Larry Butler (Fianna Fail)

I welcome the Minister of State's speech on the recapitalisation programme. It is important we focus on our banking system. Running a small business, I had dealings with the banks for over 35 years. My business could not have continued without a good credit and banking system. I always had good relations with my bank and kept it up to date with my business activities. The old system meant the bank manager used to visit my business projects to evaluate them. Some ten or 15 years ago, that all came to an end. One never saw one's bank manager because he was obliged to refer matters to head office. As a result, customers who were dealing with banks for perhaps 35 years have become mere numbers. The banks have lost all the contact they had built up with customers under the system that previously obtained.

Perhaps it is time the banks reviewed what they are doing wrong. They do not know their customers, they lent money in an irresponsible fashion, they did not evaluate when the market was going to fall and there was no consistency with regard to the actions they took. Everyone is paying as a result. The banks went completely out of control and taxpayers will now be obliged to support them.

We have a responsibility to taxpayers. We must draw up new rules and regulations and we must put legislation in place to protect the investment that is being made in the banking system on behalf of taxpayers. We are due to receive a return of 8% on the money that is being invested and we must ensure that this will be forthcoming. In addition, we must ensure that our capital investment is safe. I would prefer us to invest in something tangible, such as our banking system, which will help our economy, than to make investments abroad. Doing this represents a much safer course of action. If we can manage this investment correctly, taxpayers will enjoy a good return. It is our job to ensure that it is managed correctly and that proper governance structures are put in place. There is no governance whatsoever in the banking system. Senator Ross has been making statements to that effect for a long period.

A number of Government-appointed directors are already in place in the banks. However, there should be such directors in the six institutions covered under the guarantee scheme. We must evaluate the agreements that have been reached in respect of recapitalisation to ensure that money is lent to small businesses. We must be informed as to what will be the increase in the level of loans made available to such businesses. It has been stated that 10% of the €7 billion used for recapitalisation will be made available in this regard. We must be able to rest assured that this money will be invested where it counts. If we ensure that those who require such money receive it, matters relating to business will improve.

The position is similar with regard to mortgage lending. It was announced that there will be an increase of 30% in such lending. However, 30% of nothing will come to nothing if people are not put in place to monitor the position. Government-appointed directors must be charged with examining lending patterns and the way the money that is being invested is managed. If this does not happen, the banks will again run rings around us and our investment of €7 billion will come to naught.

It would be extremely difficult to quantify the damage done to Ireland's reputation internationally by the banks. Matters must be put right in this regard and that should be the next item on the agenda. The Government guaranteed deposits in the banks and the financial system was stabilised as a result. However, we are now making a tangible investment in the two main banks and we must ensure that they put proper governance procedures in place. Those who got us into this situation are not fit to manage the banks, not to mention any other form of business, and we must get rid of them. If we do so, we will improve both our international reputation and the way the banking system operates. This is the type of action we must take and the Minister of State and the Minister for Finance will ensure that it is taken.