Jim Walsh (Fianna Fail)

One does not do that until the game is over. We are only part of the way through this particular game. I went to the Davenport Hotel today with a member of the Labour Party. On the way down she said, "at least we are fortunate to have two of the best intellects in the Houses of the Oireachtas at the helm at this particular time". I agreed with that. I compliment the Minister on the initiative that has been taken. It was necessary and essential. Increasing the deposit guarantee from €20,000 to €100,000 was a very good initial step, and brought some stability. Following the example of the USA and Britain in the approach taken to hedge funds and short-selling was also important, because to allow speculators, at a time of financial turbulence, to depress prices further would have exacerbated an already difficult situation.

The guarantee has taken the international market by surprise. It was an extremely brave move. It is not without certain risks and the Minister will acknowledge that. The markets have welcomed it, and it is interesting today that one of our major banks, in New York, got between €7 and €8 billion in deposits, which is very significant.

There is money flowing in from various banks into the Irish institutions as a consequence of the initiative taken. That raises its own particular concerns or notes of caution. I know the Minister is taking the necessary precautions to ensure money coming into the bank is prudently utilised within the banking system here, and we are not adding to any exposures that might be there from previous debt that they are handling. That is essential.

People have been saying this is almost an exclusively Irish phenomenon. It is not. This is an international problem because of the globalisation of the international finance markets. It has its genesis in the sub-prime market in the USA. Some Members have compared that with the Irish situation. There is no such comparison. Institutions involved in sub-prime in the USA were lending to people who were high risk, with low creditworthiness, at high interest rates. They then parcelled those loans and sold them on to investment vehicles and other banking institutions. Senator Liam Twomey rightly said, in his opening remarks, the biggest difficulty in any market is not the good news or the bad news, it is the uncertainty. That brought uncertainty and as a consequence led to the lack of liquidity in the market. That in turn has given rise to the situation here. People say property here is overpriced; they are right without a doubt. Our income levels are significantly higher as well. In a comparison last year, Dublin came out at an average of €53,000 per annum. The next highest in Europe was Stockholm, at €36,000. Property prices will, to some extent, reflect income levels.

I have some notes of caution. I do not think we should be too intrusive into the payments and remuneration packages of people in banking. We want a vibrant banking system to continue. There is one area has contributed enormously to the difficulties we have, and it is the area of extravagant bonus payments, which were multiples of the salaries people were getting, being paid to executives. That brought short-term thinking into focus to the detriment of medium- or long-term prudent adherence to fundamental banking principles. That needs to be corrected.

I agree this should be limited to the six institutions already mentioned by the Minister. We should not, under any circumstances, extend it to externally owned banking institutions who should be getting comfort from their own states. I would make only one exception. We have a great success here, which was the brainchild of Dermot Desmond, and implemented through the vision of Charlie Haughey, and that is the IFSC. It is important that anything done in this regard would ensure the continuing success of the IFSC.