Brian Lenihan Jnr (Dublin West, Fianna Fail)

Senator Fitzgerald made the case for the various critics and also the Fine Gael alternative banking strategy. It would be good to be able to establish a new bank but we should not be deluded into thinking that just by establishing a new bank we would have a sudden explosion of credit in the economy. If anyone showed an interest in establishing a bank in Ireland at present, I would certainly contact the Governor of the Central Bank and urge him to do all he could to speed up the formalities. The reality is that every externally owned bank that came into this country in recent years has had to capitalise its banks - as we have had to with Anglo Irish Bank - in a country external to the external bank's main theatre of operations, and has engaged in substantial de-leveraging of its Irish operations. That is the reality with which we are faced, and it is important we understand that.

Senator Cassidy was concerned that funds would be made available to the banks and that there should be a percentage for small and medium-sized enterprises, and that the OPW should be involved. I will examine that.

Senator McDonald referred to the 3% pay rise in the Allied Irish Bank. I agree with the Senator in that we are facing into a very difficult period in pay determination. Our public servants have already made substantial sacrifices - on average approximately 6.9% in pay reductions. In the private sector, even wider sacrifices have been made by those who trade on the British market or engage in professional services connected with construction and in certain other sectors. Then, side-by-side with that, there are sheltered sectors in Irish life, in both the private sector and the commercial State sector, which are immune from pay restraint, and that poses substantial difficulties. I have raised this issue with IBEC recently.

Senator McFadden referred to a large number of the issues that have been raised and was a strong advocate of the Fine Gael position, as I understand it, that another NAMA should be established for those who have mortgage arrears. The NAMA model does not suit them. NAMA will pursue the developer for the full value of whatever are the developer's obligations. It would not be of much use to a homeowner to be told NAMA has bought his or her loan but will turf him or her out on the road if he or she does not pay the full face value of his or her loan. NAMA is dealing with commercial loans and it must act with a commercial mandate. As I understand it, what is being advocated by Fine Gael is that the taxpayer should directly subsidise the write-off to the borrower and that the borrower should be released from the obligation to repay the loan.