Martin Mansergh (Tipperary South, Fianna Fail)

It is fair to say that both parts of this amendment reflect a concern, which we all share, to improve the flow of credit in the economy. Under the Credit Institutions Financial Support Act 2008, the Minister for Finance can provide financial support only where, after consultation with the Central Bank and the Regulatory Authority, he or she is of the opinion that there is a serious threat to the stability of financial institutions, provision of support is in the public interest to maintain the stability of the financial system and support is necessary to remedy a serious disturbance in the economy.

These onerous requirements on the Minister are further reflected in the conditions for direction by the Minister in section 8 of the Bill which require that a direction to make investments will be given only after consultation with the Central Bank and the Regulatory Authority and where it is necessary in the public interest to remedy a serious disturbance in the economy and-or to prevent serious damage to financial stability.

A central objective of the Government's bank recapitalisation programme is to support the flow of credit, which is of course critical to continued economic development in Ireland. In this context, the recapitalised banks have agreed to a package of measures which include increased lending capacity to small and medium enterprises and first-time buyers, codes of practice to facilitate the flow of credit and protect consumers and the establishment of specific funds for environmental and seed capital lending. To ensure these lending targets are met the banks will make quarterly reports to the Financial Regulator, with the first report to end March 2009 to be submitted by end April 2009.

As I stated, the Government is aware of restrictions in the flow of credit to viable business while at the same time reports suggest that falling demand for credit is the main cause of reduced credit flow. There may be truth in both explanations. The perception of limited credit availability is damaging at this time of fragile business and consumer confidence. The Government has therefore decided there should be an independent review of bank lending to report within a short timeframe. The recapitalised banks have agreed to fund this independent review which will be managed by the banks, Government and business representatives. The banks have undertaken to co-operate fully with this review and to engage constructively in implementing any recommendations made. Independent consultants appointed to conduct this review will report in four weeks.

I regret, therefore, that I am unable to accept the amendment.