Liam Twomey (Fine Gael)

We engaged in an interesting debate in respect of an earlier amendment in respect of how much power the Minister or the Government will have in the context of compelling institutions to lend money to small and medium enterprises and to extend credit to individuals. We have not yet seen the guidelines and, therefore, we do not know if they will work. I am of the view that they should be produced quite quickly.

The Minister of State will be aware that two years ago the criteria used by the banks in respect of applications for overdrafts made obtaining such overdrafts relatively easy. However, the banks have changed those criteria and are trying to bring to an end the overdraft facilities available to a huge number of businesses. I do not know if it will be possible to compel the banks to restore those criteria to the way they were two years ago when the market was more favourable.

Fine Gael put forward a proposal in this regard which would involve the establishment of a wholesale bank which could employ the criteria that were previously used and thereby facilitate lending to the type of companies to which I refer. I accept that there would be a greater risk involved but it would certainly facilitate the restoration of credit flows. What Fine Gael proposed would be much cheaper, the State would have control over it and everyone would know the number of loans involved and the value thereof because the wholesale bank would operate in a real-time market scenario rather than on the basis of the model relating to long-term economic value.

The Minister for Finance should either produce the guidelines or provide further information with regard to how they will be used to oblige banks to lend in a difficult economic environment. The banks are restricting overdraft and lending facilities to small and medium enterprises for two reasons. First, in difficult recessionary times, banks restrict their lending. The second reason is that because they overextended themselves and simply do not have the requisite money, the banks are trying to reduce the number of loans on their balance sheets. If we are going to compel the banks to lend, then we are going to require something more concrete.

The Minister should indicate what will be the content of the guidelines. If such information is not forthcoming, we should revert to Fine Gael's proposals to the effect that a wholesale good bank be established.