Shane Ross (Independent)

I wish to take up a point made by Senator Hannigan. The Leader promised to make time available for regular debates on the banking industry. Within the next two hours, the European Central Bank is set to reduce its rates by 0.5%. That should be a case for great rejoicing in this House and throughout Europe because it is meant to give a boost to the economies of member states, particularly Ireland. However, the evidence is that the first people who will rejoice will be those who run the Irish banks. My remarks are not intended to be flippant.

Senator Hannigan correctly pointed out that the previous cut in rates was not passed on by the ICS Building Society. In addition, Permanent TSB did not pass it on to new first-time buyers. Other banks played ducks and drakes with the reduction by not passing it on to those with loan-to-value and other mortgages. Despite immense Government pressure exerted shortly after the announcement of the guarantee scheme and the ECB rate reduction on 8 October, the banks did not capitulate. They passed on the reduction in some cases but not in others.

I contend that the new 0.5% reduction will not be passed on to customers. The banks are using the European Central Bank's cuts in interest rates to pay for the cost of the guarantee scheme. They are actually stealing from customers in order to pay for the guarantee scheme, which is something they were not meant to do. As a result of inquiries made yesterday by my office, the indications are that the banks are not going to pass on the new reduction in its entirety and that they will instead use it to either recapitalise their operations or increase their profits. This means that customers are already paying for the guarantee scheme.

I suggest the Leader take a message to the Minister for Finance to the effect that the pressure the latter maintains he will exert on the banks by placing people on their boards is already failing to have an effect. The banks have got away with murder. They went cap in hand to the Minister and promised to behave. However, they have already returned to their own tricks and are playing ducks and drakes with the ECB rate reductions.

When this matter was raised in July some of the banks — I can name them if the House desires — raised their interest rates by more than the increase recommended by the ECB. They took advantage because they were of the view that people would not really notice. If the ECB's 8 October rate reduction, which was meant to boost the global economy, and the new reduction continue to be exploited by those who caused the financial crisis, we will be back to square one and the banks will be better off than they were in the first instance.