Dan Boyle (Green Party)

Senator Alex White asked, in respect of Anglo Irish Bank and the option taken by Government in September-October last year, whether that institution was of systemic importance to the Irish economy. Taken on the level of whether it was run competently and whether those involved in it were offering a useful service to its customers and the State, it would be difficult to argue that. It has been an institution with a deposit base greater than the annual spend of this country in terms of its current expenditure. In terms of its overall asset base, had a run occurred on its accounts this would have had a significant impact on this economy. There was already the lesson, such as it was, of the effect of Lehman Brothers in the United States. Given the need to make quick and decisive decisions I believe the right decision was made.

It is often forgotten that in addressing the deposit guarantee put in place then, and that which we are enhancing through this legislation, that a deposit guarantee already existed. If even that had been exercised in September-October of last year, the cost to the Irish taxpayer would be already many times the amount expended trying to resuscitate and retrieve Anglo Irish Bank in its current incarnation.

That said, I hold no brief for the individuals who ran that institution into the ground and is now represented as something tawdry in the commercial and financial life of this country. I find inexplicable and continue to seek explanations as to why it is the case that an individual, a former chairman and CEO of that institution, continues to receive pension payments from an institution that is now State owned. If we cannot address that question now, it will need to be addressed either by way of ministerial action or through other legislation. I am not prejudging any decisions that will be made by other agencies or individuals. Given that this institution was run into the ground and was seen to benefit such a small coterie of individuals, I cannot accept that the payments being made to such individuals can ever be acceptable. Decisions need to be made in this regard and need to be made quickly to ensure public confidence in the future of our financial system.

The Bill is welcome in that it is another progressive step in terms of our moving away from the events of September-October 2008 in respect of which Government decisions had to be necessarily reactive, decisive and quick. We are now getting a better understanding of the scale of the problem and the degree to which the problem exists in particular financial institutions. There is no doubt that we continue to face a huge problem in terms of trying to resuscitate our financial institutions. Proper acts of due diligence have been done in relation to our two largest financial institutions and others are ongoing in regard to some of the smaller ones. In terms of ensuring public confidence here and internationally in our financial institutions, it is important this legislation is enacted thereby ensuring the commercial health and financial stability of these institutions can be achieved in the quickest possible time. That said, this is only another step in the process. Further questions need to be asked about the organisation of financial institutions in this country.

A welcome aspect of this Bill, subsequent to a promise made by the Minister for Finance, is its inclusion of credit unions and the question of social finance. While deposits in credit unions are not as large as deposits held in most financial institutions, and are possibly not as great a risk, they are the type of deposits that might have a particular impact on local communities and individuals in such communities. It is right and proper that such a guarantee be given. The legislation is vague in terms of how the guarantee can and should apply to credit unions. I am hopeful that the regulations, when released by the Minister for Finance, will clear up that ambiguity. I believe particular treatment should be given to credit unions and I acknowledge the point made by Senator Alex White in this regard.

Another aspect that needs to be addressed, in terms of the type and number of institutions we have, is the question of mutuality in our remaining financial institutions. We have two mutual societies, the Educational Building Society and Irish Nationwide Building Society. I have been extremely critical of the activities of those involved in Anglo Irish Bank and I believe what we are learning on a daily basis in terms of what went on at Irish Nationwide Building Society, while not in terms of scale, are also beyond belief. The extent to which the State must pick up the pieces for the activities of that particular organisation is something the people will find hard to justify. I suspect, in looking at the future of these institutions, given that Anglo Irish Bank has been nationalised and that Irish Nationwide Building Society is probably the most weakened of the remaining five institutions, that this is an issue the Government will need to address quickly. I again accept the point made by Senator White that this is an issue that needs to be addressed with the widest degree of consultation and co-operation within the political system given we are talking about our financial systems and public confidence in it.

We need to know the health and viability of our two main banks and what is happening in regard to mutual societies and social finance, micro-financing and community finance through the credit union movement. This Bill is helpful in our taking another step in that regard but it is only another step in what will be a long and difficult process in which all within the political system need to be engaged. This is not an issue that will be easily resolved. However, I am confident that the right decisions have been and are being taken and that they will eventually be viewed as the right decisions.