Joe O'Toole (Independent)

I wish to share time with Senator Bacik.

I have no inhibitions in supporting this bold, courageous and necessary legislation. Senators should take care when commenting in the House and those who make statements should be prepared to back them up. For the past two weeks, outrageous, unfounded and unfair criticism has been made of the Financial Regulator by Members of both Houses and commentators across the board. The Oireachtas gave the regulator the powers it wanted to give it. The Financial Regulator does not have legal power to ban products such as 100% and 110% loans because we chose not to give him the authority to take such action.

Approximately five years ago — the Minister of State was a Senator at the time — when the Seanad debated the issue of directors' compliance statements only a small number of Senators fought for such statements. I ask Members to read the debate to see how committed Senators were to directors' compliance statements because the outcome of our deliberations was a watered down and clearly inadequate version.

While I hold no brief for the Irish Banking Federation — like Senator Twomey I consistently criticise the organisation — the harsh reality is that the points it made in its presentation three months ago are as factually correct now as they were then. People can argue otherwise if they wish. If there is toxic debt of a level that should worry us, I cannot find it and I assure the House I have made many inquiries in this regard in the past week. If someone is aware of toxic debt, he or she has a duty to say so tonight. I must base my decisions on what I have learned.

Congressmen emerged from the events on Capitol Hill in Washington last weekend looking like a bunch of amateurs with as much credibility as Ballymagash district council. They could not deal with the problem in the United States, whereas all sides in both Houses of the Oireachtas have approached the problem here in an admirable manner, showing unity of purpose, even if there are differences in approach. The debate in the Dáil today was conducted in a highly impressive manner by the main spokespersons, although some of the comments made by other Deputies were completely off the wall.

I regret we have not heard how the proposals will work. The legislation before us will not bail out the banks. I will give an example because it is the only way the issue will be understood. If a developer borrows €400 million from the banks to buy half of Ballsbridge and then goes belly up, the banks are left holding a debt of €400 million and the developer's property in a depressed market. They must then liquidate the property, for which they will receive perhaps half the value. This means they are owed €200 million, as a result of which they must access their capitalisation. As Senator Twomey noted, Irish banks' capitalisation is stronger than that of any other national banking system in Europe because the Financial Regulator imposed on them the most intensive and stringent demands in terms of loan-to-value and capitalisation of any European country. Last year, for instance, Irish banks cried foul arguing that the stringent regime operated by the regulator placed them at a disadvantage compared to other banks. For example, in the area of loan-to-value the regulator insisted that any loans of more than 80% of a house's value had to be backed up——