is hereby completed and the Bill is hereby passed."
The Dail Divided:
For the motion: 124 (Dermot Ahern, Michael Ahern, Noel Ahern, Barry Andrews, Chris Andrews, Seán Ardagh, Bobby Aylward, James Bannon, Seán Barrett, Joe Behan, Áine Brady, Cyprian Brady, Johnny Brady, Pat Breen, John Browne, Richard Bruton, Ulick Burke, Catherine Byrne, Thomas Byrne, Dara Calleary, Pat Carey, Niall Collins, Margaret Conlon, Paul Connaughton, Seán Connick, Noel Coonan, Mary Coughlan, Simon Coveney, Seymour Crawford, Michael Creed, John Cregan, Lucinda Creighton, Martin Cullen, John Curran, Michael D'Arcy, John Deasy, Jimmy Deenihan, Noel Dempsey, Jimmy Devins, Timmy Dooley, Andrew Doyle, Bernard Durkan, Damien English, Olwyn Enright, Frank Feighan, Martin Ferris, Michael Finneran, Michael Fitzpatrick, Charles Flanagan, Terence Flanagan, Seán Fleming, Beverley Flynn, Pat Gallagher, Paul Gogarty, John Gormley, Noel Grealish, Mary Hanafin, Mary Harney, Seán Haughey, Brian Hayes, Tom Hayes, Jackie Healy-Rae, Máire Hoctor, Paul Kehoe, Brendan Kenneally, Michael Kennedy, Enda Kenny, Séamus Kirk, Michael Kitt, Tom Kitt, Brian Lenihan Jnr, Conor Lenihan, Michael Lowry, Martin Mansergh, Pádraic McCormack, Shane McEntee, Dinny McGinley, Finian McGrath, Mattie McGrath, Michael McGrath, John McGuinness, Joe McHugh, Olivia Mitchell, John Moloney, Arthur Morgan, Michael Moynihan, Michael Mulcahy, Denis Naughten, Dan Neville, M J Nolan, Michael Noonan, Caoimhghín Ó Caoláin, Éamon Ó Cuív, Seán Ó Fearghaíl, Darragh O'Brien, Charlie O'Connor, Willie O'Dea, Kieran O'Donnell, Fergus O'Dowd, Noel O'Flynn, Batt O'Keeffe, Batt O'Keeffe, Jim O'Keeffe, John O'Mahony, Mary O'Rourke, Christy O'Sullivan, John Perry, Seán Power, James Reilly, Michael Ring, Dick Roche, Eamon Ryan, Trevor Sargent, Eamon Scanlon, Alan Shatter, Tom Sheahan, P J Sheehan, Brendan Smith, David Stanton, Billy Timmins, Noel Treacy, Leo Varadkar, Mary White, Michael Woods)
Against the motion: 18 (Tommy Broughan, Joan Burton, Joe Costello, Eamon Gilmore, Michael D Higgins, Brendan Howlin, Ciarán Lynch, Liz McManus, Brian O'Shea, Jan O'Sullivan, Willie Penrose, Pat Rabbitte, Seán Sherlock, Róisín Shortall, Emmet Stagg, Joanna Tuffy, Mary Upton, Jack Wall)
Tellers: Tá, Deputies Pat Carey and John Cregan; Níl, Deputies Emmet Stagg and Seán Sherlock.
Question declared carried.