Frances Fitzgerald (Fine Gael)

We have had a cosy cartel consisting of the Government, property developers and the banks in recent years which has led to a completely overheated property market. Many young couples and families are paying the price for this in negative equity. I have a concern with today's motion that the public interest is not protected strongly enough in the detail of the legislation. I would like the Minister to address that and I will outline later my concerns on the matter.

As the debate has developed, what is most striking is that with every initiative taken — whether at government level in the United States, President Bush announcing an initiative, the world banks or the EU making statements — it seems it is never really the full solution and the problem continues. As we meet today, it is very clear the Minister will be back, this is not the end of the story and this is another part of an ongoing process.

Our world banking system has been seen to have feet of clay. Senator Fiona O'Malley made the point that we all assumed the people in it knew what they were doing but many serious mistakes have been made which have had a significant impact on individuals, small firms and families.

I say this as an observer of the stock exchanges only from watching television. I was in one exchange once watching the behaviour on the floor when economic times were easier and the crisis was not a concern. Even at that time, the behaviour on the floor of the stock exchange was frenzied and aggressive, and one must really ask the question whether this is the best we can do and the best way to regulate our world economies and stock markets. Are they really being run in the best possible way and is this kind of behaviour likely to lead to high quality financial decisions or world markets that will deliver the best for all our people and with all the needs we have in the world today? That is just an observation on how the business is done.

What we have learned during the course of this debate is that there are a range of questions we needed to ask about how the business was done and a range of mistakes were made. There was also a range of behaviour not in the interest of world economies, banks or individual consumers. That is the big problem which has emerged.

The Minister is coming to the House today with the scheme, which is extraordinary. The first few lines state that the Minister is making this scheme in the public interest because he is of the opinion that, "there is a serious threat to the stability of credit institutions in the State generally, or there would be such a threat if he did not provide the financial support". We are in an extraordinarily difficult and demanding time and our economy, as well as the well-being of our people, is under serious threat because of the problem which the Government is trying to deal with.

There should be no mistake that Fine Gael will do what is best for the national interest. We have serious reservations about the motion today, and there is a democratic deficit in the way it is being dealt with. I understand the pressures of going to Europe to achieve the agreement to remove the uncertainty. Why could the motion not go before the Dáil and Seanad with the possibility of amendment? Why can the Ministers not listen to the points made in the Dáil and Seanad and incorporate them into a scheme before going to Europe? There must have been a window of opportunity to do this and I regret that is not being done.

Fine Gael will do the right thing to keep our economy moving. We must ensure credit is available for every man, woman and child. People may think the problem is very far away from them but every family and small and large business is affected. We must see that our banking system works effectively.

With regard to the democratic deficit, I regret we cannot put amendments to this legislation. It is a key point. There are a number of areas I would like the Minister of State to come back on. We are giving the Minister great power in this legislation and in many ways the legislation is asking us for an act of faith in how he will behave in affecting the banks' behaviour. There are powers but very little detail on how they will be used and what precisely the Minister will expect from the various mechanisms within the Bill. Will the Minister of State outline the detail of that issue?

When he presented the legislation, the Minister indicated this is for this stage, which implied he may return with a more detailed scheme. I fully expect the Minister will have to return to both Houses in this respect. It looks in some ways as if he sees this as an initial scheme.

Questions have not been answered. I note that before an Oireachtas finance committee the other day, the Financial Regulator spoke about doing an audit when asked about the value of the loan book. Will the Minister provide some information on the audit and when he expects the result? It raises a question about the banks and the value of their loans. We know large loans were given assuming certain values and we know this has changed utterly. A question exists about that.

I will speak about the public interest, how it is protected in the legislation and the role of the independent directors. I refer to what the Minister of State indicated in his speech. This is the quandary I have in understanding how the public interest will be protected by these directors. Under company law, the director's primary obligation is to shareholders. New legislation is necessary if the two directors to be appointed are to protect the public interest. I do not see how under present company law the directors can protect the public interest. I would like more information on that.

There is also an information and monitoring function indicated in the scheme. The Minister has today indicated that in the first instance, the Financial Regulator, on behalf of the Minister, will monitor compliance with the terms and objectives in the scheme. The Financial Regulator will in turn provide reports to the Minister, which sounds very weak. Given the lack of confidence many have had in the Financial Regulator and the lack of information over recent months and years, that seems a very weak provision for the information and monitoring aspect of the scheme.

Regarding consumer protection, it is stated that the scheme must provide that each institution shall adhere to the Irish Banking Federation code of practice. Is this the same code of practice on which we relied for the past number of years? Where did that get us? Or will the code of practice be updated and changed? I certainly hope so.

What power will the observers to the remuneration audit credit and risk committees of the covered institutions have? What power to implement change will the Minister have concerning their recommendations? It seems that we have gone for a weaker scheme than other countries and there are still significant issues about the solvency of the banks and their ability to commence giving credit again. Does the Minister of State believe this will happen as a result of the measures?

The Minister for Finance will return to the House. I would have preferred to have had a situation where Fine Gael and other parties might have put down amendments to the scheme. We would have come out with a stronger guarantee that would have been in the interests of the consumer and the taxpayer. I regret that we are not in a position to do that today.