Timmy Dooley (Clare, Fianna Fail)
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I welcome the opportunity to contribute this legislation, which is one of the most important aspects of the financial resolution infrastructure to come before the House in recent months. While we may say this about almost every item of legislation aimed at the resolution of the economic crisis, this Bill is particularly apposite since it deals, to a large extent, with regulation. There is little doubt that regulation is at the heart of the problems we have experienced.

Since summer 2008 there has scarcely been a day that Irish banks and the banking system have not made the front pages of the newspapers. I heard one commentator remark in recent days that it has now been some time since the banks were relegated to the business pages, their natural home. The banking system was for many years considered to be a subject that was rather dull and boring, and was discussed neither in the vernacular nor in general discourse. We hanker back to those days and wish they would return soon. However, I doubt they will, because of the damage that has been done by the failure of so many people to recognise the malpractice that was allowed to develop, which has caused a massive cancer in Irish society and, to a broader extent, in the world.

For many, the early morning announcement that an overnight Cabinet meeting had taken place was the first indication, back in September 2008, that a problem existed within the banking sector. Since then it has been one bad-news story after another, day in day out. The continual drip feed came in many cases from the Government and other parties to force the banking sector into an admission of its guilt and complicity in the malpractice that has had such a devastating impact on our economy.

The arrogance of some of the players has been breathtaking. Some have sought to deny from the very start that there was a problem and that they were involved in creating it through their failures and lack of respect for the trusted positions they held. Many of these people pursued a greedy approach, enriching their own positions through the various schemes that were in place, and the focus for far too many in the banking sector switched to feathering their own nests. They spent time managing their own pension funds and investments rather than accepting their responsibility to protect other people's investments. That is the most shocking revelation of all - the prevalence of the quick buck, or the capacity for people to earn large bonuses based on short-term benchmarks or the assumption that they had in some way developed their investments to the point at which they were making a return.

The implications of rolling up interest should have been fundamentally obvious to everyone. Yet such deals were taken to indicate, somehow, that the bank had received a return, and people received bonuses on the basis that investments had come good. However, in many cases the investment had not taken off at all, although the money had been spent. There is little doubt that these continued investment practices created the building boom and the lack of prudence in lending fed into a property sector that was already doing quite well. The endless supply of funds made it possible for small players within the sector to believe they were large players. This had a devastating impact on the economy because it further fuelled the boom.

The problem was not restricted to loans for the building sector. We have seen in the analysis of NAMA the amount of money expended - which was funded through crazy lending practices - on the purchase of agricultural land in small villages with little or no infrastructure because of a belief that rezoning had taken or would take place. There was a belief that the zoning of land for residential purposes somehow conferred an expectation that there would be 300 or 500 houses, even in villages that had never had a population of more than 75 or 80 people. That the banks did not have even the basic cop-on to investigate this with due diligence is breathtaking. That is proof, if proof were needed, that there was a complete disconnect between the lending of the money and the expected return. Any half-wit that set about considering the future potential of the bank's investment would conclude that there was little or no chance of a return on the loan. It seems that bankers were more concerned about short-term gain by virtue of a bonus based on money having been lent rather than having been earned by the bank.

Some have sought to distance themselves or say they were involved in driving on the economy; I do not buy it, and nor do many others. Some were professionals who had risen through the ranks and developed the culture. That the so-called economists who worked for the financial institutions continued to give projections for property growth that were unconnected to the growth in population or the expected population dispersal is breathtaking. They continued to contribute to the hype and to give positive appraisals without ever rooting them in the fundamentals. That is a clear indication that an entire culture that was quite a distance from reality had developed.

Some of these bankers sought to blame others. One person, after the crisis erupted, seemed to indicate that the problem in our economy was the minimum wage. This was a person with a massive salary, bonus and pension entitlement; yet the cleaner earning €8.65 an hour was the problem. It just sums it up. Another person seemed to suggest that the banking problem, from his point of view, would not be resolved through the investment of cash by the State, indicating on one occasion that the only way one particular institution would require funding from the State was over his dead body. This is an example of the arrogance of some in suggesting that they were invincible. As we have seen, nothing could be further from the truth.

We saw the tip of the iceberg of a culture of delusion and deception that existed within our banking system. There is little doubt that the regulator was asleep at best, and at worst somehow colluded in the ongoing deception. I do not say that lightly, but there can be no other excuse. If professional people who are well paid and well qualified and have all the information available to them continue to propagate a lie, as they did before various committees of this House and in various reports, we must question their motives. As I said, either they were asleep or they were in collusion in some way, which is disturbing.

Given that every aspect of Irish society has been affected by what has happened, most people recognise the necessity for a strong and effective suite of measures to deal with the problem. For this reason, the legislation under discussion, which seeks to bring together the best aspects of the Central Bank and the Financial Regulator under one board, where a much more co-ordinated approach can be taken to the overall management of the banking system, while retaining the capacity within the same framework to manage the prudential requirement of each institution, is the way forward.

Whatever architecture or regulatory framework we put in place, unless there are people who are prepared to do their jobs in line with the legislation and with what is expected of them by society and by those who make the laws, we are going nowhere. It would be wrong to suggest that the framework that existed in the past was overly deficient, because it was not. There were issues with it, which this Bill seeks to resolve. However, it comes down to people having the wherewithal to stand up and say "Stop". We have all learned a difficult lesson in recent weeks as the Financial Regulator has done exactly this with regard to Quinn Insurance.

We all recognise what a wonderful company Quinn was and what fantastic work Seán Quinn and his family, who were motivated in such a selfless way, have done. However, when insurance policies and the financial system are placed in jeopardy because of risky decisions and mistakes, someone has to shout "Stop". Mr. Elderfield has done the State an exceptional service. Along with Professor Honohan in the Central Bank and Mr. McDonagh in NAMA, he has given confidence to the international markets and helped to restore Ireland's battered image. Over the past several weeks, these three individuals have done a good job in getting us back on the long and difficult path to recovery. In ensuring the mistakes of the past never happen again, the Bill before us will restore further our credibility.

Leo Varadkar (Dublin West, Fine Gael)
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It is a pleasure to speak on the Central Bank Reform Bill 2009 and I support its proposal to establish a commission to replace the existing hybrid structure of IFSRA and the Central Bank. When IFSRA was first established, I questioned the need for such a body given that under the existing system the Central Bank was responsible for financial regulation alongside the Stock Exchange and other bodies. It appeared a strange decision to make at a time when the Central Bank was losing powers because of the introduction of the euro. It is right, therefore, that the bodies are being merged once again.

I have concerns about the transfer of consumer functions to the National Consumer Agency, which has a good staff and CEO but has not produced many benefits for consumers thus far. Given that it is the Government's policy as stated in the emergency budget of April 2009 and ours as stated in our streamlining Government document to abolish the National Consumer Agency and replace it with a new body incorporating the functions of it and the Competition Authority, it is strange that the Bill provides for the transfer of these functions. Does it remain Government policy to abolish the agency and, if so, why is legislative provision not being made for the transfer of functions?

My main problem with the Bill is not so much its proposals for reform as what these do not include. Reforming the architecture of financial regulation in this State is not enough on its own and we need the right people for a start. If people such as Mr. Elderfield or Professor Honohan were appointed to their current positions five years ago, different decisions would have been made even under the existing legislation and principle-based rules. Over the past seven years, the Central Bank and the Financial Regulator were the dogs that barked but did not bite. The Central Bank's Quarterly Bulletin and the regulator's reports repeatedly warned the public, media and political class that the economy was overheating and excessive property lending was creating huge risks but these organisations did not go public or take similar actions to those pursued by Mr. Elderfield in recent weeks.

Irrespective of the architecture developed, it is important that we have the right people. As a State, we rely on having a wise Minister for Finance who makes the right appointments. The current Minister has made the right appointments to these positions but his predecessors, the Taoiseach and Charlie McCreevy, made the wrong ones. I do not have confidence that future Ministers will make the right appointments and this is why we need some form of public or parliamentary scrutiny of people before they are appointed Financial Regulator or Governor of the Central Bank. We cannot rely on the Minister of the day to make the correct decisions and I fear that a future Minister for Finance will be somebody like the Taoiseach. The Bill before us does not address that danger. Parliamentary scrutiny would allow us to test people before they are appointed to these important positions.

I understand from the Minister's statement that further legislation is planned but I wonder why we are still waiting for it two years after the banking crisis erupted. We are still waiting for updated rules on the conditions and securities which should accompany mortgages and loans. It is shocking that the Government's banking policy lacks a proper resolution regime. The United Kingdom Act, which could almost be copied and pasted here, provides that insolvent banks can be taken into administration. It is unforgivable that two years after the bank guarantee and the insolvency of our banking system we have not yet introduced such legislation. I will not go into the rights and wrongs of the decision taken on Quinn Insurance but it is clear that the Financial Regulator acted under existing legislation which allows him to intervene where an insurance company is in danger of insolvency. Similar legislation which would allow him to take an insolvent bank into administration does not exist. The time that the bank guarantee bought us has been squandered by the Minister and his Government colleagues.

In researching for this debate, I studied the speeches on the bank guarantee scheme, which was held on 29 and 30 September 2008, because Deputies on all sides of this House have been rewriting history since them, particularly in regard to why they supported or opposed the guarantee. I am afraid to say that the quality of the debate was very poor, although we have learned a lot about banking since then. There was hardly any mention of bondholders, subordinated debt or whether it was appropriate that Anglo Irish Bank and Irish Nationwide were included in the guarantee. While the latter issue was discussed on subsequent days, it was not addressed in the period immediately after the announcement of the guarantee.

On 30 September 2008, the morning after the guarantee of the night before, the Taoiseach stated in response to Deputy Kenny:

The banking system in Ireland has assets which exceed its liabilities. The assets of the Irish banking system amount to approximately €500 billion and the guarantee liabilities are approximately €400 billion.

We now know that was absolutely untrue. The assets which the Taoiseach told the Dáil were worth €500 billion were actually worth two thirds of that figure if we are lucky. It is clear, therefore, that either he was wrong or he misled the House. He went on to state that the Government:

...has provided a State guarantee to deal with liquidity which was critical to the continuation and health of the financial system. By doing so, we are not exposing taxpayers' money to the provision of that equity.

Again, that statement was untrue because the decision taken by the Government completely exposed taxpayers' money to the provision of equity. Indeed, we have taken equity stakes since then.

In response to Deputy Gilmore, the Taoiseach stated: "The issue here is that solvent banks, which have assets in excess of their liabilities, are faced with an unprecedented situation whereby there is a credit crunch..." That was untrue. The banks were not solvent. Two of them were insolvent and it is likely another two were as well.

The Minister for Finance, Deputy Brian Lenihan, speaking on the guarantee Bill stated: "There is understandable concern that the Exchequer is potentially significantly exposed by this measure." He want on to state that the "exposure from this decision is significantly mitigated by a very substantial buffer made up of the equity and other risk capital in the relevant institutions". That also was not the case. We found out subsequently that the banks were considerably under capitalised. On that occasion the Minister was so unable to manage the facts or manage his brief that he either did not understand the facts or he misled the Dáil. He went on to state: "It is estimated that the total assets of the six financial institutions concerned exceed their guaranteed liabilities by approximately €80 billion." That also was not the case.

The Minister for the Environment, Heritage and Local Government, Deputy Gormley, in the same debate, spoke of what he described as a bold move the Government had taken and stated: "I am very proud of the role the Green Party was able to play in providing this innovative solution." This is something he will live to regret.

Even though I do not like to say it, one of the more astute contributions made during that debate was one that I made. At the time, I stated:

I do not agree that the main problem with the banking sector is liquidity. I think there is a capital problem as well. The banks have squandered their capital on mistaken loans to the property sector and I really wonder whether, in all cases, their assets exceed their liabilities. I will be interested to see how the Minister has been assured of that and how he has come to the conclusion that their assets ... [exceed their liabilities by] €80 billion.

I went on to state:

I am disappointed that there are no consequences or punishment for some of the people who are, in part, responsible for this situation - bankers who made inappropriate loans, the Central Bank to a certain extent, and also Ministers who had the opportunity to act to rein in the financial sector, but did not do so for various reasons...

We have a national crisis and on this side of the House we are doing our best to offer responsible and patriotic opposition. As a result, and because this Bill changes other pieces of legislation, we are by and large supporting this Bill on trust. The Government has asked for bipartisanship and a Tallaght strategy, and they will get it on this one Bill. However, the responsibility for this lies on the heads of Government Ministers and woe betide [any of] them if any banks fall or if taxpayers are left with significant liabilities.

It is nice to be right about issues but, at least on this occasion, I wish I was not. What shocks me is that I made that speech 18 months ago on the night of the bank guarantee when I could see what was happening and what the true situation was, and the Government, the Minister for Finance and the Taoiseach either could not see the wood from the trees because they were so incompetent at doing their job or, alternatively, deliberately misled the Dáil on those occasionsd.

What needs to be done now seems clear to me. There is a bank guarantee. It was probably still the correct decision to take, although perhaps it would have been wiser to guarantee the liabilities and not the assets. At the very least, it was two years in which we could buy time and in which to repair the financial system but those two years have not been used wisely. Essentially, there have already been five bailouts already - the guarantee, the first recapitalisation of AIB and Bank of Ireland before Christmas of 2008, the second recapitalisation of AIB and Bank of Ireland, the nationalisation of Anglo Irish Bank, NAMA, and the recapitalisation of Bank of Ireland and AIB now planned. They have not worked and what we need now is a very different approach.

We need to clear out the banks of their top brass. Second, we need to set salary caps across the banks, not only for the positions of chief executive. It is absurd that there are bank chief executives whose salaries are capped at €500,000, and yet there are people under them who are allowed to earn €600,000 and €700,000. For so long as there is a Government shareholding in those banks, the salaries of senior bankers should be capped at public service levels, perhaps linked to Civil Service salaries as ours are, and they should only be allowed to set their salary limits again or to break those caps when they have repaid in full, and bought back from the Government, all the shares that the State has taken.

Third, we need to wind down Anglo Irish Bank and Irish Nationwide Building Society. I am encouraged by the large number of independent commentators who did not agree with my party's position on this eight months ago and who now are very much coming around to that view, be it Mr. Willie Slattery of Citibank, Dr. Constantin Gurdgiev, David McWilliams, Moore McDowell and Morgan Kelly. Increasing numbers of people are coming to the view that we can save up to €15 billion with our banking policy by winding down Anglo Irish Bank and Irish Nationwide Building Society. That does not mean letting them collapse or allowing them to call on the guarantee. It means essentially a debt for equity swap, saying to the bondholders that they will not get all their money back and they will have to share in the pain by only getting the market value for their bonds, perhaps 30 cent or 40 cent in the euro.

We also need to put in place a bank levy for future bailouts because if one looks back over history, asset bubbles come and go while banking systems do collapse. This has happened on several occasions throughout history. Even with the right architecture, the best people and the best regulatory structures in place there is likely to be future banking crises similar to the one we have now. They may not be as great, or they me be similar in scale to what happened in the 1980s. A permanent banking levy needs to be put in place to build up a fund of money that can be used should a similar situation arise in the future.

We also need a new bank, a national recovery bank, as advocated by my party and now supported by the Labour Party. We need to introduce a banking resolution law to give the Financial Regulator the power to take over insolvent banks and bring them into administration. We also need a decision by the Government as soon as possible on the guarantee and on what it intents to do with it. I accept it cannot be ended overnight but a plan is needed to see how it can be unwound over time, especially as it has acted as a constraint on all banking policy.

Some 18 months after the introduction of the guarantee and five bailouts later, with the best part of €25 billion to €30 billion added to our national debt, we have the Bill before us. It does not address the issues in our banking crisis that need to be addressed. That is why we need a new approach to banking. The sooner we have a new Government to do this the better.

Noel Ahern (Dublin North West, Fianna Fail)
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I listened to the contributions by some earlier speakers in this debate some of which were thoughtful and interesting. Deputies Noonan and Rabbitte in particular made thoughtful, wise and reflective contributions looking back over their time in Dáil Éireann. I will exclude from that the contribution by the Labour Party spokesperson on finance because she engaged in approximately 20 minutes of finger-pointing.

Over the years a trend has emerged where an architectural framework is constructed and then dismantled because it is considered not to have done what was intended. We now appear to be repeating this exercise with this Bill. The 2003 Act established the Financial Regulator as an independent regulator within the Central Bank and the Financial Services Authority of Ireland, reporting both to the board of the Central Bank and the Minister for Finance. At that stage the regulator was to be responsible for the regulation of most of the financial service providers in Ireland, including the credit unions. I received a detailed letter from the credit union movement, the content of which can be addressed on Committee Stage. The credit unions see this as an opportunity to make their input.

Prior to the establishment of the current regulatory system, responsibility for regulation was spread over a number of different bodies and codes. This Bill is part of a three stage legislative process to create a new, fully integrated regulatory structure.

The previous speaker stated that this is the first of three Bills and that these measures should have been introduced six or 12 months ago. However, some of his colleagues said the very opposite last week. They questioned the reason for this new and completely integrated structure when the banking inquiry has not been held. They argued for the introduction of the broad architecture but stated that we should not go too far at this stage. Many people know what went wrong but we should wait for the report of the banking inquiry to pinpoint the weaknesses so that this three-point legislation will take them on board. The Minister has announced two further pieces of legislation to make up the complete framework. I am sure by the time they are progressed through the House that the banking inquiry will have done its work and its recommendations will be considered in that legislation.

The issue of regulation has developed over time. Now everybody is calling for more and stronger regulation both in banking and business, whereas a few years ago the trend was to have less regulation in farming, business, cottage industries and many other areas. Speakers both inside and outside the House questioned the involvement of the State and argued for less State interference. They questioned why the State was depressing initiative, flair and innovation. The Fine Gael Party and the Progressive Democrats would have been big into the mantra of there being too much regulation across society. We may have agreed with this view at different stages until the banking crisis blew up in our faces. If some of those speeches were read again, many of us might be embarrassed at the statements we made from time to time.

Speaking from the Government side of the House, it is easy for the Opposition in many respects. It is changing tack now and blaming the Government for not sorting out the statutory officers, the regulator and the Central Bank and for failing to prevent the banking crisis. All of a sudden, the regulator is God. I note the suggestions made a few weeks ago that if any Minister telephoned the regulator or mentioned anything to him, this might be deemed to be a form of pressure. Suddenly, it is inappropriate to curtail the regulator in any way.

It is very fashionable to bash the old regime and the former regulator. There is no doubt that things went horribly and drastically wrong on his watch. I never met the man but at times I was a little concerned about him. The architecture of the system - a phrase everyone uses - was set up after much discussion and departmental and political disagreement about what should be set up. He was told to do his job but he was asked to bear in mind that the Central Bank was not to be upset. It was a case of walking on eggs in his case. It was not desirable to have inter-agency or inter-statutory officer rows and it was a case of doing the job without getting in one another's hair and attempting to co-operate.

The current attitude is that the regulator is supreme and one cannot say boo to him, so to speak. We always seem to go from one extreme to another. I refer to comments about extra resources being required by the regulator. I ask the Minister to clarify the staffing levels in the regulator's office. Some people think the regulator consists of one individual. I have heard figures of 600 and 1,100 staff in his office. Before the Government approves another couple of hundred staff, I suggest it examines the structure of the sections in the office. For example, a few years' ago, a business in my constituency complained to me that it was being put out of business, more or less, by the former regulator because there seemed to be a lot of bureaucratic nit-picking. If the section controlling the banking sector is short-staffed, I suggest staff could be moved from other areas.

Members will have received many e-mails from employees of the Quinn Group. Suddenly it is all to do with proper and strong regulation. Ministers make announcements about new multinational companies setting up in Ireland or the expansion of existing companies and there is often much hullabaloo about 50 or 100 jobs being created. We are very pleased to see new jobs being created, yet we might be about to lose several hundred jobs in the Quinn Group. There is almost a delight in certain quarters that we are correcting bad practices but I wish we moved more slowly. I acknowledge more regulation is necessary and that the system failed but I would hate to think that because the mantra or the mood changed, we put hundreds of people out of work when a slightly more joined-up Government approach would save those jobs. I agree we had to stamp out weak practices and weak regulation but I wish these things could be done gradually.

Many people are of the view that the former regulatory system was meant to work. I compare it to the talk about the volcanic ash last week in which case there was supposed to be a system and a plan in place to deal with all types of events and along comes an unprecedented event and nobody knows what to do. Situations are not always as easy to handle as was expected. When I was a Minister of State, I observed a few cases where it was difficult to get the political system, the statutory officers, the Department of Finance, the regulators or the Central Bank to recognise that a problem was brewing. I recall doing my best to discourage 100% mortgages and their ridiculous marketing whereby people walking down Grafton Street at lunchtime were encouraged to take out 100% mortgages on what was almost an impulse buy. Some of the statutory officers at the time noted my views but suggested I should revert to them when I had verifiable data to prove my point.

It would be a bit like me taking out a grenade, pulling the pin and throwing it down into the well of the Chamber. Obviously, only one thing will happen – it will blow up. In such a scenario, statutory officers, however, would be inclined to say "Yes, yes, yes, let me know when it does blow and tell me what the damage is" while everyone else would say, "Jesus, that thing down there is going to blow". Likewise, statutory officers would claim the concerns about lending were only a hunch and that we cannot base major policy decisions on a hunch. They would ask one to come back with evidence-based research data, compiled by an accounting consultant, which would take a year anyway.

Some Members referred to Irish Nationwide Building Society, INBS. Last week, Deputy Gilmore asked the Taoiseach if he ever heard any rumours or whispers about the building society when the Building Societies (Amendment) Act 2006, which would allow building societies, including INBS, to demutalise, was introduced. I was involved with the legislation as a Minister of State and at the time there was a complaint from the Ombudsman concerning overcharging. Apart from that, there were no other issues of concern.

Deputy Gilmore, however, was egging on the Taoiseach about the chit-chat around the Houses and elsewhere at the time. As we all know Michael Fingleton ran INBS like a personal fiefdom. We never heard mention of any other senior officers or a board of directors there. Michael Fingleton was very much into self-promotion and, therefore, promoting his building society. I have often heard from colleagues about the widely held view around these corridors that for a journalist or a politician looking for a loan or mortgage for himself or anyone else, the friendliest and most accessible person in financial institutions was Michael Fingleton. The bigger the fish one was in the media or political pond, the more personal the attention one received. If one were a really big fish like a Minister or a correspondent, one might have even got a personal telephone call from Michael Fingleton informing one of a loan approval.

There is no doubt Michael Fingleton had many media friends who he worked well over many years for his own publicity. I often heard it joked that most members of the Press Gallery, not necessarily those in the class of 2010, got their mortgages from Irish Nationwide. I have no self-interest since my mortgage was with the EBS. However, Michael Fingleton, as everyone knows, was approachable and did many favours for many people in here and up there in the Press Gallery, as well as in other places. There is no doubt as he moved on from mortgages to property, land and development that he totally lost the run of himself, ending up in disaster for the taxpayer and, indeed, for many of his clients.

I recall before we passed the Building Societies (Amendment) Act 2006, Members were popping up every morning on the Order of Business asking when the legislation would be introduced because their constituents were on to them about when they would get their free shares from demutualisation and make their fortunes. Unfortunately, the money many of these constituents were going to get, as well as much more, has gone up in smoke. No one can condone the absolute mess made by some of the banks and building societies in recent years.

Some Members referred to whether Anglo Irish Bank should have been sold last year or kept going forever. This is a non-argument. We could not have announced we were going to close it in September 2008 because there would have been a run on the bank which we would not have been able to handle. Equally, I do not believe the bank will be there in its totality in 15 or 20 years time. I am sure we will either sell it, reduce its size or put up a new sign over its door calling it "The Happy Bank". It is a bit of a non-event. With a bank like Anglo Irish, one has to keep it going, control it, examine its strengths and weaknesses. I am sure the Government and its board of directors will decide what to do with it. Most of it is a disaster case but there may be segments that could be developed, expanded or sold off. It is a bit of a non-argument wondering what to do in the long term.

Charlie O'Connor (Dublin South West, Fianna Fail)
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I regret to inform the Deputy he has one minute left.

Noel Ahern (Dublin North West, Fianna Fail)
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I apologise for wandering.

Charlie O'Connor (Dublin South West, Fianna Fail)
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No, it has been good so far.

Noel Ahern (Dublin North West, Fianna Fail)
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I hope the Bill is right. While the legislation deals with the architecture of financial regulation, it depends on those who operate it. There is no doubt we will be paying the price for this mess for some time. It will be up to the banking inquiry as to who made the boo boo of it all. No one realised things could have gotten so bad. We were at a certain stage of our own ten-year growth pattern and then along came certain world problems that put us into a spin. The system between the Financial Regulator, the Central Bank and the Department of Finance has already been in place . Hopefully, this legislation will get a better structure in place. However, this and the other two Bills will have to be influenced by the banking inquiry that will be held over the next 12 months.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Tá áthas orm an deis a bheith agam labhairt ar an Bille tábachtach seo - cé nach dtéann sé fada go leor - An Bille um Athchóiriú an Bhanc Ceannais, ina bhfuil muid ag iarraidh a dhéanamh cinnte nach dtarlóidh a leithéid agus a tharla go dtí seo arís amach anseo. Táimid ag foghlaim ó bhotúin na ndaoine úd a bhí i gceannas go dtí seo agus, is trua an rud é, ó dhaoine atá fós i gceannas.

The last contribution reminded me of school religion classes on Pontius Pilate washing his hands of the crucifixion. The Government has no conscience when it comes to its deeds which led to the current banking scandal. That is the most galling part of the debate and the Government's actions to date. It feels it has absolutely no responsibility for the situation in which the State finds itself, for the many thousands of people who face unemployment and repossession orders or for the many thousands of young people contemplating emigrating from these shores. It is not good enough for a Government Member to stand up in here to waffle for 20 minutes and to wash his hands of the consequences of his Government's actions which have led to a banking scandal.

This State is being run by a cosy cartel of right-wing politicians. Fianna Fáil and the Green Party have been bailing out the banks with more and more taxpayers' money in the past two years. What has that achieved? What lessons have been learned by those who have caused the financial crisis? If one were to go by the previous contribution in particular, nothing has been learned. It seems to be a case of business as usual and would it not be great if we returned to the era of bonuses and pay rises? We seem to have already returned to that era if we examine recent announcements on various banks which are effectively under receivership. I refer to Anglo Irish Bank and Bank of Ireland in particular but also to Allied Irish Banks.

The bottom line is that the banks took risks because they knew that if they failed they would be bailed out, and they are being bailed out by a bottomless recapitalisation offered by the Government. They know with even greater certainty that they will continue to get away with their selfish, reckless practices which have brought this country to the brink of ruin. This Government has rewarded bad behaviour when instead it should have sent the financial shysters to sit on the naughty step. In fact, they should be in jail.

This week, Goldman Sachs is being investigated in the United States for fraud. It has been credibly alleged that, as the banking crisis and recession took hold, Goldman Sachs exploited that as an opportunity to make further profit for itself at the expense of others. Reports suggest that while the economy was turning belly up, Goldman Sachs developed and sold risky mortgage packages and then bet against them. That was a win-win position for the Wall Street giant. A series of damning internal Goldman Sachs e-mails have been published by the United States authorities, one of which reports the good news that the wipe-out of one security and the imminent collapse of another meant that Goldman Sachs would make $5 billion from a bet against the instruments it had set up and sold.

Even after the US authorities moved to charge Goldman Sachs with fraud against its investors to the tune of $1 billion, and the German and British authorities in turn commenced investigations, what was its response? Goldman Sachs, one of the top companies, could not care less about the investigation. It awarded itself a new round of bonuses for its staff amounting to $3.5 billion.

One might ask what all of that has got to do with us. As the Government consistently reminds us, in a futile effort to evade taking responsibility for the nation's current troubles, we live in a global economy. Our banks are tied up with the international financial markets. Our banks eventually follow where their international role models lead, and Goldman Sachs analysts issue assessments of Irish banks which have consequences for their ability to raise capital. The per-share profit estimates issued by Goldman analysts have consequences for Irish stocks. If Goldman Sachs is found to be involved in the fraud alleged, that has consequences in terms of all the advice the Government listened to from that quarter in recent years.

What has the Government done in response to the growing evidence of fraud by this financial ogre? I would like to know if it has blacklisted Goldman Sachs from future contracts and consultancies. Has it sought to minimise the consequences for Ireland of the activities of this organisation? It has not done so to date. In fact, the Fianna Fáil-led Government sought an endorsement of the NAMA plans from Goldman Sachs and it has been happy to rely on that ever since. Is that a flawed endorsement? Is it to benefit Goldman Sachs? Is Goldman Sachs betting against us? Is it betting on its failure? Is that what is behind its endorsement?

We should not be under any illusion. Fine Gael would not do any better. The slimey Fine Gael hack, Peter Sutherland, who is pumped up on his own arrogance and self-importance, would close half of the Irish universities if he got his way. He is a chairman of Goldman Sachs International. I note also that one of the Senators in the other House is a director of Goldman Sachs Ireland. That world of cosy, crony capitalism which both Fianna Fáil and Fine Gael inhabit is a source of our country's woes and almost our financial ruin.

It is not just the political masters who are responsible, but also the financial masters. Bank of Ireland announced today its intention to impose another round of interest rate hikes on mortgage customers. That follows the 50% increase on home insurance premiums it commenced recently. The Government is a 36% shareholder in Bank of Ireland, yet Bank of Ireland continues to enjoy the guarantee from the Government. That is not acceptable because Bank of Ireland is penalising its customers for its mistakes.

The Government, using its shareholding, must intervene because Bank of Ireland is screwing the taxpayer who is bailing it out. It is further screwing the taxpayers who have mortgages with it through its interest rate rises. Is that to pay for its bonuses or for its failed gambling and to ensure it can continue to make profits on the back of the Irish people? It appears it is in a win-win position because it does not suffer the consequences.

One of the roles of the Central Bank is to curb those excesses and ensure that those who gamble, and it is a major gamble because the stock market is playing monopoly with people's lives and we have seen the consequences of that recently, are not allowed to pass on the consequences of their gambling to the taxpayer. That is what has been happening in the banking sector in recent months and in the past two years in particular.

A property lending binge was embarked upon by the Irish banks for almost a decade, and possibly longer. The Government facilitated that and was very much pro-real estate policy. For almost 15 years, the growth in bank credit outstripped the nominal growth in GNP by a factor of 2% to 3%. Poor lending standards, unregulated products and bonus bonanzas brought the financial sector to its knees.

The Central Bank's role should have been to show caution but it did not do that. It ensured that credit was readily available and, as a result, a range of financial liberalisation measures including relaxation and abolition of exchange controls, interest only mortgages, 100% mortgages, equity withdrawal, re-mortgaging and mortgaging with longer terms occurred under the watch of the Central Bank and the Financial Regulator. All of them occurred under the governance of the Fianna Fáil Party.

Who suffered from the miserable excuse for regulation that was prevalent in this State? It was not any member of the current Cabinet or of a Cabinet that governed during that period. None of the consecutive Taoisigh or Ministers for Finance who presided over that regime has been held to account to date. It is hoped the electorate will hold them to account in due course. It was not any of the bank directors who abused the system for their own gain, and we have seen by way of a drip-drip measure the way they abuse their position, and nor has it been the auditors or the accountants who were blind to or hid the abnormalities across these financial institutions.

The people who have suffered are the ordinary people who are being crippled by the failure to regulate properly. I refer to the people who got 90% to 100% mortgages and those who are now facing mortgage interest hikes while simultaneously losing their jobs and having social welfare cuts imposed on them because their taxes are being used to bail out banks and property speculators.

The economic crisis would have been less severe had legislation or regulations to restrict predatory lending been adopted. Some argued at the time that loose lending standards would enable more individuals to become homeowners, but it should have been made clear that giving a loan to somebody which was beyond their capacity to pay is not doing them or society a favour; the opposite is the case.

The main beneficiaries were those giving the loans. People are now burdened with unsustainable mortgage debt and the prospect of repossession. This is the direct effect of Fianna Fáil dismantling of regulation and its failure to heed warnings from economists and members of the Opposition. We heard on television and radio advertisements for financial services products at the end of which was included the familiar by-line "regulated by the Financial Regulator". Looking back, what good did this do ordinary people? From what we can see, financial regulation during the most controversial period in our economic history was redundant. In fact, it gave licence to the risky and speculative financial practices that have thrown Ireland into the economic mess it is now in.

We want all those who participated in and encouraged the practices that brought about the current crisis held to account and criminal convictions pursued. There were early warnings of what the banks were engaging in. There was little doubt what caused this and little was done to improve regulation in the banking sector. The OECD criticised Irish financial regulation and supervision, in particular in regard to Anglo Irish Bank, saying that the threat of enforcement was too weak and that the regulator should have been better informed and more intrusive in dealing with that institution. The signs were ignored by the Central Bank, the Financial Regulator and the Government. Had any of them paid attention to the balance sheet growth of Anglo Irish Bank, actions could have been taken to curb the crisis that was developing in that institution. Usually, a 20% growth in any financial institution would be a catalyst for action by the Central Bank or Financial Regulator. In the case of Anglo Irish Bank the average annual growth was 36%.

While it was uncovered in 1997 that directors of National Irish Bank were acting ultra vires, it took 11 years before they were brought to court and struck off. There should be no delays or backlogs in dealing with wrongdoing in the financial sector. The Minister for Justice, Equality and Law Reform and Garda Síochána have to date failed to secure the prosecution of bankers despite 18 months of investigations. Are we to wait a further ten years before one or two bankers are prosecuted? I hope not. The white collar crime and corruption that has engulfed the Irish banking sector needs to be treated as seriously as any other form of crime and needs to be prosecuted quickly and effectively. The failure to date of the Minister for Justice, Equality and Law Reform and the Government to prosecute the bankers is undermining the financial well-being of this State. What they did is the equivalent of economic sabotage. Other people have referred to this as "treason". They have through their actions put not alone the banking sector but the entire country in crisis. Regulatory sanctions should in the future be sufficient to ensure compliance and to penalise proportionately in respect of proven breaches. We need to ensure this happens. In the United States, Bernie Madoff was imprisoned on 12 March 2009, some 91 days following the investigation by authorities there. The failure of the Irish Government to conduct a thorough investigation and to bring prosecutions against bankers and financial miscreants can be attributed to a lack of political will and a fear of what will be uncovered, namely, that these malpractices were allowed to happen because of the Government-created culture and the exposure of political favouritism.

I heard the previous speaker refer to Mr. Michael Fingleton and Irish Nationwide Building Society. He stated that Mr. Fingleton ran that institution like a personal fiefdom. There are many within and outside this House who are beholden to Mr. Fingleton. These people need to be exposed so that the full extent of that corruption is known. This is the case not alone in terms of Irish Nationwide Building Society but also in regard to Anglo Irish Bank, Allied Irish Banks and Bank of Ireland in respect of favours given and by which all of the regulations and rules in regard to mortgages were breached time and again.

In terms of Anglo Irish Bank, the skulduggery and manoeuvrings of that bank will possibly result in the loss of 6,000 jobs in the Quinn Group. A case can be made, given the nature and importance of these jobs in the Border region and in parts of Dublin, for nationalisation of the Quinn Group until such time as it can be sold. It should be nationalised to secure those jobs and existing business. It can then be sold off in the future if the State so wishes, as it did with the PMPA. The case can also be made that we already own these companies because of the Government bailout of Anglo Irish Bank and the fact that we have underwritten it. Somebody needs to speak up to protect those jobs. Perhaps that company could be nationalised to protect the interests of the State and the 6,000 jobs involved. I ask the Minister of State to consider that.

There is a discrepancy between the private and social returns of lending. What we are discussing this evening is the Central Bank Reform Bill 2009 and the job which the Financial Regulator needs to do.

Charlie O'Connor (Dublin South West, Fianna Fail)
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The Deputy has one minute remaining.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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A financial regulator needs to show that it has the resolve to monitor and enforce. There needs to be a strong appetite and a political support for strong enforcement action. If the regulator lacks the political support needed to impose sanctions, enforcement may be severely compromised. This was the problem with principles-based regulation and cannot be allowed to continue. I believe much more needs to be done to protect ordinary people who deal with banks on an ongoing basis. An alternative is needed to the business practices of the big banks who ignored the small creditor and deposit holder. I believe we need a State bank which looks after these interests and has local branches. Many of the big companies who have caused the mess we are in are those who not so long ago closed small branch networks around the country. It is a pity some of these banks did not concentrate more on small lenders and businesses. Perhaps then we would not be in the crisis we are in.

It is time this Government stood back and allowed somebody else to take over. I welcome the Bill. However, I do not believe it has political backing because the people behind it and those on whom they are depending for advice are the same people responsible for the predicament we are in.

Charlie O'Connor (Dublin South West, Fianna Fail)
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I call Deputy Jim O'Keeffe, who also has 20 minutes.

Jim O'Keeffe (Cork South West, Fine Gael)
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On the face of it, the Central Bank Reform Bill 2009 appears to be reasonable legislation. I compliment those in the Department of Finance who worked on it. Having spent time as Minister of State at the Department of Finance, I am aware of the expertise there, which it is evident has been brought to bear on this Bill.

Having said that, a question arises, not in regard to the work of the officials on the Bill, but in regard to its failure to address a particular issue, namely, we still do not know why the previous regulatory system failed so spectacularly. That system was put in place approximately ten years ago, which is relatively recent.

This followed a report by a joint Oireachtas committee in 1998. That 2003 Bill was the basis on which a system was put in place which was supposed to be the answer to all our problems but it did not work. Now, we have a new reform Bill, the mechanics of which appear to be fine. However, I believe there is a fundamental flaw on the part of the Government in bringing the Bill to the House at this time. When introducing the legislation, the Minister stated the causes of the financial crisis should be and would be investigated and that we would have a report in due course. In the meantime, we have scoping exercises. They will be followed by a commission of inquiry which will report only God knows when, but hopefully before the reports of the tribunals sitting in Dublin Castle.

If we are to have any confidence in a new system, surely we should know now the causes and the reasons the outgoing system failed so spectacularly. If we do not know the flaws of the outgoing system, how can we cure them? This is a problem and, to a large degree, we are flying blind. It is not the fault of the officials who put together the mechanics of the Bill; they stand up. However, because we do not know what caused the previous failure at the political end, we cannot really judge whether the proposed new system will be adequate to ensure such a failure does not recur in future.

Bernard Durkan (Kildare North, Fine Gael)
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That is it exactly.

Charlie O'Connor (Dublin South West, Fianna Fail)
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Deputy O'Keeffe without interruption, please.

Jim O'Keeffe (Cork South West, Fine Gael)
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I accept the supporting comment from my colleague.

Charlie O'Connor (Dublin South West, Fianna Fail)
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I will protect the Deputy only if he wishes.

Jim O'Keeffe (Cork South West, Fine Gael)
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In many ways, I am in favour of the mechanics of the legislation but this fundamental problem remains. We should work on it now; we cannot wait any longer. This Bill does not provide the answer because we should know at this stage what caused the problems of the past but we have not even started.

There has been a report in Iceland, which had an even more spectacular failure. That report is complete and I understand it runs to nine volumes and was published some weeks ago. There was no restraint in that report. It ladled out the blame where it was clearly established. Regardless of who the individuals were, they were pinpointed. The real question is why this has not happened here. One must be driven to a certain conclusion. I am long enough in the House now not to get into political slagging, but the suspicion exists that the reason for the delay in carrying out an analysis, an examination and a report is the fear of the Government that the finger of suspicion would point at it.

I recall the mantra of the then Taoiseach, Deputy Bertie Ahern, the then Minister for Finance and all the Ministers. It was that there were no problems and that the fundamentals were sound.

Bernard Durkan (Kildare North, Fine Gael)
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That is right.

Jim O'Keeffe (Cork South West, Fine Gael)
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The view was that if anyone made any suggestion that the fundamentals were not 100% sound, he or she was virtually betraying the country. It was unpatriotic even to think of it, never mind to suggest it. This is the reason we do not have such a report or analysis and it is a basic difficulty I have with the Bill. In many ways, we are putting the cart before the horse. We are attempting to solve a problem without really knowing its causes or without having a real analysis of same. We are flying blind.

People have stated that no one could have known anything like this would happen and no one knew about the machinations that went on in banking circles. One of the best books I read some years ago was called Liar's Poker by Michael Lewis. He gave an insider's account of the graft, greed and corruption involved in building up the bonuses of those working in a particular financial institution. He gave a blow by blow account. It was quite clear that the first item on the agenda in all transactions was how much one could squeeze out of them for the individual involved and for the bank for which that individual was working. Every client was a fat goose to be plucked. In the book, Michael Lewis detailed exactly how it was done. A bank collapsed, but it was not Lehman Brothers. The bank about which he wrote was Salomon Brothers, which went bust 20 years earlier.

Anyone who was involved in the business of financial regulation or supposed to be involved in the system of supervision and monitoring had a prototype of the carry-on that was unfolding in these financial institutions. It was written by an insider who had been directly involved. He admitted he was involved in the activities about which we are now so horrified and surprised and about which the regulators and those supervising the business had no clue. No one knew anything about it. Were they all blind? I presume there was a relevant official section in the Department of Finance. Was any Government official or anyone in the Central Bank or the regulator's office aware? Did anyone else hold even the slightest suspicion that the same activities were taking place under our eyes in this country? Apparently, it was happening under their noses but they did not have the slightest suspicion.

The warnings were there. I do not refer to the 20 year old blueprint in Liar's Poker which set out how it was to be done, but all the warning signals were there nevertheless, including the greatly inflated profits that were being made. I have been involved in business, politics and law for a long time. Sometimes when one is making inflated profits one may be inclined to believe it is too good to be true, but it is and it was too good to be true. However, no one seemed to have the slightest idea that these highly inflated profits, the magical growth in such firms as Anglo Irish Bank and the multi-million euro bonuses, were suspect. It appeared those involved were bankers walking on water, who could do so with impunity and then take off with fat, million euro bonuses in their pockets. The warning signals were everywhere and should have been obvious to anyone who had any function whatever in supervising the shambles that was about to unfold.

I have been reading the Economist for many years. I recall it warned about the bubble that was developing in Ireland some five years ago. It reported that the number of units being constructed exceeded total construction in the entire United Kingdom, a place with a population some 15 times greater than ours. It warned about what was happening but no notice was taken. I refer to another aspect that has not been sufficiently explored. What was the relationship between the bank and other financial institutions and those dealing with such institutions? Was the person dealing with it a customer or a client? Was there a duty of care to that person? Was there a fiduciary relationship? Was it just a limited contractual relationship in which the fat goose waited to be plucked, even though it was nominally a client or customer of the bank? Under the new system, will these institutions owe any responsibility to their clients or customers? Is it a professional relationship at all?

When one follows the hearings that are taking place in the United States at the moment, with regard to certain exploits at Goldman Sachs, one wonders whether they could happen here under the current system. If not, why not? What protections are preventing it from happening? Will it be able to happen under the new system? When one considers the relationships at Goldman Sachs, one has to wonder what duty of care was owed by the institution to its clients. Without prejudging the outcome of those hearings, I have to say there does not appear to be much evidence of fiduciary care on the part of those involved in that transaction. That leads into the question of ethical responsibility. Are there guidelines that set out ethical responsibilities in this area? Are there no ethics? Is it a case of every man and woman for himself or herself, and let the devil take the hindmost? What is the Government's approach to ethical standards, at least in the future if not in the past?

This issue is of some relevance because these problems are continuing to happen today. What responsibility does a financial institution have to its clients? I have come across the case - I had some discussions on it today - of an established bank that is dealing with a small company that has 30 or 40 employees and is doing plenty of work, thanks be to God. When the company applied to have its overdraft of €500,000 renewed, the matter was considered. It is not an exceptional amount for a company that has been in operation for 21 years and has been dealing with the bank in question throughout that time. The company was notified on a Monday morning that the overdraft was not being renewed - in fact, it was being reduced to €200,000, with effect from a date four days later. What kind of way is that for an established bank to do business with an established customer? Many issues of this nature need to be explored. I intend to suggest a means by which that can be done.

The future role of the financial institutions is another issue that has not been considered in this debate. Anglo Irish Bank has been nationalised and the other main banks have been part-nationalised. What are the responsibilities of those working in such banks? I hope they will not be concerned with trying to get inflated bonuses for themselves. To what extent are they answerable to the boards, shareholders and customers of the banks? Does their business essentially amount to increasing the profit line of the banks, with little or no emphasis on increasing their underlying value in the interests of customers or clients? On the question of pay and bonuses, bankers have always told me that if one pays peanuts, one will get monkeys. The bloody trouble for us was that in many cases, we paid millions and we got monkeys nevertheless. In some instances, it was worse than that - it was clearly a case of criminal negligence that will cost taxpayers for decades to come.

Bernard Durkan (Kildare North, Fine Gael)
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Hear, hear.

Jim O'Keeffe (Cork South West, Fine Gael)
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There were instances of sharp practice. People who took no risks and added no value to clients or customers ran off with multi-million bonuses stuffed into their pockets. Will that happen in the future? If not, why not? When I spoke to people about this issue, I was often told it was an international question. The monkeys compared themselves to monkeys in other jurisdictions who were doing exactly the same thing. We were expected to accept that it was okay. How will that be dealt with in the future? I believe the labourer is worthy of his hire. There are people who are very good at this business, but they are few enough and far between. We need to establish a system that allows those who do a good job to be adequately rewarded. Essentially, how can we separate the good, the bad and the ugly?

A number of other issues have not been mentioned during this debate. What is the Government's attitude to the possibility of introducing a Tobin tax? Such a proposal, which would involve introducing a levy on a wide range of financial transactions, has been around for a long time. What is the attitude of the Government to the International Monetary Fund's proposed financial stability contribution, which would meet the fiscal cost of any future Government support for the financial sector? What is its attitude to the proposed financial activities tax? When one thinks about some of the fat cats who are around, it is appropriate that the tax is delightfully abbreviated as the FAT. There has been no debate here on the FAT, which would operate as a tax on remuneration, profits and bonuses. What is the Government's attitude to it? Has there been an adequate debate on the merits of principles-based regulation, as opposed to rules-based regulation?

I would like to conclude by focusing on monitoring and oversight. What is the best practice in that regard? Regardless of the outcome of the theological argument on the differences between principles-based and rules-based regulation, it is essential that there is proper and genuine monitoring and oversight on the part of the Minister of the day, the appropriate section in the Department of Finance, the regulatory authorities within the Central Bank and the Oireachtas. I have called for years for the establishment of a standing committee of the Oireachtas to deal with banking affairs. It could be modelled on the Committee of Public Accounts, to some degree. Such a committee should be adequately resourced. Obviously, it would not interfere with day-to-day decision-making. It would be able to discuss broad issues of relevance in public. If questions could be answered transparently and openly by the top people in financial institutions, we would get the accountability that is needed, which is a major issue. While the Bill proposes that certain functions be given to the Oireachtas, I do not believe it goes half far enough. We need a standing Oireachtas committee on banks to be established. It would play a major role in ensuring that the kinds of failures which have occurred in the past do not arise again in the future.

Bernard Durkan (Kildare North, Fine Gael)
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It is timely for the House to be considering the Central Bank Reform Bill 2010. The various points raised by my colleague, Deputy Jim O'Keeffe, sufficiently illustrate the need for reform or, if not reform, total and absolute application of the regulations that are already in place. On 29 September 2008, this House and the country as a whole became aware of some of the implications of certain actions, from a financial and budgetary perspective, such as the hardship that was likely to be inflicted on the Irish people. I mentioned at the time that the Governor of the Central Bank, certain officials in the Department of Finance and the Financial Regulator were at fault and should be fired, unless it was the case that they were carrying out Government instructions. Whenever something extraordinary happens in any Department - in relation to child abuse, crime or anything else - it is always decided that there is a need to introduce legislation but there is never much regard for the failure to recognise the legislation that was already in place.

The latest phrase we hear is "systemic failure". The system did not fail, but many of the people within it failed. Many of the people who oversaw the system failed. Many of the people who were in positions of power, authority and direction failed. The people and the country paid and will continue to pay for many years to come.

I refer to previous debates in the House. Why does everybody decide something should be done after the crisis? There were procedures in place to alert everybody to what was happening long before it happened. Did somebody come forward and say, "We could not do that because there were no regulations, accounting procedures or guidelines. The fundamentals are not quite right."? They were not, and have not been for the past ten years. Everybody knows that, but nobody wants to be seen to admit it. I cannot understand that.

I thought at this stage in the debate somebody would have stood up and said we now have a serious problem. The problem was that nothing was done by the people in authority or by the people who give direction to the people in authority. As a result, the nation and everybody in it now pays. I have said many times during the passage of legislation in this House that I would like to know if the Bill, when it is passed by the House, is likely to have a serious impact. Will it be seriously adhered to by the people for whom the Bill was produced in the first place? I am not referring to the ordinary citizen, but the people in control, those with power and direction, those in Government and the relevant Ministers and authorities. I see no indication that is likely to happen, which is unfortunately the case.

I am a member of the much-maligned Committee of Public Accounts which sat to examine issues of this nature under the DIRT inquiry some years ago. It was brought to the attention of the members of the committee at that time that various Acts of Parliament were ignored at crucial times. Nobody could be found ultimately responsible. There was a reference to a vague statutory instrument which could not be tracked down to anybody in particular. The consequences for the country and the running of it were colossal, as was the collection of taxes which were due. It was a regulatory system. At that time there was also a tax amnesty.

What has happened since is nothing more than a total and cavalier disregard for every lesson, issue and direction given by the legislators in this House at that time. Why did that happen? We came to believe that we were the wealthiest country in the world. What a lot of codology. What a laugh. We were never the wealthiest country in the world. We pretended we were, just like those who said they would pay themselves because they were good and deserved it.

In the past week all of us have had the honour of being the subject of a media investigation into whether we qualified for or received pensions, and whether we were illegally receiving pensions and if we would give them up voluntarily. I say without the slightest hesitation that I have no difficulty in not drawing down a pension because it is insignificant in any event. However, I have difficulty with a smokescreen being created which is of benefit to those who want one at the current time. Serious issues which affect the budgetary situation in this country were rejected by the European institutions in the past week and were discovered as being seriously remiss. There has not been a single word about it. It is an issue which will put a further liability of billions of euro on the backs of the people and taxpayers of this country for the next ten years.

There has not been a word of inquiry from the media at all because they have been well and truly harnessed. I feel sorry for them. They have been hijacked by the Government or by forces in this country who have an interest in this issue. This week we should have been discussing the implications of the decision by EUROSTAT regarding off-balance sheet accounting which has become commonplace and was commonplace in many institutions in this country. I cannot understand why we have not had a debate on that issue. I cannot understand why the whole country has not come to a halt and said, "What is happening here? Why has something not been done about this?".

We have been discovered at last. All of a sudden there was a major issue about pensions. It was a satisfactory smokescreen. I often wonder whether somebody has hypnotised the media into the belief that this is where the real pot of gold is because they should have been focused in a different direction. I want to dwell on this point for a moment. We now live in an era of experts. We have experts to tell us about virtually everything we want to do. We have experts who want to tell us when, how and where to invest, how to make more money, be better and move ahead more quickly in the world and how to be faster and more glib than anybody else. However, we do not have any experts who seem to want to adhere to fundamental structures, guidelines and regulations which have been put in place for a purpose.

It was well known in this country for at least eight or nine years that the normal guidelines which applied to the financial and banking sector were no longer being observed. It was a fact of life. Three or four people in the media were the only ones who raised questions about it. Deputy Jim O'Keeffe and people on this side of the House also referred to it. Every time anybody drew attention to that issue, he or she was denigrated and cast out as being unpatriotic, unfit to be Irish, not proud of the nation and no longer a proper citizen. That is what happened.

There are guidelines laid down in financial and banking services which require certain procedures in regard to borrowing, lending and back-to-back loans, all of which we discussed and dealt with at length during the DIRT inquiry many years ago. All of this information was available. Everything had been learned and done and dusted before. A short time ago we were bigger and better and the fundamentals were right. The fundamentals have not been right for at least eight to ten years. The quicker we recognise that in this House, the better. If we do not recognise that smokescreens do not solve the problem, what the real issues are and their full implications, and the full and likely impact on the country and the political and financial systems, we are wasting our time.

I do not want to be confrontational; it is of no benefit to me whatsoever as an Opposition politician. I find it extraordinary when the media concentrates on the politicians and the Members of this House. This is Parliament; it debates and the Government makes the commitments. The Government comes into the House - in a democracy it must always have a majority unless there is a hung Parliament - and disposes. That is what has happened here, and the country has paid the price for it.

There were many experts in the so-called good days. If we want to find out whether they were good days, we should ask any small businessperson, shopkeeper or man or woman who manages a household budget in the country. They know where everything went wrong and they told us then that this could not last and this was crazy stuff. Nobody wanted to stop because everybody was having a good time. Now the emphasis in on punishing the most readily available victim. That is what happened in the French Revolution. Another guillotine was set up to appease the crowd, which was dissatisfied. A dangerous scenario could emerge unless normality is restored. It can only be restored when there is clear commitment that those who are given the responsibility to oversee discharge their duties, carry out their functions and ensure regulations are observed to the letter; otherwise, we are wasting our time. The way it is looking, the people who were charge with these responsibilities will not pay. They will escape and move away to a far flung place where the sun shines and from where they can talk back to us as if they have done no wrong. We will get one chance at this. We need to restore public confidence not in politicians or the institutions of the State, but in those who were given well paid jobs in these institutions.

I am not a spokesman for the Taoiseach or a Minister. Many of those who failed to do their job, as a result of which the country is paying heavily, were paid multiples of the salary of the Taoiseach, prime ministers in other jurisdictions and even the US President. What are we at? Today, the media are occupied with somebody's pension. In the order of importance, where are we going? The media will say what they are doing is about perception and it is the right thing to do. That is an education at this stage. If the right things were done, we would not be in the position we are now.

I often wonder where people obtain their information. I received an e-mail earlier from a poor, unfortunate guy who was probably genuinely expressing his view. He said he had a terribly hard year in 2009, having worked 60 hours a week, and he paid his taxes and so on. He did not say this but I presume he had come to the conclusion that Members of both Houses had a much easier time. I assure everyone that I worked more than 120 hours a week last year. I did not claim credit for that nor do I wish to do so. That is the job we do. However, I like to think other Members and I do the job to the best of our ability without expertise, without reference to advisers and spin doctors and without excuses afterwards because any decision we make, we stand over. That is the job we are elected to do and, at the end of the day, we go before the people again to secure another mandate.

If we continue to cloud the issues and raise smokescreens in the way we have, we will be found out in a much more serious way. Suddenly, European institutions and other international bankers will awaken to what is happening in Ireland and they will have a good look at the institutions here and the people running them. They will not look for outside experts because they will look for the experts who are in place and who were allegedly carrying out a function. They will ask why they did not carry out the function and why they have continued not to do so.

There have been financial crises in other jurisdictions but it is also necessary to recognise that we had a great deal to do with our own problems. We did not need imports. We did it so well that it would make a great film even covering the ten-year period it took to do it. At the end of the day, the people who are deemed to be the culprits for the situation in which we find ourselves are the politicians, not the Government or the Ministers who were in direct control at the time and those who were in institutions such as the Central Bank and the Department of Finance or the Financial Regulator. In God's name, what were they doing? Were they at their desks? If so, were they awake? They cost the country dearly.

I do not see any stomach in the media or elsewhere for somebody to carry out a serious investigation into what happened. Worse still, this could happen again. In the same way we had the DIRT inquiry and the scam associated with it, light fingered regulation could be repeated. There was clearly a disregard for all the regulations in place and, ultimately, the country will pay. The sad part is people on social welfare and those whose mortgages are several months in arrears and who are in danger of having their houses repossessed will pay in a severe and serious way for the nonchalance of those in charge of the system who had no regard for what was happening. They will pay again and again as long as there is disregard for the regulations in place.

I referred to the need for change but there is no need to amend the legislation. The regulations are in place but they just need to be put into operation. Why is the Government hiding behind camouflage whereby every time there is a crisis, the answer is to introduce more legislation? That has never worked. Where emergencies arose over the past number of years, it was clear the necessary regulation and legislation was in place. However, the problem was somebody decided to ignore it. The people running the system have failed, not the system itself, and until those charged with responsibility for the system recognise the job they are supposed to do and come forward, put their hands up and accept that responsibility, we are wasting our time in the House. We are debating in a vacuum. The debate will have no impact on the future or the past and it will only cause the public to have even less confidence than they have in what they see as the culprits for, and the cause of, the problem.

Dáil committees are deemed to be necessary because of the success of the DIRT inquiry. It is cited as the epitome of how inquiries should be carried out. However, there is only one thing wrong with this proposition. There are powerful vested interests in all the services in this country and when a committee of the House, as opposed to the courts, goes into investigative mode, gets close to the target and begins to pinch those who feel threatened, there will be a reaction. It will be sinister, punitive, dangerous and intimidating and the success of the investigative procedure will be determined by the degree to which Members will be committed to take the hit and the criticism that will go with it and to do their job. That will be an example for those throughout the system who did not do their job for a long number of years.