Paul Bradford (Fine Gael)

I welcome the Minister of State to the House for this debate on the crisis in the banking system. We are now entering the Donald Rumsfeld world of the known unknowns and unknown unknowns and over the past 48 hours, more of the unknown unknowns have appeared and have reduced even further the public confidence in our banking system. This side of the House recognises the absolute and urgent need for a credible banking system which is working properly. Without such a banking system we cannot have an economy and without an economy we cannot have a proper functioning society. A debate on bashing the banks is not sufficient because we need to respond to the crisis which has been caused and recognise what is at the heart of it and try to ensure it cannot happen again. We need to restore public confidence along with investor confidence and international confidence. We may not all readily be able to have a full understanding of the banking system. When the man and woman on the street talk about the banking system, they talk about the scandals, the persons involved and the levels of remuneration. They also note those who led us into this crisis continue heading up the banks. The cry on the street is there must be changes in personnel at the top of banking management with significant levels of resignation at executive level. For better or for worse, that is necessary to restore public confidence in our banking system.

There is a deep anger among people, particularly those who have lost their jobs, at the banking system and the mechanisms which have resulted in the current economic crisis. It cannot be readily addressed or properly analysed. However, when people see top banking officials going unpunished for what they have caused, that must be addressed.

Maintaining international confidence in the Irish banking system is the gravest concern. The revelation in the past 48 hours of yet another sweetheart deal for Anglo Irish Bank has damaged international confidence. It is not just a question of international investors wondering about the competence, or otherwise, of the political system. As was said this morning by Senator Quinn, they will also question the ethics behind the conducting of banking and business in this country. That needs to be addressed as a matter of urgency.

Over the past several months, all Members have raised the recapitalisation issue. Clearly, not enough money was going around the banking system to generate economic activity. Recapitalisation of some form was urgently necessary. The Minister of State has presented one such proposal to the House while Senator Coghlan outlined the Fine Gael Party's proposals. Where they differ is in the separation of the toxic debts. Will the Minister of State outline how the recapitalisation programme will respond to the bad debt crisis? The House could have an all-day debate on this issue because we still have not grasped the scale or level of toxic debt in the banking system. The investment of €7 billion, a large amount which only a few years ago would have run the country for a year, is being pumped in on one side while there is an unknown level of toxic debt on the other side. This is a concern, not just simply from a political perspective but a broader economic one, when we are investing pension funds into a black hole the size of which we cannot comprehend. Will the Minister of State give his views on the toxic debt issue?

I was initially concerned about the proposed 8% dividend from the banks because a similar proposal was introduced by the British Government in its recapitalisation programme. It demanded a dividend of 12%, which simply did not work as it did not allow the banks have a sufficient liquidity ratio to put money back into circulation. However, I now accept there is some flexibility in the Government's 8% dividend in that if the banks are not in a position to pay by way of cash, it can be resolved by way of ordinary shares in lieu. That is an improvement on what I thought was the original proposal. We would like to ensure the banks repay the taxpayer and the Government as soon as possible. Being realistic however, the most urgent necessity is to ensure money flows into the economy again.

The proposed 33% increase in mortgage availability and the 10% increase in assistance to small business look positive on paper. As Senator Ross pointed out earlier, however, these increases are occurring when there are zero flows in both areas. It is not enough and we should be demanding a quantifiable pool of money being made available for mortgages which would allow 20,000 people, say, over the next several months to buy homes. The same principle of a defined amount should be applied to loans to small businesses. Vague percentage figures are not sufficient. We need to get precise numbers and figures as to how many couples and young people will be facilitated to buy houses, getting the property market moving and increasing State revenue. We need precise figures of the loans to be made available to small businesses. On every high street, low street and no street, small businesses are shutting down because of zero capital. Ten percent of zero is still zero. The Minister needs to put further pressure on the banks regarding that figure.

The so-called sacrifice by banking personnel to reduce salaries at the top scale by 33%, while a step in the right direction is still a token response to the scandalous levels of executive pay which existed and resulted in this disaster. I am disappointed the penalty they are paying is not in any way in proportion to what it should have been.

I recognise the scale of the crisis. The Government's policy is set out in this programme. I am, however, concerned about the level of toxic debt which we cannot quantify. I am also concerned about the levels of moneys being made available for mortgages and small businesses. While they are there in theory, they may not be there in practice. The next few crucial weeks will decide the future of the banking industry and the short to medium-term future of the economy. We cannot yet fully grasp the grave economic crisis facing the country. Banking is at the core of it, which means it is important for all of us that this programme works. It will require closer regulation by the Department to ensure the commitments, both verbal and written, come to pass, money flows again and economic activity is generated. If that does not happen, the country will go down the tubes, a tragedy for all of us.