Alan Kelly (Labour)

I welcome the Minister at this fine hour. The Bill is unprecedented. The reality is that the Minister for Finance is being forced to bring it before us or else the banking sector in Ireland will be facing what many have admitted is a catastrophe. The Irish banks have a build-up of liabilities on their books due to the backing for and dependence on the construction industry. Consequently, they were out of favour on international markets. That is the tone and reality.

The Minister has acted because he was backed into a corner. It is similar to his reaction a few weeks ago to guarantee deposit holders and raise their protection level — he did so only after it had been pointed out to him time and again. Some have said the Bill proposed is an Irish solution to an Irish problem and that worries me. It is not true to say there were no other options because there were, whether it was through an equity shareholding or something similar. Were other options examined and, if so, will the Minister outline any of the ideas considered?

The Government has gone down the road of deciding to bail out the six banks. I agree with Senator Bacik when she raises the question of why these six banks specifically. I would like more information in that regard. It did not emerge in the debate in the other House. We are gambling the State's silver on the banks. They must respect this and act accordingly, a point to which I will return.

We must examine how we got to this stage. The issue of regulation needs to be examined. We have a banking system that operated recently under the following premise. They could give huge loans to developers across the country without any comeback, especially when it was obvious that the sector was heading for troubled times. They could give out reckless subprime mortgages to people who could not afford them; it was crazy that first-time buyers were given 100% mortgages over 40 years. How was this justifiable? There was real change in the area of credit cards with consumer limits with which they could not live. They were allowed to introduce banking practices that were borderline in their justification whereby people were encouraged to change their banking methods in order to maximise their exposure. In 1992 a couple on lower executive salaries were able to borrow X amount of money from financial institutions; in 2007 they were able to borrow up to five times that amount. If that is not evidence of banking gone mad, that does not show that regulation was not working or demonstrate greed, then I do not know what does. There is a lack of ethics in how the banks have been behaving, pure and simple. However, we would not think that was the case from the way the bankers presented themselves and their analyses in front of the Joint Committee on Finance and the Public Service a number of months ago. The change in international factors has brought new challenges but outside of that everything was rosy in the garden. Were they living in the real world? It seems not.

I do not agree with Senator O'Toole. The chief executive of the Irish Banking Federation said:

We have a clear purpose, which is to foster an innovative, stable and dynamic banking system which contributes not just to the economic life of the country but also its social well-being. We take this seriously...

I argue they did not take it seriously enough. Either the bankers did not know what was coming down the tracks or they simply were not telling the truth. Either scenario is equally worrying.