John Gerard Hanafin (Fianna Fail)

I commend the Minister on his speedy response and on the introduction of the Credit Institutions (Financial Support) Bill 2008. There has been significant praise throughout Europe for the efforts of the Minister. The proof is that there is a strong indication that net inflows into Irish banks are looking positive. Last year there were long queues outside Northern Rock, a UK bank, and it was nationalised. It has now said it might stop taking deposits because it has reached its deposit limit.

The Minister has placed our economy — not our banks — on a sound footing. That was the purpose of this Bill. It was not introduced to protect the banks or the people who work for them but to protect the people of this country. He is to be commended for his speedy response, and for the strongest response in Europe. As a result of that guarantee, Irish banks will be highly capitalised and will have the one asset lacking in international banks currently, namely, liquidity.

The alternative was to do nothing. Lack of intervention in the 1920s, which is widely credited to have caused the stock market crash, resulted in a recession turning into a full depression which lasted throughout the 1930s. During that time in the United States, output dived by25%, 25% of the people were unemployed, income fell and deflation took hold. As we saw happen, there were frequent runs on banks as desperate consumers withdrew their money, eventually leading to the introduction of the bank holiday which was not to give people a day off but to stop them withdrawing money.

What we have averted by speedy and proper action is a serious crisis. It was not a serious crisis of our making. Given that what happens in the Far East and on Wall Street can affect our lives, we should have a say in how they are regulated and run. There is no doubt there was desperate corporate greed in America and Gordon Gekko took hold. Greed was not good. Billions were paid in bonuses to people who repackaged mortgages. The only criteria for getting a mortgage was that one was still breathing. That was not right because the person who gave the mortgage was no longer responsible and responsibility was transferred to the person who bought the repackaged mortgage.

The Minister's speedy response has served the country well. He has set an example which may be followed by the rest of Europe. We may soon see very strong net inflows into Irish banks not only from the UK but from Europe and the US, as well as confidence immediately restored by this necessary action. Each time there is a net inflow, our exposure is reduced. We have given an insurance policy, and no more than that.

The difficulties in the Irish market were not the reason this Bill was introduced. The reason it was introduced was because of the domino effect. Banks were not lending to each other because confidence had gone. Nobody knew which bank was secure and which bank was not. This was visited on us; we were the innocent party in this. I commend the Minister on taking action on behalf of the country.