Frances Fitzgerald (Fine Gael)

I welcome the Minister of Defence, Deputy Willie O'Dea. I am glad to have an opportunity to make a short statement on this matter because it is an historic day for the economy of the country when we underpin the banks from the pension fund to the degree that we are doing. It certainly is an historic day for this country's banking.

Potentially, it should also be an historic day in terms of the culture of banking in this country. However, the question that arises is whether it will be an historic day for the good of the country. Will it be historic economically? While Fine Gael does not agree with the approach taken by Government, and I want to read into the record of the House what we believe should be done, we hope the economy of the country will be stabilised and that our international reputation will be enhanced.

It is critical for the future of every citizen and every worker in the country that this works. It is critical for the 1,000 men and women who lost their jobs in north Dublin this morning. It is critical for our young people who are hoping there will be a future in this country for them and that they will not have to emigrate like the generation of the 1980s had to do. It is critical for everyone who hopes to create a job in the country and who hopes to seek employment. Let us hope that it is historic in the sense of bringing stability to the economy even though we believe a different approach should be taken.

Will there be a change in the culture of banking? This is critical question which I would like the Minister to address. Having read the detail of the agreement, which was printed in The Irish Times today, I have questions about this. Does it guarantee a change in the culture because it is very clear that a cultural change is needed? Senator Boyle spoke about this, as did a number of other Senators. I am concerned to hear Senator Ross, who did so much in this area over many years prior to it being as clear as it is today that there are serious problems in the culture of banks, state that his view of the agreement is that it is a sell-out to the banks and a complete surrender. I hope this is not true but I have concerns about the detail of the agreement that has been reached.

I hope that when the legislation comes to the House some of the concerns expressed on all sides today will be addressed and we will be able to build into it corrections and more detail so we can ensure a cultural shift. It is very clear that the predominant culture has been an insider culture. It has not been accountable or transparent enough. With the bird's eye view we have now of Celtic tiger Ireland we can see how much insider trading was done and it is very shocking. It raises questions about some of the wealth creation we have seen over recent years. Who got loans from whom? What sort of insider information and knowledge was passed between the key players? What chance did the citizen have?

It also brings into relief our failure in many front-line services in terms of health and education. Why was more money not available for these? At the end of this extraordinary period of growth we have come out with a complete failure in terms of front-line services. This is of great concern to everyone in this House and to the people trying to access these front-line services. Very serious questions still arise after this Government agreement.

Fine Gael is concerned that the recapitalisation proposal of the Government will be insufficient to restore a strong banking system able to maintain the flow of credit to the economy. We are concerned that even though this is what is written in the agreement, it will not happen. We call on the Government to consider other options which would put taxpayers' money for recapitalisation into new banks with clean balance sheets. This is a recommendation about which Deputy Richard Bruton has been speaking out strongly. It is being considered in other countries. Will the Minister respond to this suggestion? Why has this not been considered?

We called on the Government to defer the decision on recapitalisation until a full set of proposals that addresses the management of impaired loans has been developed. We also called on the Government to introduce a flat cap on remuneration of senior executives at no more than €250,000 until the Government's capital is repaid. Let us consider the salary scales which have been current in banking, and I know they are in line with international banking. I read recently about the situation in the United States. We consider the bonuses here excessive. They are excessive worldwide and there is no doubt about that. There was a culture that rewarded risk taking and the more risk taking there was, the higher the bonuses were. We can see that led to poor decision making, risk taking to an extraordinary degree and the sort of banking culture we saw in the lending between Anglo Irish Bank and Irish Life & Permanent.

It is extraordinary that the Minister did not read this in the report. I find it more extraordinary that the Taoiseach did not know about it or read the report. We were all waiting with bated breath to see what PricewaterhouseCoopers would state. We were told that for reasons of stabilising the banks, avoiding uncertainty and not damaging the international reputation, this could not be put on the public record. I am beginning to wonder about the protection of vested interests in the withholding of some of the information as opposed to being concerned about the stability of the banks. Was what happened really about protecting vested interests rather than maintaining the stability of the banks?

Last week, National Irish Bank gave a different re-evaluation of its loans and assets and this changed the situation somewhat. This morning, we heard Bank of Ireland has bad debts of up to €6 billion. It is extraordinary that the Government agreed the recapitalisation last night and Bank of Ireland came out with this information today. This drip feed of information is a real problem. It raises the very legitimate question which every citizen has, which is whether we know the full extent of the bad debts and what more information still has to emerge. I would like to state much more but I will conclude on these points.