Shane Ross (Independent)

Lots and lots of tax breaks for property. That is where the connivance of the Government lies. These have been extended time and time again, giving developers a field day. Let us not pretend that is not the truth. Let us allocate the blame a bit here and a bit there, but let us not take the line that we are the victim of a global problem.

It is my contention that whatever the merits of the initial Bill, this scheme shows all the evidence of the Government's rolling over in front of the banks and the Financial Regulator. I do not say that lightly. It was expected that the scheme would be radical and that it would change not only the way in which the banks operate but also their personnel. It was expected that the Government would have, on behalf of the taxpayer, a significant say in appointments to the banks. Speakers from the Government side of the House have pointed out, very weakly, that there will be up to two representatives on the boards of the covered institutions, by which I mean the ones that will buy into the guarantee. Two is the maximum number of representatives. It probably will be one, if the truth be known, because that is the way in which these things work, but it may be two. I do not know how big the boards of Bank of Ireland and AIB are, but there are about 15 members. Thus, the Government representatives, even if there are two, will be outnumbered by seven to one. They will not have an enormous say in what goes on. What is more, the Government will not nominate people to the boards of these banks. This is a comfortable little arrangement which shows all the signs of the bank lobby being victorious. What will happen? There will be a panel, which is the oldest political trick in the world. Anybody who reads the details of the scheme will recognise that the panel is not appointed by the Minister but approved by him. I do not know what that means. The scheme does not say from where it comes. When the panel is selected, who will choose the people in this kind of beauty parade for appointment to the boards? The individual banks will choose the people from that panel. I do not know how big the panel will be because conspicuously the Government does not give us that information.

We know, however, the same banks that have been selecting the members of their boards for years will now be able to omit people who the Government believes are suitable but whom they do not like. The people who are chosen to be put on the boards of these banks should not be people sympathetic to the banks but people who are truly independent and critical of them. That is not what we will get. No bank will select someone it knows will be critical of it. These people will be already approved by the Minister and they will sail on. This is a bit of a ready up and is not satisfactory. If the Minister were genuinely acting on behalf of the taxpayer he would have said he would appoint a specific person to each board. While that also has dangers, at least the banks would have board members they did not choose themselves.

Considerable fuss was made when the Minister for Finance said he would install people deep into the banks. Is the Minister putting members on the key committees, the remuneration committee, the credit committee and the audit committee? If Senators read the details of the scheme they will realise he is not. The Government is giving the impression it is doing so. The Minister is putting observers on these committees. They will sit there like stuffed dummies. We do not know whether they will be able to contribute or just watch what is happening. This is cosmetic.

In the United Kingdom where the British Government has taken equity — our Government will be forced to take equity sooner or later, irrespective of whether it likes it — it has put people directly on the boards and there have been resignations. How many resignations have there been here? Everybody in this House and outside knows the answer to that. It is quite staggering. The leaders of the two biggest banks in the country went cap in hand to the Minister on Monday 29 September, advising that they were all in desperate trouble and that Irish banking was a shambles. Instead of the Minister saying that those responsible would need to go, nothing of the sort has happened. He said the Government would guarantee their deposits and that there would be a bit of a payback. However, the bit of a payback is feeble. It is insufficient and it is not radical enough.

What about the costs which were mentioned on the other side of the House. There is a €1 billion cost over two years here of which we know. I will not argue the toss with the Minister of State over that, as I know it is only an estimate. It was picked out of the air, but is based on quite a complicated formula related to the extra borrowing. It may be wrong or it may be right, which would not be anybody's fault. However, a principle is involved here. Who will pay the costs? The banks will. Everybody is asking whether they will pass on those costs to their customers, who are also taxpayers. The answer is that they will pass them on ruthlessly and with gay abandon. A clause, which is typical of this scheme, is being bandied about as if it is some defence. It states, "A covered institution shall not pass on the costs of the guarantee to its customers in an unwarranted manner." That is their get out of jail card. An "unwarranted manner" means they can claim it is warranted and, therefore, will be passed on. Let us not believe it will not be passed on. It will.

I cannot understand the Fine Gael position on this scheme. I can understand its position in supporting the guarantee in the first place because of the emergency nature of it. I can understand why it wants to be portrayed as being responsible. However, all the vibes and words from Fine Gael on this are rightly critical. However, it agrees to the scheme. This scheme is a sell out. It is a victory for the banks and the Financial Regulator. It is not the type of scheme anybody in this House anticipated, talked about or demanded.

Who is to monitor the scheme? It will be monitored by the Governor of the Central Bank and the Financial Regulator. The Financial Regulator is the officeholder who has for so long presided over this shambles and has been so silent in the face of the dangers into which the property developers have put our economy. The proposed monitoring of this scheme is not adequate because of the historical record of those who have monitored matters in the past.