John Gerard Hanafin (Fianna Fail)

I move amendment No. 1:

To delete all words after "Seanad Éireann" and substitute the following:

"— notes that the Government has taken determined and decisive action to restore, through the bank guarantee scheme, recapitalisation and otherwise, the health and reputation of the financial system;

notes that the Government has engaged with the European Commission and the ECB on the development of a common framework on capitalisation and has contributed to the development of a common approach to bad debt resolution;

notes that the current board of IFSRA is engaged in an extensive and personnel intensive investigation of issues that have arisen in Anglo Irish Bank in co-operation with the Office of the Director of Corporate Enforcement and the Garda authorities;

notes that the ongoing investigation has a criminal dimension and urges all Members of the Oireachtas to exercise the restraint essential to any successful prosecution as appropriate and otherwise;

affirms that the Irish economy needs a functioning banking system that enjoys the trust of depositors, international markets and the community at large in order to withstand the current economic and financial position; and

supports the Government's structured and measured approach to the issues facing the financial sector as representing the best way to secure the position of the financial services sector generally while keeping in mind the requirements of the EU and the interests of the State. This approach includes:

the guarantee on deposits up to September 2010 to stabilise the funding position of the banks and add a further level of protection for depositors;

recapitalisation programme of Allied Irish Banks and Bank of Ireland and the commitment to look at the needs of other institutions;

the nationalisation of Anglo Irish Bank, necessitated by particular circumstances at the time, to provide protection and support;

consideration of further interventions, including possible extension of the guarantee for limited purposes and the reduction of risk associated with assets;

review and reform of the structures, role and functioning of the Financial Regulator and the relationship with the Central Bank in light of the current situation. The stated intention of the Minister for Finance is to bring proposals in this regard to Government as a matter of urgency;

the ongoing commitment to work with the EU to frame a common approach to the issues faced by the financial services sector;

to progress work already commenced in respect of remuneration of senior executives and board members in Allied Irish Banks and Bank of Ireland in light of the report of the committee, headed by Mr. Eddie Sullivan, which is due to report on this matter by 5 March 2009, and which will include a cap on the salaries of senior executives; and

expresses its confidence in the Government's measures to stabilise and revitalise the banking system."

I am highly conscious that in the financial markets, especially perhaps in the City of London, the word was that the only difference between Ireland and Iceland was one letter and six months. Such commentators were wrong as the difference is eight letters, namely, "currency". As part of the euro, Ireland is part of the largest economy in the world. Moreover, that commitment, through the euro, has been reinforced today by a member of the European Central Bank and the head of the Bundesbank in Germany, who has confirmed that it would be possible for countries such as Ireland to have a bond that would be taken out in the joint names of Germany and Ireland, were this to be necessary, thereby mitigating the additional necessary two and a half percentage points. Ireland is highly fortunate to be part of the euro. I am highly conscious that the Lisbon treaty is on its way again and I have one question for those who will oppose it. Were we to vote "No" to Lisbon again, what interest rate do they think we would pay?

It has been suggested in the House today that international markets do not watch what Opposition parties do but that is incorrect. Whereas I might disagree with Opposition Members from Fine Gael on many matters, they did support the bank guarantee scheme, whereas the Labour Party did not and neither did they support the taking over of Anglo Irish Bank. However, it was unhelpful that the Labour Party's spokesperson for finance stated that the reason the Government was bailing out Anglo Irish Bank was to assist the friends of Fianna Fáil. Such comments cannot help internationally and were incorrect. If the four names that appeared in The Sunday Times are correct, I did not recognise any of them. This is interesting from one perspective because, having been a fundraiser for Fianna Fáil for a number of years, I would know. It begs the question as to what misrepresentations are circulating in the marketplace.

The Government acted highly responsibly in the bank guarantee scheme. It was necessary at a time of unprecedented upheaval in the international markets. Some of the figures are quite difficult to comprehend because they do not merely refer to billions but in some cases refer to hundreds and thousands of billions. This is somewhat beyond the normal understanding of finance to hear how much, and how badly, the international markets were pirated. As I have mentioned in the House previously, I remember the Big Bang in London and the introduction of financial deregulation. However, I never thought it would mean no regulation. As I have noted previously, Captains Blackbeard and Kidd, the pirates of the Caribbean, were better regulated than some of the carry-on associated with sub-prime lending, hedge funds and the amount of money that was lost. White-collar crime is not victimless and I am conscious that any wrongdoing that took place in Ireland will come before the courts. The Government is determined to bring those involved before the courts and from that perspective, this is to be welcomed.

International regulation is required because had there not been an international crisis, Ireland would have got through this recession. There inevitably would have been a downturn in Ireland and Members in this House debated whether there would be a soft landing or otherwise. However, they did not anticipate that the international banking institutions would begin to collapse. Some major banks fell and others were nationalised, both in America and the United Kingdom, some of which had branches here. While difficulties existed in the Irish market, some of which have come to light recently, the main problems, and the vast majority of the problems, were created internationally. However, this leaves us with the difficulty of regulation, of which we must be part. A society and world in which a flick of a switch can transfer billions abroad or to different companies or accounts is becoming increasingly difficult to regulate. This is the reason an international dimension, a European dimension and a national dimension are required. We have a strong interest in this regard to maintain strong regulation for the financial services centre, which comprises a major part of the economy.

When considering such regulation, one must specifically examine the misselling of sub-prime loans. There is a suggestion from Europe that 5% of the value of sub-prime lending would be held by the initiator, that is, the seller. The original proposal was for 15% and the Minister should consider the retention of this suggestion because the profit margins in selling such products are so great, that in time, the capacity for greed again may take hold and in ten or 20 years we would find ourselves with unstable banks that were creating instability.

What could the Government do in this climate? After 11 years of budget surpluses, the surpluses suddenly eroded and major deficits arose. I contend that it took the right course. Had it taken more money out of the economy this year, it would have made the situation worse. The Government has modulated the amount it can borrow while being committed to reducing the deficit over a number of years. However, Members also should be cognisant that there is light at the end of the tunnel. Oil costs $40 a barrel, the United States dollar is cheap and the price of money, at a rate of 2%, is low. Moreover, an additional half percent cut in interest rates is expected at the ECB's March meeting next week. We have low inflation but most of all, we have low expectations. This is a real opportunity for Opposition Members to pull together with the Government to do what is necessary to bring us as quickly as possible back to where we should be. I have mentioned that the bailout figures are quite astounding. More than €1.2 trillion has been spent in Europe bailing out banks and there has been recapitalisation of €200 billion to stimulate the economy. Such stimulation packages and bailouts, together with their American equivalent, will bring us back. While it may take a couple of years, if we take the correct steps and if we all pull together equally, we will get there.