John Gerard Hanafin (Fianna Fail)

I second the amendment because the Opposition's proposal is to incorporate in NAMA a home owner's support scheme to protect those families facing home repossessions. However, NAMA's purpose is to protect the economy. It is a single purpose vehicle and repossessions can be addressed by other means and methods.

On most, if not all, other issues, we agree that the situation in which we have found ourselves is, in large measure, the making of the banks and credit institutions. On the international scale, it is of their making in full measure. The collapse of the sub-prime lending sector in the US is worth noting. Housing loans were rolled over and sold forward in packages, the money from which was used to fuel the lending fire further.

It is not that long ago that one might have received a note through the door asking whether one wanted to go on a holiday or to get €15,000 with no strings attached. Those of us who went through the 1980s and remembered interest rates at 18%, 20% and 22% and the difficulties in getting and holding on to a job until our knuckles went white because the only other option was emigration knew that those practices were dangerous. In glossy store card offers, people were told they could borrow up to a limit and pay off 2% per month, but doing so would have taken 18 years.

The banks have significant responsibility for allowing 110% loans, providing money to developers who were trying to outbid one another and pushing up the price of land to the extent that people who had not been around the circuit before believed that all one needed to do to get rich was get a job, of which many were available, borrow money to the maximum, buy a house and watch its value increase by 40% within two years. The banks had a large part to play but, this notwithstanding, we could have got through it all with our exports as we had a good, strong economy.

What the banks did internationally was pure criminal. They knew it was wrong. When people started to default, banks hid the facts from the regulators. This story is almost biblical in that the banks have been forgiven a large debt because we need them to bail out the economy. Time and again, the Opposition states that we are bailing out the banks, but neither I nor anyone in Fianna Fáil holds a brief for a bank. We hold a brief for the economy, which is what we have been doing. We have helped the banks, but the way they will now treat people is how they will be judged. Banks should not believe that they can return to the old days of 3% margins, putting people out of their homes and using a Victorian legal system to ensure the repayment of debts to the last penny after they have been forgiven significant amounts. This Oireachtas and its future versions should protect people because we have not forgotten the lesson.

MABS is doing a good job. A system for the rescheduling of debts with banks, taking equity, rolling loans over and working with people to ensure they can repay a certain amount has been proposed. It has never been acceptable that those who will not pay would not pay. However, it has always been acceptable that those who cannot pay would not pay. These are the people we are supporting.

With this responsibility in mind, I remind the banks of a warning from the past. If they start going after the poor people in question, there will be a strong feeling in the community to legislate to ensure that what we are proposing as a voluntary code of conduct will quickly become a legal one. The banks' future is in their own hands.

We are going through difficult times, but better times are on the way. However, I share my colleagues' concerns regarding the rise in ECB interest rates. It could easily come about. We only constitute 1% of the euro market and there is no doubt the Germans, who have strong sway in Frankfurt and the ECB, have an historical fear of inflation. As the threat of inflation returns and economies move forward, the ECB will raise rates. However, we can take solace from two elements. First, ECB rates are historically low and are within no measure of the 18%, 20% and 22% penalty rates paid in the 1980s. Second, if the European markets are improving, there is no doubt our economy, as the world's most open economy, will start improving.

While agreeing with much of the Opposition's comments, NAMA is not a suitable vehicle for ensuring the home owner's support scheme is put in place. However, the voluntary nature of the proposed support scheme must be accepted by the banks in full. There is more than hearsay evidence to suggest that some of the banks are using Ireland as a piggy bank, in that foreign banks are taking in deposits but not giving out loans. They are using us to increase their tier 1 capital ratios abroad and are sucking money out of the Irish banking system. If necessary, we should legislate to ensure moneys deposited in Ireland are given out on loan in Ireland. The Irish economy comes before any or all other banks.