Paul Coghlan (Fine Gael)

I welcome the Minister of State, Deputy Mansergh, and thank him for his attendance. He has always been one the better performers from the Seanad's point of view. He also did great work when a Member of the Seanad. I thank the Minister of State for his overview of the Bill, which we welcome.

Some interesting questions have been posed by colleagues from all sides of the House. I look forward to hearing the Minister of State's response to the questions posed by my colleagues, Senators Cannon and Donohoe. I welcome the main provision of the Bill which is to increase the deposit protection guarantee from €20,000 to €100,000. We are all agreed the latter figure is outdated given the changes in values and so on. The removal of the provision which requires that depositors must bear the first €10,000 of any loss and the extension of this guarantee to all credit union depositors, is also welcome. Credit unions are utilised by so many it is unbelievable we did not have in place this necessary protection, although I accept they had their own scheme in place. Given self-regulation has been abolished it is only right and proper credit unions should be covered by the State guarantee scheme.

I welcome the transfer of responsibility over this area from the Financial Regulator to the Central Bank. We have seen in the recent past that the regulator was not fit for purpose and performed disastrously.

The Bill before us deals with a guarantee scheme for deposits but what about the ability of banks to raise finance through inter-bank lending? Legislation provides for a guarantee in this regard until September 2010. Given that bonds will be rolled over, it is important that the guarantee is extended. I ask the Minister of State to comment on the matter. Banks could run around a short corner with bonds of up to €5 billion coming up for renewal. I am sure the Government intends to extend this guarantee beyond 2010 given the State's preference shareholding in Allied Irish Bank and Bank of Ireland.

Confidence is intangible but it is vital for our future that we nurture it. The delay in producing legislation on NAMA has triggered profit taking in the markets, which is perhaps a natural reaction among investors. According to the Minister for Finance, we will be more lenient than the UK on capital ratios. Perhaps the State's preference shareholdings is intended to offset this leniency. I understand the legislation for NAMA will be approved by the Cabinet on 23 June and published on 4 July, although we will not take it before the recess. Given the urgency of the matter, surely it is preferable to deal with the legislation before we rise for the summer. Any slippage would be unhelpful because we need certainty to build confidence. We might not like the way in which the markets perform but we must recognise their effects on confidence. NAMA is at present working in shadow form and is seeking to recruit people of the utmost probity. Major decisions will have to be made but I do not know how much can be set out in legislation regarding discounts on the book value of the properties taken over by the agency or valuations on the assets behind impaired loans. I accept this matter is not relevant to the Bill before us but I would be grateful if the Minister of State could throw light on it.

All Senators have heard stories about how the lack of credit and working capital is squeezing small businesses throughout the country. These businesses are the lifeblood of financial institutions and the economy and I do not want to see them disappear. I recently outlined for the Seanad a case involving a bank which reneged on a deal despite having a written undertaking from a solicitor. We should not allow people to act in this manner.

The correct decisions were made on Anglo Irish Bank and I recognise that an orderly write-down will be required. The bank was badly run by a small number of people but I wish the Director of Corporate Enforcement well in his ongoing investigation. I am saddened, however, by the cross-transactional nature of these events, particularly given that the Office of Corporate Enforcement lacks the power to investigate Nationwide Building Society. I have proposed legislation in that regard which the Government might consider including in law.