Ciarán Cannon (Fine Gael)

I welcome the Minister of State to the House again. Long before this country was engulfed in its unique tsunami, concern was raised on both sides of the Houses of the Oireachtas about the need to update our national deposit protection scheme. As the Minister of State pointed out, the figure of €20,000 provided for in that scheme was hopelessly out of date as both the number and the value of deposits had increased significantly since the guarantee limit was established over ten years ago. For that reason, the update of the scheme provided for in this Bill was going to take place at some point, but last September we were faced with the imminent collapse of our banking system and a much more urgent intervention was required. Although we on this side of the House support the general thrust of this Bill and what it sets out to achieve, we must recognise also that it heaps another significant burden of responsibility on the hard-pressed taxpayers of this country.

The relationship between our taxpayers and our banking system is changing on an almost daily basis. To date, all the traffic seems to have been one way. We continue to pay up and the banks continue to refuse to pay out to struggling Irish businesses and mortgage holders. In a recent article outlining the banking crisis in the United States, Paul Krugman stated that what we have now in our global banking system is no longer private enterprise but is what he terms "lemon socialism", in which banks get all the upside but taxpayers bear all the risks.

In Ireland we have a particularly bitter brand of lemon socialism. Intervention after intervention has taken place and the workers of this country have been asked - I argue the correct word is instructed, or commanded - to dig deep into their pockets to bail out a sector that has spent the past five years shamelessly immersed in the most criminal and costly gamble this country has ever witnessed. The same taxpayers must continue to dig deep for many years to come. Although the Government guarantee, put in place on 30 September 2008, is due to expire in September 2010, the guarantee scheme which is the subject of the Bill is permanent and entirely open-ended.

Any Member of the House who campaigned during the recent elections must agree that our people are angry and utterly disillusioned. That was very obvious to me when I spoke to people during the campaign. They now realise that for a number of years a very small, privileged and totally self-interested group of people succeeded in running our country into the ground. The activities of these people were inadequately policed because those required to do the policing often moved within the same social circles and in some cases were often former colleagues of those who were gambling away our money. The alleged response from one such guardian of our financial system, when informed that a bank was about to engage in what they euphemistically described as "balance sheet management" was to say, simply, "Fair play to you, Willie".

Nine months after the September guarantee, when our public should be witnessing sweeping reforms of our banking and regulatory systems and when our taxpayers should see those who perpetrated this disaster being brought to justice, we are presented instead with a completely different vista. There is little or no sweeping reform of our banking system and no real punishment meted out to those who got us into this mess. Indeed, a number of them rode off happily into the sunset with their golden handshakes intact.

Is it any wonder, therefore, that our people are disillusioned? Most of our taxpayers are more than willing to fulfil their patriotic duty in ensuring our banking system does not go under but they are being asked to do so in a very real information vacuum. How much more will they be asked to stump up? Does anybody know? Does the Minister for Finance know? Does anybody know the true cost of our September guarantee? What is the total value of all the deposits guaranteed by this legislation? Do we know that figure?

There is another very worrying aspect to both this guarantee and that initiated last September, namely, the licence it might give to our less scrupulous bankers to continue the sort of risk-taking that got us where we are today. The people who engaged in such risk-taking in the past did so in the full knowledge that if matters went badly wrong we would be there to bail them out, and they were right - we have done so. To prevent such reckless risk-taking taking place in the future, guarantees of this nature should be accompanied by stringent and effective regulation of our banking system. I am not so sure we are yet at a point where we have such regulation. Even though our credit unions were already covered under the September scheme, I welcome their inclusion in this guarantee. It is only fair there should be equity across all depositors and the equity this legislation brings removes any fear the public might have about inadequate deposit protection in particular types of financial institutions.

When we discussed NAMA in this House, I asked the following question and I believe I should continue to ask it until such time as we get a satisfactory response. Why must all the traffic be one way? Why can the taxpayer not see any real benefit for his or her investment? For example, why can Irish banks not allow all borrowers on fixed interest rates the option of moving to a variable rate with little or no penalty, or perhaps the option of having the penalty spread out over the lifetime of the mortgage? I asked this question of the Minister of State, Deputy Mansergh, the last time he was in the House and in his response he said:

People entered these arrangements. There were pros and cons to the arrangements at the time and it is not possible for the Government to convert them however desirable that might be from a social and environmental point of view.

I am grateful the Minister of State admits that such a move would be desirable from a social point of view. However, neither he nor the Minister for Finance, Deputy Brian Lenihan, see fit to move in that direction. Therefore, the people who entered into these arrangements are to be asked to take their punishment on the chin, stoically, while those who got us into the current mess seem to get away scot free.

Only a few days after the Minister of State made that statement in this House, his colleague and member of Cabinet, the Minister for Social and Family Affairs, Deputy Hanafin, issued a press statement stating that the problems facing mortgage holders who were locked into a fixed rate were "undoubtedly an issue that should be addressed". The headline over the article in The Irish Times was: "Hanafin wants action on mortgage penalties". That is exactly what fixed-rate mortgages have become - punitive and totally unjustified penalties on an already over-burdened Irish public. Is it too much to ask for one small gesture of appreciation for the taxpayer? Is the Minister even concerned enough about the plight of people on fixed mortgages to seek to establish what the likely cost of this intervention might be? I suspect it would represent only a tiny fraction of our recent investment in our banking system. Is it possible some traffic might head in the opposite direction or is the one-way street here to stay?