Jim Walsh (Fianna Fail)

People have criticised shareholders. Nobody has suffered more than shareholders in the banks. Indeed, we have seen that people put in their retirement nest egg and lost everything. It is unforgivable in many ways. Shareholders have suffered extremely badly.

Ordinary customers have also been badly burned in two ways, the first of which is that they cannot access credit. The second is that many had money thrown at them by the banks, probably made imprudent personal decisions as a consequence of that loose behaviour by the banks and are caught.

It is easy to point a figure at developers. At one stage the construction industry and developers had in employment, directly and indirectly, just short of 400,000. That has almost completely evaporated. It is essential for our economy that we get the construction industry back to a more normal and sustainable level of growth in order to underpin those persons' employment.

I note that an analysis of those who have been unemployed as a consequence of the downturn in construction shows that 40% of them have primary qualifications or less. They will not be easily re-employable in other areas.

The people who gained - the winners in this - were the senior banking executives and the directors. I note that some of them will have had their shares wiped out, but the moneys they were paid in remuneration over that period was nothing short of scandalous.

It is not only them. There is a need for corporate governance to be clearly examined with a view to ensuring all public liability companies have a system whereby the ordinary shareholder can exercise influence over exorbitant pay within those companies.

For the directors, many of whom would have been on six figure remuneration for what is a nominal period of time spent as directors, I suggest that the following system be looked at to get over the short-term focus which was a big part of the cause of this problem. First, their remuneration, which is, say, in the order of €100,000, should be capped. Second, I propose that 65% to 75% of that should be in the form of shares, which could not be sold or redeemed for a minimum period of five years. This would change the focus of bankers and of those in charge of banking to align them more with prudential banking and also with the medium-term performance of the banks, which would be required for them to achieve the value of the shares they got for the service they were giving.

Senator Ross has been strong on the point that the banks were too big to fail, and I have some sympathy with his argument. Undoubtedly, that has been the case and we must learn from it. That can foster imprudent risk-taking, and I think it did in this instance. The fact the banking sector is being rescued, of necessity, globally and here in Ireland, means we must factor that into our thinking and into our precautionary measures for the future.

I do not believe, as has been suggested by some economists, that a break-up of the banks is a good idea. There are economies of scale. The interest of Ireland Incorporated is such that we need relatively medium-sized banking players. The legislation underpinning all of that is essential. It should include severe penalties, including custodial sentences, for breaches of the law and for breaches of regulation. The principle of criminal negligence should be applied and should be pursued in this instance.

This applies not only to the bankers. There has been serious dereliction of duty by the regulatory authorities, both internationally and, most definitely, domestically. I would ask that the Garda investigation into banking behaviour be extended to cover the role of those who worked in our regulatory authorities who had responsibility, and to examine if and where they failed and if there is any criminal negligence attaching to them for that failure.

Of the alternatives mentioned, one is a new bank which, obviously, insinuates allowing the existing banks to become insolvent. I am not sure that would be in the interest of this country or in the interest of credit flows, either to the State or to any banks we might have here in the future. I hear the argument about nationalisation, but the banks would still hold the non-performing loans and still be in the same retarded and inhibited situation they are in at present.

While I do not welcome it and while it is unpalatable, NAMA is necessary. We must rehabilitate our banking sector, as the Minister stated. In that regard, we can take some confidence from Fitch which downgraded Ireland's credit rating, from the International Monetary Fund, from the EU, from the OECD and from others who have claimed this is the correct route to take. However, it needs to be pursued with a considerable degree of caution and I am hopeful that on Committee Stage we can give greater scrutiny to ensure it is the best possible quality of legislation to meet the serious challenges we face, within the banking sector and as a country.