Brian Lenihan Jnr (Dublin West, Fianna Fail)

I would be delighted to see the putting in place of a Europe-wide system. I would fear a retreat to economic nationalism or isolationism such as happened after the Great Crash in the United States in 1929. I agree with those Senators who urged me to take the issue up at ECOFIN and within the eurozone group of Ministers to determine if we can we have a Europe-wide protection for banks because difficult issues have arisen here and Senators have referred to them in the context of subsidiary banks.

Our six domestic banks have subsidiary banks elsewhere. An issue arises about their protection because a systemic failure in regard to them could cause contagion within the Irish banking system. In the 1980s we had the systemic failure of an overseas subsidiary institution, which led to a true bail-out of an Irish bank, and the then Government sought nothing in return for the then rescue package for the Allied Irish Bank. I was very conscious of that example because we should not introduce moral hazard into the equation and for that reason the Government decided that, as far as the scheme proposed here is concerned, we are insistent that the banks must pay a price for what they are obtaining.

Side by side with the provisions dealing with the scheme, the contract on foot of it and the provisions of it that we have brought to this House for approval, we have taken the precaution of putting other provisions in this Bill, which, I accept, confer very wide-ranging powers on the Minister and the Government, but they are designed to ensure we can act swiftly if any further problems arise. It is important we have that power in the difficult circumstances in which we find ourselves. Hence, Members will note a provision in the Bill in section 8 where the Competition Authority will not be consulted because, as we can see, it is essential that we can come to a conclusion rapidly, on occasion, on amalgamations and mergers when there is financial instability.

Likewise, we have provided for an amplitude of power in the National Treasury Management Agency whereby the Government can request it to undertake financial powers on the Government's behalf. Likewise, the powers of financial assistance can be exercised by the Government in regard to these institutions when it is in the national interest to do so and to prevent financial instability.

As far as the particular scheme we are proposing at this stage is concerned, there is no risk for the taxpayer. We are getting value for the banks from it. Speakers rightly have questioned the issue of the ultimate exposure of the taxpayer. Much has been made of the fact that the banks have substantial assets as well as liabilities and that perhaps some of these assets are impaired. There is a substantial cushion of the excess of the assets over the liabilities, but let us be frank about it: we are not going to have a fire sale of all Irish assets tomorrow. That is what the Government does not want to happen. It wants to see the orderly management of the Irish banking sector. The Government is anxious that this House would agree — this is the reason I am in this chair now — to give us the powers to ensure such orderly management takes place. I sense in speakers, naturally from those on the other side of the House but from those on all sides of the House, a legitimate and entirely understandable concern to ensure we will not see the same again as far as Irish banking is concerned.

It is important not alone to deal with the issues that threatened the financial stability of the Irish economy but, as we assume these powers over the banking sector, to ensure the sector lives up to the faith which sovereign Ireland invests in it through the decision of the Government last Monday——