Joan Burton (Dublin West, Labour)
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I move:

That Dáil Éireann:

- noting the unprecedented crisis in the Irish banking system, the contribution of that crisis to the present economic emergency and the on-going implications of that crisis for employment and output;

- noting the emergency measures that have already been taken to stabilise the banking system, including the blanket guarantee, the nationalisation of Anglo-Irish Bank and the re-capitalisation from the public purse of other banks;

- further noting the losses incurred by bank shareholders, taxpayers and the general public as a result of the banking crisis;

- believing it is necessary to examine in detail the nature and causes of the banking crisis, including the manner in which relevant laws, regulations, administrative systems, procedures and practices were employed and applied, identifying in particular:

- any defects in planning, information-gathering and information-analysis on the part of public authorities;

- any other defects in systems of regulation and oversight on the part of public authorities;

- any systematic default on the part of regulated persons or bodies in their duty to comply with relevant regulations; and

- any defects in relevant laws or regulations;

- believing further that it is necessary for this and other purposes that there be conferred by statute on each House of the Oireachtas and on both of them acting jointly, through committees, a power to appoint inquiries into and to commission reports upon matters relevant to the exercise of the legislative power of the State including defects in social, economic or administrative systems and systems of governance within the State, for the purpose of proposing legislation to remedy any defects so identified and to make recommendations for the better regulation and governance of the State; and

- resolves to take all necessary steps for the establishment of an inquiry by a committee of Dáil Éireann into the banking crisis, including the consideration and passing as a matter of urgency of legislation along the lines of the Committees of the Houses of the Oireachtas (Powers of Inquiry) Bill 2010.

I wish to share time with Deputies Michael D. Higgins, Arthur Morgan and Caoimhghín Ó Caoláin.

Brendan Howlin (Wexford, Labour)
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Is that agreed? Agreed.

Joan Burton (Dublin West, Labour)
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The motion concerns what is effectively a Dáil-based inquiry into the events that have led to the collapse of the banking system. We have had an hour or two to consider what the Government has proposed in its amendment, which proposes "to request the Governor of the Central Bank to report to him [namely, the governor will report to himself] on the performance of the respective functions of the Central Bank and Financial Regulator in the period since the establishment of the Financial Regulator up to September 2008 having regard to the statutory powers, roles and responsibilities of the Central Bank and Financial Regulator".

I wish to make three points in this regard. First, I have much admiration for Professor Patrick Honohan. I welcomed his appointment and I welcome the fact he now holds his office in the Central Bank. However, I have a feeling this is a poisoned pill the Government is passing to Professor Honohan because I find it extremely difficult to understand how he, as the boss and chief executive of the Central Bank, can actually carry out an inquiry that involves the staff, papers and policies of the institution of which he is now the governor. I believe the Government is seeking to put Professor Honohan in an invidious position, which is not helpful to the future proper governance of the Central Bank, and is unfair to him.

If the Government has in mind a mere review which, as it were, points forward to what Professor Honohan, as governor in situ of the Central Bank, has in terms of thoughts about the new Central Bank-Financial Regulator legislation, that is a different issue because that is looking forward. It is not actually carrying out any kind of a review into what happened in the Central Bank from the time there was a turf war between Charlie McCreevy, Michael McDowell and the Department of Enterprise, Trade and Employment as to who should control financial regulation in this country.

There is also the fact that, as the previous governor has been at pains to point out on several occasions, the Central Bank did in various reports include references to its concern about a property bubble. However, I have heard the previous governor comment on many occasions that he was powerless to impact and influence the banks because, if one likes, there was a zeitgeist, a political system in operation here then, led by the former Taoiseach, Deputy Bertie Ahern, and the former Minister for Finance, Charlie McCreevy, which said "Bubbles are good", "When I have it, spend it", and "Ramp up the property market, and help to ramp it up even further by means of tax breaks". Therefore, to ask the governor to make any serious inquiry is, as I said, to put him in an invidious and contrary position because he would be asked to report on, or perhaps review and comment on, papers and people who are on his current staff. I do not see how that proposal would run.

Second, the Government wants "to commission an independent review from a recognised expert or experts of high standing and reputation to conduct a preliminary investigation". In the Bill which Deputy Rabbitte and the Labour Party have put forward to correct the default in the Abbeylara judgment and the gap or lacuna in regard to powers of Dáil committees to inquire, we have sought to address this issue by providing for a preliminary investigation. As speakers on all sides have recalled, this was also done by the Comptroller and Auditor General in the preliminaries to the DIRT inquiry, which was a sub-committee of the Committee of Public Accounts but held its inquiry pre-Abbeylara. Abbeylara in its particular circumstances drew down a decision from the courts which has cast into doubt the power of an Oireachtas committee to ask questions and to get and require reasonable answers when put in an appropriate framework. The Labour Party, alongside this motion, has offered to the Government in a bipartisan spirit measures which will restore the proper powers of the Oireachtas to make reasonable inquiries into matters of public importance.

According to the Government amendment, these two reports "will consider also the international, social and macroeconomic environment". It almost sounds like an environmental impact statement. That part is probably attributable to the Green Party, although it does not mean anything.

The Government amendment also states "that these reports shall have regard as appropriate to the de Larosière and Turner Reports". The point about the de Larosière report is that it is designed to create a European-wide framework. Its French author has in mind a framework which would basically provide for what one might almost call a college of regulation, via and connected to the European Central Bank, which will try to ensure that the European banking system, particularly in the euro area, would not be subject to the kind of destabilisation that was visited on central mainland European countries, although not Ireland, because the reasons for the Irish collapse are absolutely different from the reasons that banks in Germany, Switzerland and so on collapsed.

We are being dishonest with ourselves if we do not recognise the peculiar homegrown banking collapse we have had. Our banking collapse is like what happened in Sweden in the early 1990s and to a lesser extent in Finland, which were caused by homegrown property bubbles. The de Larosière report is simply something to which future Irish Governments are likely to subscribe in a general sense as a reforming process, and in the context of a court of regulators or a college of regulators throughout the EU.

The Turner report obviously arises in a particular context. Lord Turner has been one of the principal advocates for open and accountable critiques of the financial institutions. His personal experience comes from working for a long period in the City of London.

The point is that bankers, wonderful people and all, are serial recidivists. If they sense any let up on the Government's part or believe the Government wishes to cosy up to them again, they will be out of the traps before one can snap one's fingers and, as we have already seen, will return to the bonus culture and Gordon Gekko's "Greed is good" and all of the other slogans that senior bankers have over their desks.

In the United States, the people at the top of Goldman Sachs are making a profound philosophical argument to the effect that, since they have made so much money and repaid the US Treasury for the bailout and more besides, they are entitled to recommence paying bonuses, given the market in the US. Irish banks cannot even put together a rights issue. What shareholder who has been already ripped and stripped by them would contribute tuppence to a rights issue? People who believe they can take comfort from what has occurred in the US should remember that the problems of the United States are different from ours.

I referred to a committee, just one of a number of American inquiries, that has begun its work. That commission is bipartisan and has the power to call and order papers. The Minister of State may have had an opportunity to listen into the Chilcot inquiry in the UK. Its members have been empowered to seek all of the papers, without restraint and as a basis for their questions, of serving and former Ministers and Prime Ministers in order that their country can get an answer as to why they went to war. Our equivalent question is why did our banks collapse and bring ruin to the general public.

This year marks the beginning of the decade in which we will celebrate the Easter rising and our first republic. If we cannot answer questions about our greatest financial collapse, Fianna Fáil should move out as soon as possible. There are those of us who want to see the establishment of a second republic that will have reform at its heart and will seek to defeat the corruption characterising so much of what has transpired during the past 12 years. The Labour Party is determined to embark on this political mission to bring about sustained change as soon as a general election is held.

I wish to address the business of inquiries. During the 1930s after the great crash, there was a major commission in the US called the Pecora Commission. The then financial oligarchs were brought before it in open inquiry. Startlingly, it emerged from their answers that some of the largest oligarchs paid no taxes at all. Finance capital was structured in the US much like it has been structured in Ireland during the past 12 years, namely, people at the top had arrangements that facilitated them in paying no taxes. Consequently, their super profits and accumulation of capital were so extraordinary that, as is usually the case in such situations, they began to believe they were more powerful than any mere democratic forum with all of its faults and weaknesses as well as its strengths.

It is historically disappointing that Fianna Fáil has tried to dodge the bullet of an honest and open inquiry. If we really want to give young people the hope of staying in Ireland and building their futures, we should opt for reform and openness. No matter how wealthy people are or were, they should be invited to come forward and tell their stories. There is nothing wrong with business failure. It is a feature of life in business around the world. People get up off the floor and rebuild their businesses. However, business corruption is wrong, as is a system that distorts a country's structures, including the tax system and access to credit or finance, and favours the creation of an oligarchy as has developed in Russia. The Government is throwing away an incredible opportunity to have a genuinely bipartisan examination of what went wrong and to face up to the situation. For some current and former members of the Government, this would involve difficult questions because they would need to acknowledge their parts.

On Christmas eve, I received a single sheet in an anonymous letter to which I will briefly refer in my closing remarks. It concerns my old adversary in the finance brief, the then Minister for Finance and current Taoiseach, Deputy Cowen. In recent years, I had two arguments with him. The first was about contracts for difference and what was done to make the Dublin Stock Exchange a casino in which the Quinn family sustained losses through those contracts. This matter must be examined. The second related to the fact that developers were constantly entering into arrangements to ensure that stamp duty could be avoided at the then rate of 9% compared with the 1% payable via a share transaction between companies.

The then Minister and I held long discussions about the wisdom of allowing this. I told him that, when one has no taxation structure in a bubble, no one will benefit. Rather, prices are encouraged to increase. The example I chose was one with which I had become reasonably familiar, namely, the Irish Glass Bottle site in Ringsend. All of this is on the record of the House and committee.

Peter Power (Limerick East, Fianna Fail)
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With respect, he was the first Minister for Finance to start eliminating tax breaks. That is also on the record.

Joan Burton (Dublin West, Labour)
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We need to find out about this issue. The letter sent to me, presumably by someone in an accounting firm, related to a company called Betbay and how it wanted the arrangements hurried up to be sure of avoiding stamp duty. Anyone who believes we can examine how the bubble was created without looking at the political complicity of Fianna Fáil, the developers and the bankers, led by Anglo Irish Bank, is fooling himself or herself.

Brendan Howlin (Wexford, Labour)
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The Deputy has two minutes remaining.

Peter Power (Limerick East, Fianna Fail)
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Bipartisanship. Has Deputy Burton decided already? That is not bipartisanship.

Joan Burton (Dublin West, Labour)
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No. The letter I received, a copy of which I will give to the Minister of State and which I will read into the record, was only an ordinary letter about a commoner garden bit of tax avoidance. It only involved tax avoidance on a deal worth about €500 million and tax avoidance of approximately €48 million. In the whole scheme of things it was not that much. This kind of arrangement was core to why we lost the run of ourselves and why this Government ended up admiring Anglo Irish Bank.

Mr. Justice Peter Kelly talked yesterday about Zoe Developments and arrangements for a €500 million loan all secured on undertakings. The Minister of State present has a legal background. The son of a very prominent developer who has fallen on hard times wrote in The Sunday Tribune at the weekend about how personal guarantees were what banks came to rely on towards the end even though they were meaningless.

A developer in my constituency told me he is only liable to NAMA for approximately €75 million and therefore he is okay. Those are not the kind of figures in which I would deal but he seemed to be able to take it on the chin. The banks were contacting him by telephone to ramp up what he would bid and seek. Unless that area is included in this inquiry, we will simply encourage the bankers to go off as soon as this is over and repeat exactly what they have done to the economy. Perhaps they will be waiting for Fianna Fáil after it is ten years out of office to return to office and let them start all over again.

Michael D Higgins (Galway West, Labour)
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The only personal remark I want to make is to wish the Minister for Finance a speedy and rapid return to full health.

In the short time available I wish to address a fundamental issue. I speak as a political scientist; I am not a lawyer. If at 8.30 p.m. tomorrow Members vote down the Labour Party motion and the Bill at the heart of it, they will do a terrible disservice to this Parliament. I am in a position to know about parliament and its powers. This is an incredibly important moment. What we are deciding to do is a little less than what the Labour Party proposes, which it does on the basis of the history of its party founded in 1912, that chose parliament as one aspect of politics that needed to be treated with respect and that should be used in a transparent and public way. It exercised a trust that there were was no issue that could not and should not be discussed in parliament. My first fundamental assertion in favour of the Labour Party motion is that there should be no aspect or administration of policy that is above parliament, from which parliament should be excluded or of which it should not be the prime agency.

Emmet Stagg (Kildare North, Labour)
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Hear, hear.

Michael D Higgins (Galway West, Labour)
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I will go further and say, having listened carefully to what has been said, that it is not a correct interpretation of Ms Justice Denham's judgment to suggest that she said or that the Supreme Court held that the Parliament had no power to institute inquiries. Her judgment is entirely in regard to the Abbeylara case. It is also specifically on the issue as to whether the committee could effectively try somebody or reach a conclusion which was damaging to that person's integrity, but it did not exclude nor did it place integrity in such a position as if it could defeat policy. What is happening here is the accepting of an under-labourer version of parliament. As one who believes in a rugged parliament committed to transparency, to its public work and to extending and deepening democracy, I go so far as to say that if this Bill, on which Deputy Rabbitte worked and which he produced, was found unacceptable and if we had to go to the extent of having a constitutional referendum on this issue, it would be the right thing to do. One cannot continue when a Member of Parliament, sadly and disgracefully in the case of the Minister, Deputy Eamon Ryan, describes oppositional voices and views in this Parliament, to which we are elected, as squabbles. That was a pathetic indicator of a party that is weak on its commitment to equality and democracy, even if it is strong on the environment. He can reply to that elsewhere and he and I can debate that elsewhere.

The nub of this issue relates to the role of parliament and parliamentarians and then one turns to the role of committees. We spent a great deal of time here recently talking about reform of the parliamentary process. It would be ridiculous to suggest that we would spend our energies deciding whether we would meet at 9.30 a.m. or 10.30 a.m. and would not express ourselves and say that we want no obstacle to be placed in the way of a committee of inquiry. If one considers Deputy Rabbitte's Bill and examines it in detail, one will note it respects the integrity of the individual and does not dislodge the legal process within the division of powers. However, one could argue the case the other way. Parliamentarians are self-inflecting a wound on themselves by taking an interpretation of the Abbeylara judgment, which is excessive and which cannot be sustained.

Emmet Stagg (Kildare North, Labour)
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Hear, hear.

Michael D Higgins (Galway West, Labour)
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This is about democracy. If it is the view of the Minister of State that I am wrong, he should test the Bill and, if I am wrong about it, he should test it in a constitutional referendum. Ultimately the public elects representatives and representatives must never be excluded from examining any aspect of policy, its administration or its consequences. On another occasion I will expand on this and say that powers of this House have been given to the NRA, the HSE and elsewhere, which have effectively removed the power of accountability which representatives had. We are the worse for that. I will return to that issue on another occasion.

Regarding what is involved here, what of the concerns of the public, to which all of us return and who view our proceedings? I suggest something else. They would like to believe that the Parliament they elect in a representative sense is capable of seeking and obtaining such expert and technical advice as is necessary to give the accountable democratic decision. They are not saying that those in Parliament must immediately say that they are not competent and should hand sideways, as it were, to an expert opinion that for which the public have elected them. If that is one's view, one should get out of Parliament. We come in here and seek the expert opinions that are necessary to sustain us in an informational sense and to form a decision, but we take the decision and do not shirk from it. Unlike the Minister, Deputy Eamon Ryan, we take it as much as possible, as the Labour Party is committed, in public to doing, to answer the public's concerns in a fully transparent way.

The public looking on will consider something else, namely, what would restore Ireland's reputation internationally. Is the restoration of Ireland's reputation served by the complex private structure, outlined in the Government's amendment to the motion, or is it best served by what the Labour Party proposes in regard to giving full public ventilation to all the issues? The Labour Party would not have opposed a scoping report, as I had pointed out, to identify all the complex issues that might exist, but we are insistent on the role of parliament and we believe that we will damage ourselves irrespective of who forms the Government or the Opposition. It is important that we do not lose strength. Our committees are weak. I hope that in future committees being formed will be at arm's length from Government. A committee system in which the Government of the day retains a majority does not have a sufficient arm's length distance. In committees in the Scandinavian system or elsewhere, not only does the government not have a monopoly on investigation of or establishing legislation, such committees have autonomy to initiate, amend and change legislation. What we need are parliamentarians who will not say that this is too complex for them or who will not give to an unaccountable body policy decisions that they should be taking or who will say to another group when the public are concerned, as they are now on this issue, that we will have a scoping report. That is all right.

Following that, there will be another wise-man and wise-woman commission which will decide on the great issues that are beyond Parliament. However, they are not beyond the public. I am not particularly interested in the names of the individuals involved, but I am interested in the fact that a political decision was taken to implement light-touch regulation in this country. The Minister who did this later became a European Commissioner and went to various countries in Scandinavia to suggest they should also have light-touch regulation. That fundamental policy decision was taken by an elected representative.

As we face into this long year, the public will ask one question: is this exercise only about, as somebody put it, getting out of the storm? Is it about restoring calm so that the reckless navigation can begin all over again? Or is it, as the Minister remarked - I liked the remark when he made it - about establishing an entirely different culture of banking, politics and regulation? If it is, let us hear from all sides of the House and all political parties that they are in favour of a different system entirely, and that they will oppose any covert or overt attempt to keep the old racket going - and a racket it was. Let us also hear, in the reply to our debate, at least this much: that no individual will be protected in any way and no file will be retained from any of the investigations that are going on.

I am a Member of this House. This Parliament has many defects, but the most outrageous is that tomorrow night at 8.30 p.m. it can decide, without proper analysis, that it should lose the competence to give the lead in an investigation, and lose the opportunity to strengthen its committee structure to give it the power to investigate any matter of public policy.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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I wish to record, on behalf of the Sinn Féin Deputies, our support of the Labour Party motion and our opposition to what I can only describe as the despicable cop-out of the amendment presented by Government. The inquiry we seek needs to examine and expose in full how the banking sector played a central role in bringing the Irish economy to its knees. It must call to account Government Ministers and the so-called regulators who, instead of doing their duty, maintained a cosy relationship with the banks and, of course, the third element - the top bankers themselves across all institutions.

The Irish public has already poured €7 billion in recapitalisation payments into Anglo Irish Bank, AIB and Bank of Ireland; more than €50 billion will be spent on NAMA; and billions more will be required for future recapitalisation. Yet the public still do not know exactly how or why this situation came about. We should make no mistake about it: the figures I have cited, the true extent of which have yet to be exposed, are only part of the picture. The real cost for individuals and families, for whole communities and sectors of our society, is not reflected in those figures. Cutbacks, pay cuts and the 2010 budget, to name but three, are consequences of these failures - failure of Government, failure of regulation, and failure to oversee a banking sector in which business should have been conducted to the highest standards to engender the confidence of the people.

That is why the inquiry should be concerned predominantly with the failure of regulation and the role that Government played, as well as the conduct of the top management at the banks. The role of external auditors must also be examined. The inquiry must be public. We recommend an all-party joint Oireachtas committee with outside experts brought in to help with the investigation as required. The bulk of the work should be done in public; that is what the people have a right to and deserve.

Why do I place both Government and the regulatory authorities over the bank executives? I do so because I have been a Member of this House for 13 years and I have seen the failure of this Government, in a previous manifestation, to accept the recommendations contained in the report of the Joint Committee on Finance and the Public Service published in 2005. I participated directly in these deliberations, and the recommendations, if the then Government had the wherewithal and the commitment to effect real change, would have had an undoubted effect with regard to the conduct of the banking sector. There would have been protection for whistleblowers and an increase in the maximum fine for transgressions from €5 million to €50 million. We would have seen the continuation of the bank levy and the financial regulator would have ensured that low-income groups had access to borrowing that was equal to those more favoured in Irish society. Much work was put into that report, with the participation of representatives of all parties. It angers me greatly that the Government failed absolutely to grasp the nettle of the disgraceful, repeated ill conduct and bad management of the banks at the time and the subsequent failure of the so-called regulation that the Government put in place.

Arthur Morgan (Louth, Sinn Fein)
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In the debate immediately preceding this one, Deputy Mulcahy, on the Government side of the House, said that shareholders - people who had invested in the banks - wanted and were entitled to an inquiry. He said that taxpayers also wanted and were entitled to an inquiry. We all want an inquiry, but the three key words missing from Deputy Mulcahy's contribution were "open and transparent". A closed-shop inquiry is useless. We know what will result: absolutely nothing. We accept that if there are sensitive pieces of evidence to be presented, for example, the committee could go into private session by agreement. There is no question about that as applied to an Oireachtas all-party committee. We accept fully the need for preliminary evidence to be produced, similarly to a book of evidence in a court case; that is standard practice. Whatever our aspirations for an inquiry by a commission, we can get some indication from the Government amendment of what is likely to be established. The first paragraph of the amendment contains the type of proclamation that is liable to appear:

[The Government] commends the ongoing programme of actions being taken by the Government to restore banking stability and restructure the financial sector, including the recapitalisation of the two main banks, which will facilitate increased access to funding for SMEs and for first-time home buyers as well as offering protections for existing homeowners in arrears;

SMEs cannot get a red cent from the banks. We all know that from listening to their representative organisations and listening to their owners in our constituency offices and in our social spheres. Yet we are being told the policy being implemented by the Government is excellent. That is exactly the type of nonsense that will come back from any commission report. We are also told about the wonderful work done in recapitalising the two main banks. However, they will need to be recapitalised again. Several billion euro will have to be given to each of those banks in order for them to function in any meaningful way - that is, if they are not to be nationalised by stealth. Here we have evidence of the Government bringing nonsense before the House, in contrast to the very well crafted motion from Deputy Pat Rabbitte of the Labour Party, which I commend.

While the Government's amendment refers to protection for homeowners, one need only read the newspaper reports on what is happening in the courts. The continuing and growing level of repossession of people's homes is an absolute scandal. However, the amendment would do justice to Shakespeare, John B. Keane or someone similar in respect of putting together some kind of comic effort. It certainly bears no comparison with reality.

The people are demanding an open, public and transparent investigation into what went wrong. The people and taxpayers of this State are carrying the can for serious Government misconduct bordering on fraudulent policy. They are carrying the can for this and are likely to do so for several generations. This is grossly unfair and is completely unacceptable. If the Government is not listening to Members on this side of the House, I am sure it will get its answer from the public as soon as the latter has an opportunity to do so, namely, as soon as the general election is called.

Martin Mansergh (Tipperary South, Fianna Fail)
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I wish to share time with the Minister of State, Deputy Peter Power, and Deputies Mattie McGrath and Niall Blaney.

I am pleased to speak to the House this evening on behalf of the Minister for Finance to elaborate further on the Government's comprehensive approach to framing an inquiry into the banking sector. The Minister indicated that he will participate in this debate tomorrow.

I move amendment No. 1:

To delete all the words after "Dáil Éireann" and substitute the following:

"— commends the ongoing programme of actions being taken by the Government to restore banking stability and restructure the financial sector; including the recapitalisation of the two main banks, which will facilitate increased access to funding for SMEs and for first-time home buyers, as well as offering protections for existing homeowners in arrears;

— calls for the transfer of assets to the National Asset Management Agency (NAMA) to be expedited in order to further enhance the stability and financial soundness of the institutions concerned;

— notes the Government decision to introduce important reforms to financial regulation in Ireland which will secure confidence in the banking system through the introduction of new standards of banking regulation and corporate governance, will restore Ireland's international reputation and will reposition the country's regulatory system;

— commends the Government's support for the comprehensive programme of reforms to financial regulation that are being put in place at the EU level;

— notes that essential work remains to be completed in order to bring further stability to the banking sector; including the critical 'transfer of assets' to NAMA, agreement on the bank's restructuring plans and their future capital requirements and expected early progress on the consolidation of the building society sector;

— notes that significant resources are being devoted to these efforts and the officials involved continue to be fully engaged in achieving the objectives of banking stability and restructuring of the financial sector;

— notes that any inquiries that are established must also have regard to the ongoing criminal and regulatory investigations into wrongdoings at certain financial institutions;

— commends the decision of the Government:

— to request the Governor of the Central Bank to report to him on the performance of the respective functions of the Central Bank and Financial Regulator in the period since the establishment of the Financial Regulator up to September 2008 having regard to the statutory powers, roles and responsibilities of the Central Bank and Financial Regulator;

— to commission an independent review from a recognised expert or experts of high standing and reputation to conduct a preliminary investigation into the background to and causes of the recent crisis in Ireland's banking system up to September 2008 to assess what lessons can be learned and to inform the future management and regulation of the sector, both in relation to individual institutions and in relation to the management of risks and stability issues within the regulatory and governmental systems;

— that these reports will consider also the international, social and macroeconomic environment which provided the context for the recent crisis in the banking sector;

— that these reports shall have regard as appropriate to the de Larosière and Turner reports;

— that both reports are to be initiated as soon as possible and completed urgently and no later than 31 May 2010;

— that following completion of these reports, an independent, statutory commission of investigation is to be established by 30 June 2010, chaired by a recognised expert of high standing and reputation, to identify, examine and report on the causes of the systemic failures such as corporate strategy, governance and risk management in the Irish banking sector which culminated in the need for the State guarantee, the recapitalisation programme, the nationalisation and rescue recapitalisation of Anglo-Irish Bank and the establishment of NAMA in order to preserve financial stability;

— that the terms of reference for the commission of investigation will be informed by the conclusions of the reports of the Governor of the Central Bank and the independent review; and

— that the report of the commission of investigation would be completed within six months;

— notes that:

— an appropriate Oireachtas Committee will meet both the Governor and the independent expert(s) at the outset of their work to be briefed on the Oireachtas's priorities for investigation;

— the two preliminary reports, when completed, would be laid before the Houses of the Oireachtas and the appropriate Oireachtas Committee will be invited to consider the findings of the reports;

— the terms of reference and draft Government Order to establish the statutory commission of investigation will be laid before the Oireachtas; and

— the report of the commission of investigation will, when completed, be laid before the Oireachtas for further consideration and action."

At its meeting today, the Government agreed the proposed framework set out in the amendment for an inquiry into the banking sector proposed by the Minister for Finance and for its subsequent consideration by the Dáil. This framework envisages a cohesive two-stage approach. The first stage will consist of two separate preliminary reports to be commissioned immediately, that is, one from the Governor of the Central Bank on the performance of the functions of the Central Bank and the Financial Regulator and the second from an independent "wise" man or woman to conduct an examination into the recent crisis in our banking system to assess what lessons can be learned and to inform the future management and regulation of the sector. Both reports will be completed by 31 May 2010.

These two reports will constitute detailed groundwork in preparation for the undertaking of the second phase of the Government's plan. This will involve the establishment of a statutory commission of investigation within one month, by 30 June 2010, which will be chaired by a recognised international expert or experts of high standing and reputation. The terms of reference for this commission will be guided and informed by the conclusions of the two preliminary reports in consultation with the Oireachtas. It will be completed by the end of this year and will be laid before the Oireachtas for further consideration and action by an appropriate Oireachtas committee. The need to examine and learn from recent events in the banking sector is paramount. A key part of this will be to learn lessons from these events and the Government's announcement today, in seeking two preliminary reports to be followed by a statutory commission of investigation, will form another important input into the ongoing reform of Ireland's regulatory systems and structures, as well as the internal governance of its financial institutions.

It is of course important that a retrospective look be taken at the banking sector in light of the significance of the measures that the Government has been obliged to take over the past 18 months and the substantial financial support it has proved necessary to provide to the domestic banking system to secure financial stability and which have been the subject of extensive debate in the House over the past year or more. As Members will be aware, over the past year and a half the Government has moved decisively to ensure confidence in the financial system in Ireland by announcing a series of measures, starting with a guarantee arrangement for depositors and lenders to Irish credit institutions. That was the first essential step on the path to stabilising the banking system in this country. All are agreed that this is one of the key requirements for our economic recovery, which will serve the needs of the wider economy. In the absence of a properly functioning banking system, economic recovery will be significantly delayed and the economy's medium-growth potential will not be fully realised.

The overall objective of the Government has been to stabilise the banking sector to ensure that Ireland is best placed to take advantage of the global economic recovery when it occurs. Needless to say, it also must ensure that the interests of the taxpayer have been protected to the maximum extent possible. The proper functioning of the banking system is critical to the effective performance of the economy and therefore must be safeguarded by the Government. In this context, it is worthwhile to outline briefly the various measures that have been taken by the Government to secure this objective here. I refer to the introduction of a bank guarantee scheme in September 2008, the €3.5 billion of recapitalisation of Ireland's two largest banks, namely, Allied Irish Banks and Bank of Ireland, to assist in securing the banks' funding base and the €4 billion recapitalisation of Anglo Irish Bank. In addition, a new code of conduct on mortgage arrears took effect on 27 February 2009 and a new code of conduct on business lending took effect on 13 March 2009. Other measures include the announcement of the reforms of our financial regulatory structures encompassing the establishment of a single fully integrated Central Bank of Ireland to replace the current board structure of the Central Bank and the Financial Services Regulatory Authority with unified responsibility for both the soundness of individual institutions, as well as the stability of the financial system overall, the establishment of NAMA to strengthen the banks' balance sheets so as to considerably reduce uncertainty over bad debts and as a consequence facilitate the flow of credit on a commercial basis to the real economy, and the establishment of an independent credit review process together with a credit review system to examine the credit policies and practices of the banks in respect of SMEs. This review process will help the Minister to decide what further action might be necessary to secure the flow of credit.

It should be noted that the actions being taken by this Government are taking place against the backdrop of continued widespread and significant Government supports for, and reforms of, financial services sectors in the European Union and in other developed countries. The banking crisis has highlighted weaknesses in the financial regulatory and supervisory framework of the EU and its member states. This EU framework remains largely nationally based, despite the creation of a European Single Market in financial services more than a decade ago and the highly significant growth in cross-border provision of financial services, as well as the emergence of large and systemically significant pan-European financial institutions. A highly significant programme of reforms is, therefore, under way at EU level in the areas of financial supervision, prudential regulation and corporate governance, as well as crisis management.

These EU reforms are building upon the analysis for the European Commission of the high level group on cross-border financial supervision, the so-called de Larosière report. This and other reports, such as the United Kingdom's Financial Services Authority's Turner report, have provided the impetus for the international reform which is now under way. Ireland is a strong supporter of such international reforms, and has played, and will continue to play, its part at EU level to ensure that they are implemented swiftly and effectively. These reports also will form a significant input into the work of the Governor and the wise person providing a detailed overview of the causes of the financial crisis internationally.

One must draw a link between the features that are particular to the crisis in the Irish banking system and the available international analysis and reforms that are under way. The completion of the reviews by the Governor and independent expert, together with ongoing disclosures regarding possible malfeasance in particular institutions, will provide the basis for identifying specific issues that warrant further investigation through a statutory commission of investigation. This statutory commission, to be established by 30 June 2010 and chaired by a recognised international expert of high standing and reputation, will be asked to pursue particular lines of investigation which will have been identified by the two preliminary reviews. The Government is aware that the potential scope of an inquiry into the banking sector is very broad and it is essential that the inquiry maintains a clear focus on key issues and is concluded within a reasonable timeframe. 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. There clearly are a number of broad themes that require thorough examination. These include the performance of individual banks and bank directors where wrongdoing 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 in respect of the linkage between the banking crisis and overall economic management.

There are valid reasons for the approach that has been agreed by the Government. Under the legislation, the commission will conduct specific parts of its investigation, for example, into the affairs of individual institutions, in private. This will minimise the risk of interfering with the ongoing Garda and ODCE investigations. Significant State resources are fully engaged in achieving the objectives of banking stability and restructuring of the financial sector, and these resources must continue to be devoted to the task at hand. The approach being adopted by Government will also ensure the ongoing criminal and regulatory investigations into alleged wrongdoing, which are expected to take some time, can proceed without the possibility of prejudice. Taking account of all these factors, the Government is proposing the multi-stage investigation to be completed by the end of the year. This approach will lead to an expert, authoritative, robust and structured examination of the financial crisis.

An important priority for Government will be to ensure the Oireachtas has a central role to play in these investigations and will be involved at each stage of the process, as set out in the Government's amendment. This envisages that an appropriate Oireachtas committee will meet both the Governor and the independent experts at the outset of their work to be briefed on the priorities of the Oireachtas for investigation; the two preliminary reports, when completed, will be laid before the Houses of the Oireachtas and the appropriate Oireachtas committee will be invited to consider the findings of the reports; the terms of reference and draft Government order to establish the statutory commission of investigation will be laid before the Oireachtas; and the report of the commission of investigation, when completed, will be laid before the Oireachtas for further consideration and action. It will be open to the committee to hold public hearings on the report.

I refer to the social context of the financial crisis referred to in the Government amendment. In debates about responsibility for the present state of the country, there is constant and repeated reference to the triad of bankers, developers and politicians. Books published by columnists in the broadsheets, who are also, in many cases, broadcasters, excoriate poor decision-making and regulation and cronyism - real and alleged. There is rarely any reference to the relentless hype in property supplements, which fuelled what has been described elsewhere as "irrational exuberance", which was the cause of many of our present problems and which, in the prevailing climate, would be difficult enough to contain or control. It has been alleged that published guide prices were often very wide of the mark, auction results were not always faithfully reported, and headline prices could be manipulated by under-the-counter payments.

As a person said to me yesterday in another context, the media drive issues and they are not just passive reflectors. We all recall the campaign to abolish stamp duty in the autumn of 2006, running into 2007, intended to save and prolong the property boom. Was this just sincere concern for hard-pressed home buyers or was it dictated in part by commercial self-interest? There is much discretion about the parallel collapse of revenues and the sharp economies that news organs have experienced and have had to make. Was, taken as a whole, the Fourth Estate more provident than others, or did it, just like others, and indeed the State itself, become badly overextended? Were the property pages, at least for a time, an integral part of the forces driving the bubble? Without overstating its significance relative to other bigger factors, it would be good if this were examined, if any holistic explanations were sought and lessons learned, and if improved safeguards were provided for the future.

The preliminary reviews and the commission of investigation and their appropriate consideration by the Oireachtas, together with ongoing Garda and ODCE investigations, will form a comprehensive framework of investigation into the recent crisis in the banking sector. This will allow the Government to assess how lessons can be learned to inform our future management of the sector, both in regard to institutions and their management and direction and in regard to the management of risks and stability issues within the regulatory and governmental systems.

Peter Power (Limerick East, Fianna Fail)
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I support the amendment. The debate arises from a public demand to find out what went wrong with our banking system and who is responsible for it. The people want to ensure this does not happen again and to restore our reputation on the international financial markets in a way that does not prejudice ongoing criminal investigations. People have lost their savings and pensions. Businesses in my constituency cannot obtain finance from banks because the banks cannot access credit following the wipe-out of their capital as a result of unwise decisions. People are demanding answers to these questions.

Everyone in the House agrees on the central objectives of an inquiry but we disagree on how we go about doing this. The Government wants to do this efficiently, effectively and in a way that works and we disagree fundamentally with the Opposition on this. The proposals of Fine Gael and the Labour Party, although they seek to achieve the same objective as the Government, cannot do so. We want an inquiry that will compel those who have information and who have difficult questions to answer to come before it and to be held to account. We want them to be subject to rigorous cross-examination. We want an inquiry that can make findings of fact and culpability about people who were centrally involved in the financial collapse of the country. Unfortunately, the Fine Gael and Labour Party proposals would not allow us to do that. The Government shares their desire to meet the public demand for culpability and accountability but the only way in which we will achieve that is through the Government's three-pronged proposal to find out the questions that need to be answered, to identify the people who can answer them and then to use legislation, which the House passed, to allow an inquiry to take place where this information can be ascertained, witnesses brought forward, tough questions answered and a report made public.

That is a tried and tested method. We witnessed it recently in the inquiry into the Dublin archdiocese. Nobody has questioned whether that was a cost effective, efficient inquiry that got to the heart of the matter, and there is no suggestion that the Government's proposal would do otherwise. Unfortunately, many Deputies and members of the public are confused by a blood lust to hold an inquiry in the Dáil, which would replicate a tribunal of inquiry, discredited as such inquiries are. The Government wants to put before the House the report of the commission of investigation with its findings of fact and culpability in order that the House can have its own day. The people involved can be brought in on the basis of findings and allegations made against them in the report about them not doing their job or opening credit lines they should not have or making bad and imprudent credit decisions. The Government's proposal will provide for such a report and, armed with this, the Joint Committee on Finance and the Public Service will be able to do what the people want, which is find out who is responsible, how we got to this point and how we can avoid arriving at this point again while, at the same time, ensuring people who broke the law and engaged in malpractice and misconduct and who should be brought before the courts can be still brought before them. The only way to achieve the objectives we all share in the House is through the Government's proposal.

Deputy Burton sought a bipartisan approach to this affair but, unfortunately, the Deputy and the Labour Party had made up their minds that there was a toxic triangle between the banks, my party and developers, an allegation I reject. If they seek to have a bipartisan inquiry in the House having come to such a conclusion, it will go nowhere.

Mattie McGrath (Tipperary South, Fianna Fail)
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I also support the amendment and I am delighted to have the opportunity to contribute to the debate on this most topical issue, which is affecting every man, woman and child and which will affect future generations. We must get answers on the failures visited upon our people. There was a monumental failure on the part of our banking services and I must condemn our regulation services which failed miserably to regulate and honour the jobs and positions they had.

As a public representative I believe the citizens of Ireland are entitled to know what happened, how it went wrong and what mistakes we made. More importantly, we must try to learn from those mistakes and, together, lift our country out of the deep mire it is in at present. We all know that not a red cent is available to any citizen whether for business, ordinary families, farming or anybody with a new idea to get the country off its knees and up and running. We hear pious platitudes from our bankers that credit is available for mortgages, to build new houses and to kick-start the building industry and business. However, we know the reality is that not a cent is available. We must accept that the banks do not have it.

Until we sort out those issues and get proper answers I will not call for anybody to be indicted without fair and due process. I support the procedures laid down by the Government to hold these inquiries and to do so in public where possible. It is imperative that the public sees what is going on and it is looking to us to bring these people to account, whether they be regulators, bankers or politicians who allowed the situation to continue and got us into the mess in which we are. It is vital for the future of the country that we have this investigation and that it is carried out speedily and effectively with the right people and expertise brought in to do so. We must then bring it back to the Oireachtas committees, as we have done in the past. We are dealing with a much greater challenge than any Oireachtas committee has had to deal with but it should return for debate to the floor of this Chamber.

Let whomever feels the cap fits wear it, whether banker, regulator or politician. We have to send out the message to our European partners, our international lenders and those with whom we transact business on a daily basis that Ireland does not have a kangaroo system but that it is a democracy with an effective and working banking system and thriving economy. To do so we must learn from our mistakes and put a new roadmap in place to chart out a course and go forward and, with the help of our people, lift our economy back to where we would all like to be, not to the mad years of the Celtic tiger but to a decent day's pay for every man or woman who wants to work for a day's wages and not the crazy figures to which some people felt they were entitled and achieved.

I lend my support to this inquiry and I hope it will be constructive, that there will be no witch hunts but that there will also be no hiding place for any man or woman who in the end-game is found to be guilty of any wrongdoing. However, it must take place after due process is carried out.

I support the Government's amendment to the motion before the House. Over the past 18 months, there has been much debate in the House on the stability of our economy and banking. It is with satisfaction that I discuss the matter again today as our economy is stabilising and our banking system is also showing signs of doing so. There have been many ups and downs during the past year or two and on many occasions we faced a crisis. Each time, the Government stepped up to the mark and provided the leadership required to inject stability into the economy. It is necessary to state that we provided the leadership to do so.

The ordinary people have made many sacrifices to ensure we get back on our feet. There has been much discussion in our recent past about our resilience as a nation and the concept of the Irish meitheal. As a nation, our meitheal has been thoroughly tested in recent times. It is against these tests that we show our true ability. It is only when we work together that we can show optimum ability as a nation and it is with that mindset that we must move forward.

The banking system has let us down. People did wrong and the system failed us. There is nobody in the country who does not want to see those responsible facing justice. There is no justification for debate on that issue. However, how it is investigated is certainly a matter of opinion and of those there are many. Unfortunately, in recent months there has been much fanfare on the Opposition benches about how we will bring the country to economic recovery.

I firmly believe in efficient Opposition and constructive criticism. It is time the Labour Party got real about what the country faces and offers real alternatives or gets behind the leadership being provided by the Government. The Government is responsible for the bank guarantee scheme against much criticism from the Labour Party. Other countries copied our technique as they appreciated the advantages of such a scheme. The Government was responsible for nationalising Anglo Irish Bank, not in an effort to save bankers but in an effort to save the bank itself and, more importantly, its depositors and shareholders. These are real people whose interests we must protect. I must also point out that it was under this Government that the Garda inquiry into the dealings in Anglo Irish Bank came about. The recapitalisation of Allied Irish Bank and Bank of Ireland followed. Again this was to bail out depositors and those seeking credit and not the bankers, as has been claimed by some. We are not in the business of bailing out bankers; we want to get the country back on its feet and that is our common purpose.

Clearly, the aim of the Labour Party is to destroy Ireland's banking reputation and only then it may have a chance of electoral success and a return to Government. Only a fool could not see that the Labour Party's position throughout the banking crisis has been one of political point scoring with a view to enhancing its electoral success but with no regard to the current difficulties of depositors and banks. It does not have an ounce of consideration for the recovery of the economy. The Government was responsible for the establishment of NAMA and we have been heavily criticised for that. However, I firmly believe it was the only show on the road. I look forward to credit being freed up by the banks in the near future when they are restructured.

I could spend all my speaking time discussing the various suggestions made by the Opposition for stabilising our economy. However, I am not interested in rehearsing what has already been debated in depth in the House. Suffice it to say the Labour Party has been caught up in the business of opposing anything proposed by the Government. However, time will prove that the correct measures have been taken and the roots of stability are already showing.

We are too familiar with inquiries and tribunals and their benefits and lack thereof. It is vital that an inquiry of sorts is launched into the failures of our banking system. However, we must be acutely aware of issues such as time and cost. How we go about this is the crux of the debate before us. The proposal by the Minister for Finance, Deputy Lenihan, is sensible and measured. The Labour Party spokesperson on finance is more keen on trial by the Labour Party and letting the banks fix themselves, which has resulted in the position of the Labour Party which I already outlined. Let us not forget that the banks need help to recover as much as we need inquiries. It is our job as legislators and Government to provide real solutions and that is what we have been doing in the recent past. We will continue to do so even though it may not please the Labour Party or be in its political or electoral interests.

Kieran O'Donnell (Limerick East, Fine Gael)
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I wish to share time with Deputies Lee and McHugh.

Brendan Howlin (Wexford, Labour)
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Is that agreed? Agreed.

Kieran O'Donnell (Limerick East, Fine Gael)
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I thank the Labour Party for tabling the motion. As a party, Fine Gael feels very strongly that there is a need for a public inquiry to be carried out by the Oireachtas. We were elected by the people to represent them. To restore confidence to the banking system and to bring credibility to this inquiry, it must be held in public and under the direction of an Oireachtas committee. This is critical because it will be open, transparent and show proper accountability.

The Government has brought forward a counter motion to the Labour Party motion. I listened with interest to the Ministers of State, Deputies Power and Mansergh, who spoke about how this would work. The Government is spinning that this is a public inquiry, but is like a wedding without the bride because it is completely outside the terms of reference of the Labour Party motion. The Government motion refers to bringing forward two reports from the Governor of the Central Bank. It is inappropriate to have a newly appointed Governor - an excellent man of great calibre - carrying out an investigation into an organisation that he has just taken over. The motion only deals with the Financial Regulator and the running of the Central Bank, and there is no reference to Government policy.

The Government motion also refers to carrying out an independent review, but once again it only looks at Ireland's banking set up until September 2008. The Government has not clarified whether this means up to 31 August, in which case its guarantee scheme from 29 September 2008 is omitted, as is the appearance at the Joint Committee on Economic and Regulatory Affairs on 14 October of Mr. Patrick Neary, the former chief executive of the Financial Regulator. At this committee he stated "I believe that all banks are solvent." However, Anglo Irish Bank was nationalised a short time later. These issues would not come under the terms of the Government inquiry.

The Government motion refers to appearances before the Oireachtas committee before and after the reports are completed. It also states that the terms of reference and a draft Government order establishing a statutory commission of investigation will follow the two reports. Those terms of reference would appear to be at the sole discretion of the Government. It is not allowing the Oireachtas committee to determine the terms of reference. The motion seems to infer that the Oireachtas committee will meet and brief the Governor and the independent expert at the outset on the priorities of the Oireachtas for the investigation. The two preliminary reports will be laid before the House and the Oireachtas will be invited to consider to findings of the report. However, those reports will be determined ultimately by the terms of reference laid down by the Government.

The people want a public inquiry. The Government has nothing to hide and nothing to worry about. We in Fine Gael wish to have cross-party co-operation on this. The Opposition leaders can meet the Taoiseach and come up with the proper terms of reference for an Oireachtas committee. A scoping exercise can be carried out prior to any formal work done by the committee. The Governor of the Central Bank made a clear recommendation and the Minister for Finance went to much time and trouble to ensure that he got the best possible appointment. We all agree that Professor Honohan is an excellent appointee, yet the Government has tried to water down his first recommendation. He stated that there should be a complete inquiry, but this is a fudge and a whitewash. It is like water flowing through four or five funnels, with the result being that there is no water at the end. The Government is trying to ensure that we do not have an open and transparent inquiry. The public is entitled to nothing less.

The Minister for Communications, Energy and Natural Resources tried to represent this as a public inquiry. The Green Party Members have been shouting from the rooftops over the past three or four days that they would accept nothing less than a public inquiry. They are either not on top of their game or they are rolling over, but this is certainly not a public inquiry.

We must look at the key issues, such as banking regulation. Professor Honohan stated at the Joint Committee on Economic and Regulatory Affairs in December that one of the key reasons for the failure of the banking system was lack of regulation. We also need to look at Government policy. We need to look at the legislation that was brought in and why it was enacted. The Financial Regulator only functions according to the legislation that is implemented. We must have an open system to find out why the bulk of the banking system may soon be nationalised. Why did we get to a position where the loan book of a major bank doubled between 2005 and 2007? Why are we in a position where young couples have 100% mortgages that they could not afford?

The Labour Party has brought forward a Private Members' Bill on compellability. We support it in principle, but we feel that it is possible to set up a committee without any further legislation to deal with Government regulations and policy on the banking system. I hope that when the Minister speaks tomorrow night, he will promise to take the views of the Opposition on board, we will have a public inquiry in the Oireachtas so that the people can regain trust and that we might have confidence restored in the banking system.

Joe McHugh (Donegal North East, Fine Gael)
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I thank the Labour Party for tabling the motion. This debate offers the Government an opportunity to see sense. A committee of inquiry operating in an open and transparent manner would be a means of confirming and acknowledging what is being said in public. Most people seeking justice with only a small number seeking blood.

This proposal is an opportunity to have the House fulfil its democratic role and avail of the expertise required to find out what went wrong, when it went wrong and why, before making informed decisions. By tabling the amendment, the Government is refusing to afford members of the public a democratic opportunity to allow government to govern. Unfortunately, the Government made bad decisions and propagated and introduced light touch regulation. Now, however, it is preventing an opportunity to allow parliamentary democracy operate in an open and transparent manner.

The key issue is the absence of control over bankers and the banking institutions. We had a free-for-all caused by the displacement of good people from the banking system. In the 1980s senior banking personnel and managers knew how to bank and did not lend money willy-nilly. Systems and checks were in place and the good people running bank branches knew whether people could afford mortgages. These managers were replaced with others who had a sales philosophy and wanted to lend money regardless of whether borrowers could afford it.

A generation of people are going to bed at night with the fear that they will not be in a position to pay back their mortgages. The reason the Minister of State is not hearing about this is that it is a silent fear. That is where the danger lies.

We had an opportunity to seek out the expertise of those who were displaced, namely, retired bank managers and other banking personnel. An open and transparent committee of inquiry could have tapped into their expertise and asked them to explain the reason they did not lend in a free-for-all fashion in the 1980s, what systems they had in place and what pressures they came under to change the philosophy of banking.

What new systems were established as a result of the light touch regulation introduced by the Government? The Minister of State, Deputy Mansergh, enjoys a good reputation as a historian, while my background is in teaching. What banking expertise do Members have? In the Fine Gael parliamentary party Deputy Terence Flanagan worked in a bank. Politicians cannot control bankers until we start to regulate them. The only way we can regulate is to know how banking works. However, because we do not know how the system works, the bankers are having a laugh and waiting for the National Asset Management Agency to acquire large parts of their books.

The silent mortgage holders and those who are not in a position to pay back their loans will not receive assistance or resources. The bankers will still be in control and a laissez-faire attitude will once again prevail.