Tuesday, 19 January 2010
Banking Crisis: Statements
I call on the Minister for Finance, Deputy Brian Lenihan, to make a statement under Standing Order 43. The Minister has ten minutes and the spokespersons for Fine Gael, the Labour Party and Sinn Féin, who will be called in that order, also have ten minutes.
It goes without saying that the worst financial crisis this country has ever experienced requires an inquiry. The Government fully recognises that the public is entitled to a full examination of what went wrong in the banking system. More than that, an inquiry is needed to restore international and domestic confidence in our banks. As a country, we must understand the origins of this crisis to ensure that we do not make the same mistakes again.
Those mistakes required the Government to introduce the bank guarantee scheme in September 2008 and to make some significant interventions since then to ensure financial stability. These measures include the recapitalisation of our two biggest banks, namely, Allied Irish Banks and Bank of Ireland, the nationalisation and recapitalisation of Anglo Irish Bank, the establishment of the National Asset Management Agency and the recent introduction of the eligible liabilities guarantee scheme.
The State has been required to pour significant and scarce resources into our banks. As I have stated previously in this House, the banks owe a large debt of gratitude to the taxpayers of this country. It is essential that we learn the lessons of our recent experiences as we set about the task of refashioning our banking system to meet the needs of the economy and perform its proper duty to the citizens of this country. I welcomed the comments of the Governor of the Central Bank, Professor Honohan, when he appeared before the Oireachtas Joint Committee on Economic Regulatory Affairs just over a month ago and I made public that welcome on 4 January 2010. The Governor stated that he expected the Oireachtas would authorise some form of inquiry to try to understand the deeper underlying causes of this crisis in order that wider lessons could be learned for the future. The Government agrees with the views of Professor Honohan on the benefit and value of such an approach. The Government also agrees fully with the Governor on the need to engage a broad set of expertise to examine the events of recent years and to design and implement an investigation in such a way that a deeper understanding is arrived at of the root causes of the systemic failures that led to the need for extraordinary support from the State to the domestic banking system.
At its meeting today, the Government approved a framework for an inquiry and for its subsequent consideration by Dáil Éireann. The inquiry will have two stages. First, the Government will commission immediately two separate reports. One will be from the Governor of the Central Bank on the performance of the functions of the Central Bank and the Financial Regulator. A second will be from an independent "wise" man or woman with relevant expertise to conduct a preliminary investigation into the recent crisis in our banking system and to inform the future management and regulation of the sector. These reports also will consider the international, social and macroeconomic policy environment which provided the context for the recent crisis. I expect both reports to be completed by the end of May this year and laid before the Houses shortly thereafter.
The second stage of the inquiry will be the establishment of a statutory commission of investigation, which will be chaired by a recognised expert or experts of high standing and reputation. The terms of reference for this commission will be informed by the conclusions of the two preliminary reports. The aim will be for the commission to complete its work by the end of this year. Its report will be then laid before the Oireachtas for further consideration and action by an appropriate Oireachtas committee.
We are all aware the global international crisis has created extreme stress for the financial system worldwide. The drying up of funding in international credit markets and the huge write-downs of securitised assets has generated a financial shock, which has resulted in the most negative economic conditions since the Second World War. Ireland's exposure to the sharp deterioration in international financial conditions has been significantly exacerbated by practices that failed to address unrestricted credit growth in the domestic banking system. This growth was facilitated by access to wholesale financial markets with no exchange rate risk and low interest rates and was both driven by, and facilitated, an unprecedented property boom and an unsustainable increase in property development lending.
The proper functioning of the banking system is critical to the economy and, therefore, must be protected by the Government. We are not alone in this. Governments all over the world have had to make substantial interventions to protect their banking systems. These interventions have been difficult for all governments. They are not popular, they are not easy to explain or understand but they are necessary. In all the steps we have taken as a Government, our overriding objective has been to maintain a functioning banking system that will ensure a flow of credit to viable businesses and households in this economy. Today's Government decision to commission two preliminary reports, to be followed by the establishment of the statutory commission of investigation into banking matters, will form another important step in the continuing reform of our regulatory systems and structures, as well as the internal governance of our financial institutions.
These reviews will not take place in a vacuum. They will build on important work being done at international level. Over recent months substantial analysis of the failures of the banking sector has been undertaken elsewhere. The analysis the Government will commission will complement and build upon, for example, the European Commission's high level group on cross-border financial supervision - the de Larosière report - and the UK Financial Services Authority's Turner report. These reports have recommended an extensive programme of reform of financial regulation at EU and international level which is being put in place. These reforms will make a major contribution to underpinning the stability of the financial system both in Ireland and in the EU in the future.
The commission of investigation will examine and report on the causes of the systemic failures such as corporate strategy, governance and risk management in the Irish banking sector. The terms of reference for the statutory inquiry will be shaped by the conclusions of the two preliminary investigations and in consultation with the Oireachtas but, clearly, a number of broad themes ought to be examined thoroughly. These include the performance of individual banks and bank directors where wrongdoing and bad and lax practices have contributed considerably to the crisis; the performance and structure of the banking system generally; the performance of the regulatory and Central Bank systems; and the response of the relevant Departments and agencies, including the linkage between the banking crisis and overall economic management.
The two preliminary reviews will prepare the ground for the formal inquiry and will ensure it is effective and efficient. Over the next number of months, significant work needs to be completed to return our banking system to health. We need to complete the first stage of the critical "transfer of assets" to NAMA; agree the banks' restructuring plans and their future capital requirements; and progress consolidation in the building society sector. I remind the House that the banking system is still fragile and we are not out of the woods yet. It is important that the work I have outlined is completed before we turn our attention to the formal inquiry we all agree must take place. That is why the Government is proposing the multistage investigation, which will be completed by the end of the year.
The Oireachtas will be involved at each stage of the planned inquiry process. An appropriate Oireachtas committee - the Joint Committee on Finance and the Public Service seems the most relevant - will meet both the Governor and the independent expert at the outset of their work to be briefed on the members' priorities for investigation. The two preliminary reports, when completed, will be laid before the Houses of the Oireachtas and the Oireachtas committee will be invited to consider the findings in the reports. The terms of reference and draft Government order to establish the statutory commission will be laid before the Oireachtas and the commission's report, when completed, will be laid before the Oireachtas for further consideration by the committee. It is open to the appropriate committee to hold public hearings on the report.
There has been some reference to the DIRT inquiry as a possible model for the inquiry into the financial crisis but the investigative work in that inquiry was done by the Comptroller and Auditor General. An Oireachtas committee cannot constitute itself into a court of judgment on private individuals and cannot make determinations on disputed issues of fact. That is why the Government decided to adopt the commission of inquiry mechanism, which all Members will agree has done a good job in its performance to date in regard to the inquiry in the Dublin archdiocese. It could be argued that an inquiry should ideally await the conclusion of existing criminal and regulatory investigations into wrongdoing at certain financial institutions. I accept the public appetite for known and determined consequence for those who have engaged in wrongdoing in these institutions and these investigations may take a significant time. However, the Government is firmly of the view that the approach I am setting out will allow these criminal and regulatory investigations to proceed without the possibility of prejudice.
The Government's agreed approach will allow for the timely completion of expert, authoritative and structured examinations of the financial crisis. It will provide a comprehensive analysis, which will enable us to understand the origins of the crisis and help us to learn lessons which will inform our future management of the banking sector. The framework I have outlined will be transparent and constructive and it will involve the Oireachtas at each stage. It will be efficient and cost effective and, most of all, it will restore confidence in our banks in order that they can play their full and proper role in promoting economic recovery.
I am sure I speak on behalf of all Members in welcoming the Minister back to the House. I wish him every success in his personal challenge. I apologise to the House for the absence of Deputy Bruton but he had undertaken to fulfil an engagement in County Cork today some time ago and he agreed to do so.
We are having this debate arising from a realisation by the Government that there should be an inquiry into the banks, which has been driven by a public perception of a false summit between the Green Party and Fianna Fáil. I had the doubtful privilege of launching the Edelman international trust barometer for Ireland in 2008. It deals with trust in corporate affairs, business people and public life. For the first time ever, political representatives were above bankers on the ladder of trust. Bankers were trusted less than politicians arising from all the difficulties in recent years.
Banks have moved on in other countries and people are in jail. I am conscious two inquiries are under way under the auspices of the Garda fraud squad and the Director of Corporate Enforcement but Fine Gael has made it clear, as has the Labour Party, that it is not intended that the inquiry we seek should infringe on either of these inquiries, which will result in the law taking its course. They should proceed more quickly and where prosecutions are necessary, they should be taken with the law taking its course.
The principle has been accepted by the Government that there should be an inquiry but the difficulty is it has sidelined the Oireachtas entirely. The Minister said the Oireachtas will be consulted and briefed by the Governor of the Central Bank. Nobody has a difficulty with Professor Patrick Honohan but he may need an inquiry into the Central Bank because it was one of the organisations telling us for a number of years that we had the best capitalised banks in the world and everything was rosy in the garden. Nobody would quibble with Professor Honohan's credentials or his capacity to do the job we expect.
The banking crisis has resulted from the biggest failures in Government, public administration and private sector governance in the history of the State. If we are to move on from this economic disaster, the Dáil must be seen to fulfil its responsibility and to ensure accountability by those in positions of trust and responsibility. According to the IMF, the direct losses for Irish shareholders and taxpayers from the banking crisis are likely to exceed €24 billion. It will be many months before we know the final cost of recapitalising our broken banks and many years before we know the final bill from NAMA. However, it is clear that a very large proportion of these costs will fall upon taxpayers who had neither a moral nor a legal responsibility for the mistakes that were made; that is why the Oireachtas should be able to step into the breach and conduct this inquiry. People are furious because the taxpayer is being made to pay the piper for the damage that was done.
Shareholders in the banks certainly suffered. Many of the big earners who managed the reckless expansion have been able to go off into the sunset with massive bonuses untouched and golden handshakes to top it off. Their parting shot is always that nothing unlawful was done. The indirect costs of our failed banking and regulatory system for our country are likely to be much larger in terms of the damage inflicted by the credit crunch on jobs, small business and our international reputation for economic management. This is why the collapse in employment and the economic depression in the country have been and will continue to be far longer and deeper than those suffered by advanced economies since the Second World War.
Some of the causes of the Irish banking and wider economic crisis are known in broad terms. Put together, the dangerous concentration of the banks' loan books in property, reckless loan to value ratios for first-time buyers and a banking model that became 60% reliant on foreign sources of liquidity created a toxic mix that lost the confidence of investors, depositors and the money markets following the collapse of Lehman Brothers. The banks themselves must accept responsibility for these mistakes. The property bubble was pumped up by a drive on the part of banks for short-term profits without proper regard for the risks involved. Consider the words uttered yesterday by a High Court judge who stated that he was astonished at the laxity and flexibility in giving out loans of €550 million merely on a letter of security. The banks, their managers and the boards failed miserably in their responsibility to invest savings prudently and to manage risk responsibly with obviously catastrophic consequences for hundreds of thousands of people throughout the country.
Traditionally, bankers received respect, which they earned through an austere frugality in a sphere that was always shrouded in mystery. When I was young, bank managers were looked up to because they managed people's money. Whether it was greed, flexibility or all following one out the gate they all went down the same road. People in the country completely lost the run of themselves. The austerity and mystery have been stripped back to reveal a banking system that was easily corrupted by buccaneer methods, that paid obscene bonuses for short-term profits and that had comfortable auditors and boards that offered no resistance. Many of the bank boards did not know what was going on and could not have known what was going on because they were not in possession of the information to ask the relevant questions. There is no appetite among the taxpayers of the country to return to that type of comfortable world.
It is clear that the lending process, corporate governance, accounting, risk management, compensation and funding practices and systems of financial institutions must be examined carefully by a bank inquiry as must accounting practices and the quality of internal and external audits. That is where the fundamental failures occurred. The debt-fuelled property bubble did not occur in a political or policy vacuum. It is much too convenient for the Government to blame the financial crisis on greedy and incompetent bankers alone. This crisis has as much been a failure of the politics of Government and public administration as it was of the private markets. Confident that their institutions were too big to fail, bankers always had an in-built incentive to take excessive risk. That is why it was the responsibility of the Government and its regulators to protect the economy from excessive risk-taking and speculation by banks whose failure would inevitably have systemically damaging consequences for the wider economy, and that has now happened.
Far from protecting economic stability and the taxpayer, those in public office - and the Taoiseach was the Minister for Finance for a number of those years - actively encouraged the debt-fuelled property bubble or did nothing to stop it. Short-term electoral gain and not long-term prudence was the order of the day. Toothless regulation, too many tax breaks for property speculators, developer-led land planning, inflationary fiscal policies, overt political support from the main governing party for the property development industry and the arrogant dismissal of any critic who warned of the dangers all added to this situation.
This is why we need a bank inquiry and why I differ from the Minister for Finance. I genuinely believe that the committee of the Dáil should set the terms of reference for the collection, collating and scoping of information on the chronological series of events that led to the current situation. The Dáil committee, composed of respected and experienced people would then be able to analyse and determine, supported by proper resources, the causes of those regulatory policy situations. I state this with all of the understanding that the House and personnel within it have this capacity. This is the difference between what the Government proposes and what the Opposition requires in terms of accountability, transparency and the stepping up to the plate by the Oireachtas to state that we can do this, as happened years ago following the provision of information by the Comptroller and Auditor General when the DIRT inquiry was conducted by Jim Mitchell.
If we are to restore any sense of trust and capacity in politics it is imperative to have an all-party committee conduct this inquiry, as I know it can. Supported by proper resources it would make the system watertight so the Minister can tell international banks and lending institutions, the European Central Bank and the European Commission that we have analysed what happened in our banking system, that we know the regulatory failures in the Central Bank and the regulator's office and that we have ensured that it cannot happen again.
We propose to have a committee of inquiry at the same time as the Central Bank and the regulator's office are to be amalgamated by law, without even finding out what were the fundamental reasons for failure. It is partly due to politics because the same party has been in government for all of this. However, it is also partly due to a looseness that crept in, where rolled-up interest of €60,000, €70,000, €80,000, €100,000 or €200,000 was allowed to accrue on a weekly or monthly basis and where people lost the run of themselves.
Those being asked to pay are the ordinary taxpayers whose pensions have been wiped out, who are in negative equity and whose mortgages are unable to be paid. They are living in distress and with the pressure of something outside their control. It may well be that in the second or third quarter of this year the European Central Bank will raise interest rates as other European countries progress economically. We are very much behind the curve. I would have expected the Taoiseach and the Minister for Finance to step to the front and state that we can do this as an Oireachtas. Let the committee set the terms of reference for the experts to gather the information but let the politicians deal with the issues, analyse them, make recommendations and implement them in the interests of everyone in the country.
On behalf of the Labour Party I want to be associated with Deputy Kenny's remarks on wishing well the Minister for Finance.
I am not surprised at the terms of reference of the three-part bank inquiries that we are to have. It follows in the great tradition of Deputy Bertie Ahern and Charlie McCreevy in that it attempts to pull the wool over the eyes of most ordinary taxpayers who have a raw hunger and desire for some explanation for the suffering they are going through, whether that is losing their jobs or pension savings or the collapse of their small business.
I was talking to somebody the other day who runs a small engineering firm and who employs 80 people. The firm is letting 40 people go now because it cannot get any access to finance.
The banking inquiry announced today by Fianna Fáil is a clever sidelining of the issue until the far shores of the aftermath of the next general election are reached. I think less of Fianna Fáil for that. As for the Green Party, much of Senator Boyle's talk in the different television and radio studios was hot air. It would be very difficult for ordinary members of the Green Party to identify any of this as an open and transparent inquiry. However, as far as the ordinary person on the street is concerned, this is a Government that could not get salt or grit, that has left large parts of the west of Ireland under water, and which has left many parts of the country without water for at least the past two weeks. Why should we expect that such a Government would leap with alacrity to find out what actually went wrong with our banking system? Why should we expect it to find out how to avoid that happening again and how to restore our international reputation for probity in finance? At the moment, our extra borrowing costs are running to about €1 billion a year due to the premium we are paying over German bond market rates, as a result of the failures of the Irish Government and the collapse of the Irish regulatory and banking systems. Why should this Government be particularly concerned? What is €1 billion between friends? Last year, the €7 billion that was pumped into Anglo Irish Bank and the two main banks was almost double what was asked for in cuts from social welfare recipients in the budget delivered before Christmas.
I disagree with the references to de Larosiere and Lord Turner in the UK. Our banking failure had one unique feature that was not related to the derivatives and complex financial instruments that were underneath the global financial collapse. We had a banking system with two banking institutions that were effectively rogue institutions, but because they were allied with the most powerful political protectors, they became a model for our two long-standing banks, whose greedy and incompetent managements those banks decided to copy. Anglo Irish Bank was a small niche bank which supplied developers who then funded Fianna Fáil. In that circle of self regard and in that toxic triangle lay the ruin of our system. A small minnow, Irish Nationwide Building Society, was able to do the same thing on a micro-scale, so we only have to pick up €8 billion of its toxic debt and pump in €1 billion-€2 billion into that building society to merge it with another mutual institution.
Our banking crisis is home grown. As it has a unique and important political element, it is wrong for this Government to endorse the approach it is taking. Politicians, whether they are liked or not, are elected by the people to comment on what went wrong. While there are administrative lapses, regulatory collapses, and actions by the boards of management and directors of banks that are utterly reprehensible and properly the subject of inquiries and potential criminal investigations, there is a political dynamic at the core of our banking failure. The Government's motion tries to divorce the political causes of the failures that are inextricably linked to the general business and financial ruin that faces this country. It has done itself a grave disservice, because it is only when we are able to say, post-Peter Bacon and the ruling Fianna Fáil Party, endorsed by a compliant Green Party, that we no longer support crony capitalism, that we will recover our ratings in the international bond markets.
The Government has made a catastrophic error of judgment on Ireland's future with what it decided to lay before this House as terms of reference. I sympathise with the Taoiseach, who feels he was landed in this alphabet soup by his two predecessors, Charlie McCreevy and Bertie Ahern, because he inherited the tax breaks and so on and there was not much he could do in four years at the Department of Finance. That is possibly a defence that the Taoiseach can credibly put forward. It is not a defence that ordinary people accept, but I understand that it is a narrative that might apply to his understanding of how he got here. However, he is wrong to deny this country a proper and open bank inquiry.
Most democracies have inquiries. If a plane crashed tomorrow in Shannon Airport or Dublin Airport, a commission of inquiry would be automatically established to find out what went wrong. If there was a major natural disaster here, there would automatically be an inquiry. The banking collapse is the biggest financial disaster that has hit this country since the Second World War or since the economic war and the civil war, yet we are to be denied an open and accountable inquiry in the Oireachtas. There are open inquiries in democracies. Dictatorships refuse to have open inquiries and go for closed inquiries and trite explanations. The Government is not serving this country well with what it proposes.
A financial crisis inquiry commission was set up in the United States last week. The appointees to the commission are former office holders who are independent and bipartisan. The Democratic Party commissioner, Mr. Angelides, said that "we start with the belief that the financial crisis is not a past tense phenomenon." It is not a past tense phenomenon. The notion that the Government would stop the remit of this inquiry up to September 2008 is an outrage. The phone calls in the autumn of 2008 which went between the Financial Regulator and people in Anglo Irish Bank were widely reported in the media. Mr. Willie McAteer, the finance director at that bank, told the then head of the Financial Regulator, Mr. Patrick Neary, that the bank would be "managing its balance sheet", to which Mr. Neary is famously recorded as replying, "Fair play to you Willie". This is a "fair play" bank inquiry, in which anybody who has a fondness for cuteness in Irish culture will be able to say: "Fair play to Brian and Brian. They fixed it." As a consequence of the Taoiseach and Minister for Finance doing this for them - foolish as they are - the bankers will repeat much of the bad behaviour that systematically led us into this mess. They may not yet be up for bonuses and may stay their hand a little but as soon as they are out of the traps and telling their little scéalta in private with no one to ask the hard question or be awkward towards them, they will be back with the billion dollar bonuses they awarded themselves. The shareholders of the banks of Ireland will not thank the Government because they are not taking the patient into recovery but leaving us with a banking system which will limp on and perhaps have another disaster before the year is out.
Before I start attacking him I, too, extend my sincere best wishes to the Minister for Finance and his family at this difficult time.
The Government's proposal is a whitewash before the inquiry even starts. What we are being offered are some token clippings in the form of the proposal to have a presentation by the Governor of the Central Bank. While Professor Honohan enjoys the respect of all Members of the House, that is not enough. We are also offered further token gestures in the form of some level of scrutiny at the beginning of the process and the process of an Oireachtas committee. The involvement of a committee of the House is not sufficient to get to the bottom of what transpired. The real business will be done by a commission.
A number of questions arise regarding the proposed commission. Who will be appointed to it? We know its members will be hand picked by the Government and will, in all likelihood, be highly sympathetic to the Government. We are expected to believe, however, that the commission will be independent and produce a warts-and-all report. I do not believe it will do so.
On the issue of cost, why not have an Oireachtas committee carry out the inquiry? Given that this is our job, why would Members not take off their jackets, roll up our sleeves and get stuck in to producing a proper report on the events of the recent past? There is no reason we could not do so. An Oireachtas committee would have further advantages in that it would be efficient, cost effective and would not produce a whitewash report as it would operate on an all-party basis. Is the reason that it might not bring in the result the Government would want published, particularly if it were to report close to an election period?
Credit control is one of the issues an inquiry would have to address. We know about the 120% mortgages which were provided as many Deputies are dealing with people in their constituency offices who were unfortunate enough to receive one of them. At the time such mortgages were available, I called for a cap of the order of 90% to be placed on mortgages. It was clear, however, that no one would listen to my proposal.
We know about the inappropriate lending practices in which the banks engaged. A few months ago, a plasterer came into my office and told me that four years ago, when he was 50 years old, he secured a 20 year mortgage. A 50 year old man in the construction sector was expected to work and pay a mortgage until he was 70 years of age. This is but one example and Deputies will be aware of many similar cases. Recently, for example, I asked a man who came to my office with similar difficulties how he had managed to secure such a large loan. When I asked whether his bank had required him to produce paperwork, he replied that he was not asked either for paperwork or evidence of income. All the lenders wanted to do was lend money and then wait and see.
One of the critical reasons the Government has not proposed to have an inquiry carried out by an Oireachtas committee is that the Taoiseach was Minister for Finance during a substantial part of the period in question. That is the real obstacle to an Oireachtas committee carrying out the investigation.
The Director of Corporate Enforcement, Mr. Paul Appleby, appeared before the Joint Committee on Enterprise, Trade and Employment this afternoon. In response to a number of questions on Anglo Irish Bank, Mr. Appleby indicated that approximately one third of his staff were involved in investigating the bank. This is a huge waste of resources which should never have occurred in the first instance and with proper governance and correct Government policy, it would not have occurred. It is a scandal that money is being wasted by having public servants investigate Anglo Irish Bank.
Mr. Appleby also stated he had no idea when his office's investigation will be complete but that it would be at least a number of months before it is even near completion. The Garda fraud squad is also carrying out investigations at significant cost to the taxpayer. The problem is due to downright bad policy and poor governance which are also evident in the proposal contained in the Government amendment to the motion proposed by the Labour Party on Private Members' business this evening. The investigation proposed by the Government is a whitewash before it even starts.
We have seen examples of how business is done in the United States. We had, for instance, the sight of those involved in wrongdoing in Enron being marched away in handcuffs. While it may be becoming a cliché, justice is done quickly whereas in this country it clearly depends on the scale of corruption involved. If one robs a few cents, one will go to jail but if one robs several million euro one will not go to jail. On the contrary, one will be given a golden handshake and a large pension into the bargain to make sure one is tucked away in comfortable surroundings for a considerable period.
Deputy Ó Caoláin reminded me of a case involving a constituent of his, a woman who swiftly ended up in prison because she was unable to repay a meagre credit union loan. If she had worked for Anglo Irish Bank or another one of the scam banks which operated throughout the period in question, she may have been given a large loan. We are all aware of the household names who were involved in substantial, grossly illegal transactions and are now enjoying their golden handshakes and substantial pensions.
It is reasonable to have expected the Green Party to have had an input into this proposal, perhaps by acting as a watchdog when the terms of reference for the inquiry were being set. I would love to be in government with the Green Party because at every test it has proved to be a walkover. One need only consider what it did in the case of the National Asset Management Agency. Before the recent budget Green Party spokespersons informed us they were concerned about education. What did the party do for classroom assistants? As every Deputy will be aware, cutbacks are under way in this area. What about the cutbacks inflicted on people with disabilities as a result of the Green Party assisting the Fianna Fáil Party in government in everything it does? The party caved in again on the proposed inquiry.
Notwithstanding the position of the Green Party, my party will insist on an open and accountable inquiry which should be anchored in an all-party Oireachtas committee with proper scrutiny powers. I commend the Labour Party on its Private Members' Bill to be tabled this evening which provides the foundation for such a process. It is a pity that this laudable legislation is being hijacked by an amendment that does not meet any of our requirements.
On an issue raised by Deputy Gilmore, why will the inquiry only address the period until September 2008? The deposit guarantee was introduced at the end of that month and Anglo Irish Bank was nationalised in January last year. Why will this period be excluded from the investigation? What is the reason for the wording of the Government amendment? It raises substantial concerns for me and my colleagues. I have no faith in what is offered. It is a whitewash before it begins. While there is still time, I invite the Minister to award the establishment of this inquiry to an Oireachtas committee charged with getting to the bottom of this carry-on. That should ensure the dreadful policies of this Government will not be repeated. The people of this State pay the price for those policy failures every day and perhaps their children will too, because of the debacle called NAMA. I hope the Minister will consider turning his policies around, ensuring such committees are established and conducting open and accountable business in this House.
When the Governor of the Central Bank came before an Oireachtas committee and suggested there should be an inquiry into the scandal that beset the Irish banking and financial system in recent years, he reflected the widespread views of our citizens that we need to find out what caused the scandal, who caused the scandal and how we can avoid it happening again. Anyone in this House listening to the Governor of the Central Bank agrees with what he said, as does the Government. The simple question in this discussion is how we achieve the objective.
There are several ways we could achieve the objective. We could go down the traditional and tainted road of having a public tribunal of inquiry. I was taken by the description used by the Minister for Finance of the inquiries as barrister fattening exercises, a comment many people will agree with. We can choose an Oireachtas inquiry. I have participated in several those. We could also opt for a staged approach to this inquiry, as suggested by the Government. I agree with the last suggestion.
The scandal requires effective and efficient examination. With all due respect to Members of this House, this cannot be carried out by the House. We must remember that other countries have had serious banking crises in their financial systems. We are not the only country to have suffered this crisis but the public demands accountability as well as an efficient, effective and cost-effective inquiry.
Let us examine the model proposed to examine this via the Oireachtas, principally proposed by the Labour Party. I was interested in the contribution made by Deputy Burton in this respect. I was a member of the committee investigating the Dublin and Monaghan bombings. We tried to establish the causes of the Dublin and Monaghan bombings and tried to establish where culpability lay. The advice to that committee again and again was that we could not make findings of culpability against anyone, nor could we ask questions about culpability in so far as it might suggest culpability. Every time we tried to ask an individual such a question, before we could get a response, our esteemed senior counsel, Mr. Mohan, advised us that we could not ask the question because the individual could go straight to the High Court and have our inquiry shut down. That this could happen fatally undermines the efficiency and effectiveness of an Oireachtas inquiry.
There is another more important reason an inquiry such as that would not be effective. Deputy Burton has formed her opinion on what she refers to as the toxic triangle between members of the Government, directors of banks and property developers. Under the Labour Party proposal, these individuals would come before a committee of this House. Is it credible that directors of banks would come before an Oireachtas committee where tough questions would be asked? These tough questions should be asked but questions impugning their standing or integrity would not be allowed to stand. Such witnesses would run straight to the High Court and the Supreme Court and 12 months later the inquiry would be mired in mud. Members of this House know that.
How do we conduct an efficient inquiry?
The mechanism for conducting an inquiry was passed by this House. We recognised a way of doing that so that we could protect the constitutional rights of people and their reputations, which are strongly protected by our Constitution. We must recognise the situation. The commission of inquiry legislation and the report suggested by the Government provides us with a mechanism in which individuals can be cross-examined and adverse findings against those people can be laid before the House. At that stage, when the reports are published, Members of this House can clearly point to certain people and institutions. We can bring those institutions before the House and put it to them that the report of the independent statutory commission, under an Act enacted by the Oireachtas, has made certain findings against these people and their institutions. As politicians and public representatives, we can make them publicly accountable on foot of that investigation. As politicians, we could not do that if we were to start out with an Oireachtas inquiry. That is no disrespect to anyone in this House. I see my constituency colleague, Deputy Noonan, in the Chamber. It has been suggested that Deputy Noonan should head this inquiry. He would carry out a very effective and efficient inquiry but we need someone who can do so armed with a statutory report of a statutory body based on an Act of the Oireachtas making the findings that we want to make as politicians but cannot make. Let us accept the reality we are faced with and try to create an effective mechanism by which we can tackle this problem. The proposal of the Government is to engage international experts, including the Governor of the Central Bank and an international bank expert, to collate the material and provide it to a commission of investigation, including someone of very high standing, which can then bring in the sort of people we cannot bring into this House even though we would like to. This method will get the questions and answers we want. Under such a process, they can compel answers to these questions. As Deputy Rabbitte knows from other inquiries, Members cannot do so.
I also had the privilege of chairing the Committee on Child Protection examining the circumstances surrounding the CC case. We examined what lessons could be learned to ensure that such a situation would never arise again. The same advice was available to us, namely that individuals who we may wish to question cannot be brought before an Oireachtas committee if it involves impugning their integrity. That is the reality of the situation and we must work within that. The Government's suggestion is an initial engagement with experts and that such experts should come before the Oireachtas so that Members can suggest the road we want to go down, the questions we want to ask and the answers we want to receive. We can then ask for a report to be prepared on that basis and for the report to be handed to the independent statutory commission of inquiry, with all the powers such a committee has to seek the answers. At that stage, we will have our own political and public accountability. That is the most effective and efficient way in which it can be done. The Labour Party has suggested that this proposal is a recipe for kicking this issue beyond the next general election. The timeframes are set down in the Government's motion. An initial report will be produced by the end of May and laid before the relevant Oireachtas committee. The members of the committee will tell the experts who come before them what they want to arise from the commission of inquiry. That commission will produce a report by the end of the year. The process, which will take 11 months, is cost-effective and efficient. It represents a way of getting the sorts of answers we want. I commend to the House the Government's proposal to establish an effective and cost-effective commission to examine the banking scandal.
I suggest that 2008 is normally seen as the start of the international banking crisis. The collapse of Lehman Brothers on 15 September 2008 is taken as the kick-off point. When it became clear two weeks later that the Irish banking system was in dreadful trouble, leading members of the Government sat in Merrion Street all night. The following day, the Government introduced emergency legislation to provide guarantees for the banks. As the first Government intervention, it was the subject of a reasonable amount of support in this House. My party accepted the Government's arguments at face value and decided, in such emergency circumstances, that the guarantee system deserved cross-party support. The same process has since been repeated in the United States. The main banks there have been rescued and inquiries have taken place. Events there have progressed so rapidly that the US banks which were capitalised have repaid to the federal authorities what they were given and are now trading profitably. When I last examined the statistics, I learned that more than 40 bankers in America were in jail. It is clear, therefore, that we have been very tardy. We have been very slow off the mark. Our banking crisis started a fortnight after the US banking crisis. The US is nearly through its crisis, while we are wondering about the establishment of an inquiry.
I think the public wants an inquiry. These issues involve the public intimately. Many people lost their jobs because of the banks. Many people can no longer pay their mortgages because of the banks. Many people have seen their living standards reduced dramatically because of the banks. Many people are seeing their adult children heading for the airports, in order to travel to Australia and Canada with little enough hope of return, because of the banks. There is a feeling among the people I meet, including those in my constituency, that the banks need to be seen to be held to account in public. By getting involved in the legalities of the inquiry, rather than its primary principles, the Government has missed the point. There is public desire to see accountability in public. It is clear that if one wants accountability in public, it is appropriate to provide for an investigation by an Oireachtas committee, along the lines of the DIRT inquiry presided over by the late Jim Mitchell.
I fully agree that there is need for a preliminary phase of this process. No Oireachtas committee will be effective unless it has a kind of book of evidence, in effect, on which to draw. No court case would be effective, regardless of how eminent the barristers are, if it were not argued on the basis of a book of evidence. The same thing applies here. I have no problem with the proposal to provide for a preliminary stage. It is a very good idea. It was done in the case of the DIRT inquiry and it should be done now. I disagree with the suggestion made by my friend and colleague, Deputy Peter Power, that some kind of legal lacuna makes it impossible for an Oireachtas committee to inquire into these events. I do not believe that is correct. The Supreme Court judgment on the Abbeylara case was sufficiently focused. Nothing prohibits an Oireachtas committee from examining the policies, practices and procedures of the banks. Rather than having some kind of witch hunt that puts heads in baskets, we should consider the banking crisis as a failure of policy, procedure and practice. I refer to political policy, oversight policy and lending policy within the banks.
There is no reason an inquiry along the lines of the DIRT inquiry cannot stay on the right side of the Supreme Court judgment on the Abbeylara case. When he was interviewed on RTE radio's "News at One" earlier today, an eminent senior counsel, Gerard Hogan, stated explicitly that he did not see any problem with such an inquiry. That point has been reinforced by the admirable piece of work produced by Deputy Rabbitte, which deals with another key aspect of the Abbeylara judgment. We have an adequate legal framework to allow for the kind of inquiry the public wants. The Government is missing the point, which is that people need some kind of public catharsis. That will not be achieved by an inquiry that is held behind closed doors, in which people tell their stories in private. Regardless of how eminent the relevant commissioner is, the report he produces and places before the House will be one man's version of events, based on what he has heard in private. The public will have had no participation in that process - it will not have heard the evidence and will not know why certain conclusions have been reached. Ministers, like politicians of all parties, do not enjoy a high level of credibility at the moment. Bankers have very low credibility. Anything that is produced by means of hearings that take place behind closed doors will suffer from a low level of credibility too.
I will comment on two aspects of the proposal that has been made by the Government. It is proposed that both phases of the inquiry will be required to inquire into events up to September 2008. That is like running an inquest but excluding all the evidence that was gathered at the autopsy. It would be best to ascertain what was happening in the banks on the famous night when certain people came into the Minister's office in Merrion Street to look for a guarantee. The Minister received advice from the Central Bank and the Department of Finance as the banks made their case. That file would cast more light on the causes of the banking crisis than the files on many other events would. Anglo Irish Bank did not go down until 8 December 2008 and was not nationalised until January 2009. Surely the events that led to the collapse of Anglo Irish Bank are extremely relevant to this inquiry, as are the events that caused the Government to decide to recapitalise AIB and Bank of Ireland. Surely the justification for the recapitalisation of the banks must arise directly from the problems they faced. How better to cast light on the problems of the Irish banking system than to look at those events, in particular? The judgments of the judge of the commercial court, Peter Kelly, are casting huge amounts of light on, and giving us huge insights into, the lending practices of the banks. As such matters relate to the period after September 2008, that false deadline should be removed. The commission, like the expert who does the preliminary report, should not be told to inquire into everything that happened before 31 August 2008 but not to go any further because the Government was taking action after that date and driving on from there.
The second aspect of the proposal I would like to raise is a common feature of the terms of reference of other inquiries. Many speakers have laid the charge that the Government, in effect, is excluding an inquiry into its own actions. It has been suggested that the Government is prepared to consider the macro-economic causes of the banking crisis and the international crisis, but is not prepared to examine what the Taoiseach did when he was Minister for Finance, what the EU Commissioner, Charlie McCreevy, did when he was responsible for banking regulation in Europe, or any similar events. It is normal for a certain provision to be included in the terms of reference of tribunals of inquiry of this nature. There are several precedents for the inclusion of a catch-all provision that ensures that as well as examining certain events, the tribunal of inquiry also examines the adequacy of the response of the Government, the Departments and the State agencies to those events. I ask the Minister, in his reply, to give a commitment that such a provision will be included in this case.
The adequacy of the response of the Government, Ministers, Departments and State agencies, including the regulators, would also be examined. The Minister has not excluded this provision and, clearly, the amendments before us are not terms of reference. The Taoiseach has given his commitment to listen to the views of a committee of the House before drafting terms of reference. I ask the Minister to commit to including this catch-all provision so that the adequacy of his predecessors' response, as well as those of all relevant Departments including the Department of Finance, can be examined. This would curtail any further accusations that he is attempting to evade political responsibility for these events.
An inquiry into the banking failure which occurred over the past two years is essential. I commend the Minister for Finance on the proposals he has drafted for an inquiry. I will adopt the reasoning used by the Minister and the Minister of State at the Department of Foreign Affairs, Deputy Peter Power, both of whom were very eloquent.
If one is a pensioner who has lost a pension, a shareholder who has lost value, a taxpayer who is at a loss or a stakeholder in society who has lost money through this crisis, one is entitled to an inquiry. As the Minister noted in his speech, there is an evident appetite for such an investigation. The debris from this crisis lies all around us. This morning's newspapers revealed that one developer received loans totalling €550 million without any guarantee. No prudent bank would undertake this kind of conduct. However, the primary reason for an inquiry is to ensure that our system never again collapses. The Spanish philosopher, George Santayana, famously wrote: "Those who cannot remember the past are condemned to repeat it." I do not think anybody here would wish a repeat of the problems we are experiencing.
Having established the need for an inquiry, the next question to be answered is the form it should take. It should be timely, efficient and successful in bringing forward a set of meaningful and comprehensive recommendations. The public does not want an inquiry which turns into a slanging match between politicians nor does it want the type of procedures proposed by Deputy Burton. It wants a proper inquiry into the past which is carried out by professionals and subjected to the scrutiny of this House so that recommendations can be made for the future.
The motion proposed by the Labour Party is based upon a legal fallacy because it admits that the Oireachtas does not have the power to conduct an inquiry without the introduction of new legislation. I have read the Bill drafted by Deputy Rabbitte and do not believe it meets the requirements set out by Ms Justice Susan Denham when she struck down the Abbeylara inquiry. She made it clear that the Oireachtas does not have the explicit or implied power to make findings of fact detrimental to the reputation of persons. While I am aware Deputy Rabbitte's Bill makes provision for potential criminal convictions, this is not sufficient to overcome the Supreme Court judgment in the Abbeylara case.
I commend the Minister on the fabulous work he has done. The Government amendment sets out the correct means to establish a meaningful inquiry into this most serious of matters.
We must approach the matter with open minds. This problem affects all citizens and members of every political party.
The Minister for Finance outlined the most efficient and effective means of inquiring into systemic failures in the banking sector. I hope that certain Members of the Opposition will leave their political differences at the door because the problems we must address are multifaceted and international in nature. The claim is sometimes made that the problem is completely Irish but we have experienced a global financial crisis and many other countries are investigating failures in their own banking system.
The Government's approach to the banking crisis has been measured and effective. I was unsettled, although not surprised, by Deputy Burton's comments today. Not once in this banking crisis has the Labour Party supported any Government initiative. It opposed the bank guarantee, the recapitalisation and nationalisation of Anglo Irish Bank and the establishment of NAMA, which will ensure credit flows to small and medium enterprises. These initiatives were opposed simply because they were Government policies rather than on the basis of the country's best interests.
No bank has been given a free lunch by this Government. At every stage, we have ensured that they paid heavily for the support they received from taxpayers and we will continue to do so. A viable banking system is crucial in terms of supporting jobs and businesses.
Deputy Burton referred to the banking inquiry being conducted in the United States. The conduct and composition of that inquiry has received heavy criticism. The best way to proceed would be through an independent inquiry headed by people with the requisite knowledge and expertise. The Governor of the Central Bank, who will conduct his own investigation of that organisation's role in this crisis, has said it is better to do things right than to do them quickly.
The method proposed by the Government is the most efficient and cost effective way of getting to the root of the problems that have occurred in the banking system. Everybody is aware that the DIRT inquiry by the Committee of Public Accounts some years ago was based on extensive investigations already undertaken by the then Comptroller and Auditor General. It did not happen overnight, nor should this inquiry. The Oireachtas must base its investigations on fact and expertise provided by those who know the system and who will report to Parliament. The Minister has ensured that the Oireachtas will be involved in every step of this process. I commend these proposals to the House. The Government's plan is the right way forward to deal with the problems that have occurred in the banking system.
I begin by wishing the Minister, Deputy Brian Lenihan, a full recovery. This discussion is taking place because Professor Honohan stated at a meeting last December of the Oireachtas Committee on Economic Regulatory Affairs that he wanted an Oireachtas inquiry into the banking situation. The Minister went to great trouble to hire a person of the calibre of Professor Honohan as Governor of the Central Bank, yet rejected his first key recommendation. Professor Honohan asked for the establishment of an Oireachtas committee but that proposal has not been granted. It is not appropriate for the Governor of the Central Bank to conduct an investigation into his own organisation.
I was at the meeting when he asked for an Oireachtas inquiry. It is inappropriate for the Governor to carry out an investigation into an organisation for which he is responsible. The public requires a clear and unambiguous inquiry into the banking system. The first difficulty with the Minister's proposal is that the inquiry it envisages will be conducted in private. Second, it is a cumbersome process, comprising a maze of outlets that will not provide accountability in terms of the political process. It is important above all that any inquiry must be public. Moreover, if it does not have a political dimension it will be akin to a wedding without a bride.
One need only look to some of our European neighbours to see how matters were conducted differently there. For example, the Spanish regulator introduced more severe capital ratios for the banks to ensure there was no reckless landing. Why did we have a situation in this State where the Taoiseach, as Minister for Finance, could state in 2005 that there was no problem with the fundamentals of the economy and where no constraints were placed on the degree of lending by the banks? What is required to restore confidence in the banking system is an inquiry that is open, transparent and fully accountable. That can only be achieved through a public inquiry. The public will not accept the Government's proposal, under which it will take almost a year before anything is achieved. It could take even longer if the various sections seek an extension of time.
Furthermore, the Government amendment to the Labour Party's Private Members' motion suggests that September 2008 will be the cut-off point for the report of the Governor of the Central Bank and the independent review, but the Minister's speech included no reference to September. My concern is that the inquiry will encompass events only up to 31 August 2008, thus excluding the introduction of the guarantee scheme on 29 September of that year and the statement by Mr. Patrick Neary, the former Financial Regulator, at a meeting of the Oireachtas Committee on Economic Regulatory Affairs on 14 October 2008 that, in his view, all the banks were solvent. Within a short period, however, the Minister was obliged to nationalise Anglo Irish Bank. There must be an inquiry into these events of late September 2008 and beyond.
This is a defining moment for the Minister, the Government and this House. The Minister has nothing to be afraid of in establishing a fully accountable public inquiry if he has done nothing wrong. Why is the Government reluctant to establish such an inquiry? There is a view among the public that once the NAMA process is in train, the banks will close the doors behind them, with interest rates increasing and far more severe lending criteria. The public is entitled to a public inquiry. I accept that there must be a scoping exercise at the beginning, and the Government should proceed to consult experts and so on as was done by the then Comptroller and Auditor General in the case of the DIRT inquiry. However, the Governor of the Central Bank should not investigate his own organisation. After the scoping exercise, the Minister must meet the Opposition leaders to agree the make-up of an Oireachtas committee that will conduct public hearings on the basis of those initial findings. It is only in this way that the process will have credibility.
However, what the Minister is putting in place is cumbersome and unwieldy and offers only a veneer of public inquiry. In reality the investigation will be conducted in private and those who are directly responsible for getting us into this situation will not be held accountable. For instance, how could a situation arise at Anglo Irish Bank, which was apparently of systemic importance to the economy of the State, where one individual effectively secured a stake of up to 28% by way of contracts for difference? Did the Financial Regulator know about this? He clearly knew about the 10% stake that was taken by the ten bold individuals, but was he aware of whether those particular shares were financed by the bank itself? Were the margins that arose in respect of the contracts for difference financed by the bank?
The public is entitled to know precisely what went on. Any inquiry must ensure public accountability by the banks, the regulatory system and the Government. The Minister said he has nothing to fear from an investigation. I assume he wants the process to have credibility. Members of the Green Party have called repeatedly in recent days for a public inquiry. I will be interested to hear whether the Minister for Communications, Energy and Natural Resources, Deputy Ryan, agrees that what is proposed by the Minister constitutes a public inquiry that will satisfy the requirements of citizens. People are losing their jobs and homes, and small businesses cannot obtain credit from banks. The outgoing chief executive officer of Allied Irish Banks indicated recently before an Oireachtas committee that the bank would not use the NAMA bonds to provide low-cost credit before going on to suggest that it may or may not do so. Yet this is one of the key points on which the Minister sold the NAMA proposal to the public.
If the Minister wishes to have credibility in this process we must all work together. We cannot have a situation where the Government rams this proposal through. That will constitute a waste of taxpayers' money because the public will not have belief in the system and its confidence in the banking system will not be restored. The Minister has major decisions to make in this area into the future. NAMA is to be established, whether or not we agree with it, and there is the question of further recapitalisation of Allied Irish Banks and Bank of Ireland and possible further injection of funds into Anglo Irish Bank and Irish Nationwide Building Society. How did we get to this situation whereby, to all intents and purposes, in a very short period of time the majority of our banking system could be nationalised. That is the question the public want answered. The only way we will get answers is in an open and transparent way. If we need expertise in terms of an Oireachtas committee, we can bring it in. We were elected to represent the people. This House exists to ensure the views of the public are taken on board. The public will accept no less than a public inquiry. The truth will out. It is extremely important that we find out why we have reached this point.
It is up to everyone in this House to ensure that the investigation is timely, cost effective and that it delivers what we want, which is that we learn the lessons from this banking crisis and that we do not ever allow it to happen again,-----
-----that we hold people to account who are responsible for it and, crucially, that we bring confidence back to our system, primarily among people in this country but also abroad.
-----because at the very centre of it will be the work of an Oireachtas committee that will be required first and foremost to help steer it in the right direction.
Second, when the initial reports are concluded, they will be considered and acted upon as we move into the proper phase of the commission's work. When that work is concluded, be it an interim report or a final report, we will conduct the necessary hearings-----
-----based on the facts that have been found, which an Oireachtas committee would not as easily be able to find, to hold people to account and to ensure we have a cost effective, timely inquiry.
-----to try to ensure that our banking system never again makes the mistakes that were made in recent years. The investigation needs to examine the regulatory side of the banks, what the banks are doing, while cognisant of the fact that it is the courts which have primary responsibility for convicting people, if appropriate, who have carried out illegal activities within the banks.
It should also look at the macro-economic lessons we have to learn on all sides of this House, in terms of the implications for our fiscal and monetary policies as determined by our membership of the European Union. We in the Green Party are committed to make this process work, to make it public so that there will be appropriate hearings based on facts that are discovered and uncovered according to due process.
We have to take account of lessons that we learned in the course of the mini-CTC inquiry, which came to a dead end because it did not have the right structure. We have taken account of the likes of the DIRT inquiry, in which Deputy Rabbitte was involved. One of the reasons that worked is that a similar process was involved whereby a report was delivered first to establish some of the facts, which were then acted upon.
The timelines and the mechanisms that we set out are correct, appropriate and will deliver what we need, which is confidence in the banking system so that we do not make the same mistakes again, and that those who have made mistakes are held publicly to account. That will happen on the basis of the structure that we have set out, but it will require, first and foremost, an Oireachtas sub-committee. The structure of that will be subject to the agreement of the Whips. We must get down to work and stop squabbling over political points to serve the public interest by getting to the real point, which is why this happened-----
On a point of order before the Minister for Finance replies. The record will show that the Minister for Communications, Energy and Natural Resources, Deputy Ryan, said that what we are embarking on is a public inquiry. I give him an opportunity to correct the record because whatever it is, it is not a public inquiry.
It is an inquiry carried out by the right public bodies, in public and in the public interest. That is the crucial requirement we have to meet and we will.
The inquiry conducted by Judge Murphy was a public inquiry under the relevant legislation established by this House, which is a public Act of the Oireachtas. I am a little sceptical of some of the Opposition speakers in this debate. The real objective appears to be to continue to use the banking crisis as a political football. That has been the consistent pattern of events in this House for 18 months, with the honourable exception of Fine Gael in regard to the giving of the original guarantee. The steps that governments all over the world have had to take to support their banks are deeply unpopular, extraordinarily difficult to understand and explain but essential to the economic well-being of all countries. The measures we have had to take are amenable to misrepresentation and susceptible to political mischief. Opposition speakers naturally will not lose such opportunities, but the truth is that political circuses in this House for the next year and a half will not secure the future stability of our banking system. It is clear that for some Opposition speakers the economy comes a poor second to this political circus and the pursuit of office.
We have a duty as a Government and as Members of the Dáil to ensure that the origins of the crisis are understood, that lessons are learnt and that international and domestic confidence in the banking system is rebuilt. A major factor in rebuilding that confidence has been the appointment of Professor Honohan as Governor of the Central Bank and Mr. Elderfield as regulator. Let us look at what Professor Honohan actually said in his presentation at the Oireachtas committee on 15 December. He said that the banking crisis was bigger and more complicated than one that could be accommodated by an Oireachtas inquiry. Those were his words to the committee. He went on the say the question would not be sufficiently answered by a judicial inquiry because one is not simply trying to find out what happened and the sequence of events. He said we should think in terms of getting experts, including experts in economics and social science and blend them with politicians and arrive at a panel somewhat like the US congressional panels which consider particular issues on an ad hoc basis. He said, "The crisis is not simply a question of discovering who did what and who knew what. Uncovering the deep roots of the crisis will require expertise and broad social scientific understanding more than merely forensic skills."
In the presentation made by Fine Gael and Labour, naturally the entire economic problems of this country are laid at the feet of a banking crisis. That is simply incorrect. This country had a completely inappropriate cost structure. That is a major reason we have had an economic crisis and that structure has been addressed in budgetary measures that have been consistently opposed by the parties opposite. Our adjustment in those cost structures has been widely welcomed in other parts of the world and recognised as clear evidence that the Government is taking decisive action to deal with the real economic problems of this country. The banking crisis has made a huge contribution to our difficulties.
The next issue, which was raised by Deputy Kenny, in a very fair-minded way, and by other Deputies, was the extent of Oireachtas involvement and supervision in any inquiry that will take place. Everyone agreed that there should be a scoping exercise. The details of the scoping exercise were announced today in the Government decision. It is clear that there will be scope, in the context of the scoping exercise for Members of the Oireachtas to identify the issues they want scoped. I say to Deputy Burton that I do not know what will be the reaction of various people in the context of the toxic triangle she believes existed between my party, the banking industry and the construction industry, for example. I do not know how they will scope that element into their work. Her comments in this House in that regard, which have been consistent for a long period, show how totally unfit she is to make judgments on this matter as part of an Oireachtas committee because it is clear that she has arrived at a pre-judgment on the very issues she invites the House to consider as part of a committee determination. That is the fundamental difficulty about having disputed issues of fact brought before a committee such as this, in that it is clear that one either has a sharp report between a majority government and an Opposition minority or else one has chaos and confusion. It is open to the Deputy to raise that issue in the context of the scoping exercise.
At the conclusion of the scoping exercise - I accept this was not made clear to the House - it is essential that an Oireachtas committee examines the documents prepared by those doing the scoping exercise, and we are open to Whips' discussions on this issue. It is not a matter of the Government devising terms of reference for the commission of inquiry in private or in secret, or without regard to the wishes of the Oireachtas. I would see an Oireachtas committee having a vital function in assisting in the formulation of appropriate terms of reference and with regard to where the inquiry goes at the conclusion of the scoping exercise.
Why opt for the commission of inquiry? We all know that if we establish a tribunal of inquiry under the 1920 Act, we might as well sign a cheque for several hundred million euro immediately on the floor of this House. The other option, advocated by Deputy Noonan and, I assume, by Deputy Rabbitte, is to see how far this House could go in examining these matters. However, there are severe constitutional limits, apart from the practical constraints on such an operation.
I conclude by noting that other questions were raised in this debate which I would like an opportunity to deal with. I will avail of that opportunity when I make a contribution tomorrow in the context of the Labour Party motion.