Joe O'Toole (Independent)

We have dealt with this issue previously since the foundation of the State. Emerging from that, I have given one example, namely, the mutual building societies, which were non-profit making, committed to their members and which had a soft, reasonable and humane approach to debt. Similarly, another member of my union established the Irish credit union movement, which similarly dealt with sub-prime lending in a controlled and regulated environment that maintained control of the liability. For example, each night going to the credit union meeting the manager would pass the shop of the man who had borrowed money to paint his shop-front. Then, if it had not been painted with the money that had been borrowed two weeks earlier, questions would be asked.

Similarly, in more recent times the State had two banks, the ACC and the ICC, which did exactly what Senator Fitzgerald was talking about. I have spoken here previously about the changes in all these areas. At some point during the past year the Leader has also bemoaned the loss of the ACC and the ICC. What happened when the boom took place was that every building society wanted to be a bank and every bank wanted to be a building society and it became impossible to distinguish between the different financial institutions. We have had this debate here.

I introduced a credit union Bill. I do not know how many years ago it was, but both I and Maurice Manning stood and argued when the building society legislation was going through. We resisted attempts by Government Members who had been put under pressure by a well-known figure in the building society movement to try to get the legislation on mutuality changed so that they could become public limited companies. Once a building society becomes a PLC, as all banks are, it cannot be controlled by Government, unless one is in a command economy. A command economy is communist or socialist and that is the point I was making.

This is a circle that cannot be squared in this context. However, and this is the point Senator Fitzgerald was making, while the Minister can issue all the guidelines he wants, he cannot make them stick. He can exert moral authority, but as Senator Harris asks, since when did banks respond to moral pressure, that is not how they operate.

Another crucial issue in this area is companies legislation, which requires limited companies to act in the interests of all their shareholders, which leaves them in breach of the law if they take action not in the best interest of increased shareholder value. Even if the Government owned a huge share of the banks, it would still be in breach of the law if it tried to make stick something that would give money where it would earn less than giving it elsewhere. The problem here is both a societal and economic structural problem and it will not be dealt with by NAMA.

The issue raised by Senator Fitzgerald is extraordinarily important. We should deal with it here and should look at the different instruments to do that. There are ways to do that within society, everything from tontine societies to mutual societies. There are all sorts of ways to deal with the issue. The State could encourage, support and develop this area. The way proposed in the Bill is not the way. It is a sop to the Opposition, but it cannot be made stick. It is a nice thing and people can say "Isn't it lovely?" However, if one goes to the courts or Bank of Ireland and flashes the guidelines, they will only laugh.