Joe O'Toole (Independent)

I welcome the Minister of State to the House and listened closely to his comments at the beginning of the debate. It is an important debate and I disagree with people who asked me why we would discuss the Greek situation. There is every reason why we should discuss it, one of which has been raised by my colleague, Senator Norris. This is an issue we have to get stuck into.

In effect, what Goldman Sachs has done is worse than the instruments which were created by it and others for the sub-prime business three or four years ago. It is worse than that. In effect, it collaborated with the Greek Government to hide the mounting debts of the Greek economy. It did that, not last year or the year before, but for the past ten years to obscure from the European Union the correct interpretation of its national accounts. This has continued in recent months. I was appalled to learn that in recent months Goldman Sachs again created an instrument to give it billions in what was, in effect, a loan disguised as a currency trade. It was like giving somebody who cannot pay off his or her mortgage a second mortgage under the counter to pay off his or her credit cards and, as a consequence, being left with three large debts rather than two.

I raise this matter because there is a major issue in terms of international regulation. I must declare an interest — I am a board member of the Irish Auditing and Accounting Supervisory Authority and I have a keen interest in global accounting and auditing standards. I am not suggesting the Minister of State has an answer to the question I wish to ask. Charlie McCreevy hammered the table in Ireland and in Washington two years ago and insisted that international accounting standards be similar across the globe. The Securities and Exchange Commission in the United States of America, which is attached to the Stock Exchange, has a certain set of standards, the main part of which comprises the Sarbanes-Oxley Act which was introduced after the Enron disaster. It thinks it is great. It is a joy to be the one to get around it. It is a classic example of trying to have a rule for everything. I guarantee there is no rule which states one should not disguise a loan as a currency trade. That is the problem with rules-based auditing to which many Members on the Government side referred during the banking crisis, including those who did not know what they were talking about. They should all remember this as a classic example of a bank which operated under the strictest regime of rules but got around the intentions of the legislation. That is why rules-based principles will never do the business. In Britain, Ireland and most of Europe, accountancy is principles-based. In other words, one has to be honest and if one is not honest, one has to explain the reason. This is not about trying to have a rule to cover every instance because that simply does not happen. I learned that when I was 14 years of age in Dingle and saw double and treble sets of books in small businesses. This practice has been going on that long; it has gone on forever. If anybody believes there can be a rule to sort that out, it will not work.

How would this practice work? The simple way to deal with it is that auditing standards provided to Europe, whether they come from Greece or Ireland, should provide the same information. In other words, if a person owes, that is a debt, no matter how it arose or what the approach to it may be. Europe must decide on this course. In this country we have been slow to impose European directives, including the one introduced by Commissioner McCreevy, a very important piece of legislation concerning auditing and related transparency. Ireland is the second-last country in Europe to enact this, if my memory is correct. However, I do not want to go into that matter now.

We must insist on proper accounting standards, working with the Securities and Exchange Commission in the United States. The US must be called to book in this regard. It is the worst country in the world regarding co-operation on global issues. It is impossible to deal with. It is the author of its own misfortune in this situation. The bank in question should be brought to book for what it has done. It effectively collaborated in bringing an economy to its knees, not to mention the domino effect this might have all over Europe although I do not believe such an outcome will happen now. What the bank did, however, was inexcusable. I ask the Minister of State to bring to the European Union our demand that accounting standards be interpreted in a similar or complementary way to those of the United States, or else that standards as practised can be easily understood so that we can have the same information as it is required.

I wish to touch on some other issues regarding our economy. As the Minister of State will recall, I supported the NAMA legislation all the way through this House. There was one issue with which I disagreed and I raised it time and again, namely, credit flow. I asked repeatedly that the Minister for Finance make it absolutely clear that even though NAMA might do what it set out to do it would not create credit. I said this time and again and explained my reason, namely, that the total amount we were to put into the banks would only be enough to bring them to the tier 1, loan-to-asset requirements of the Basel principles. It was never going to do more than that. People were misled, although not by the Minister. I listened to him very closely and although he did not say that NAMA would release credit, neither did he make it clear that this was not the intention of the Bill. The only time he was forced into saying this was when Fine Gael tabled an amendment demanding that what the Minister was issuing as credit guidelines should be credit requirements.

I pointed out at the time, as a number of people have pointed out since, that there is no way the Government can force the banks to act against the best interests of their shareholders. It cannot force the banks to act in the public good. They are bound by company law and would break the law of the land if they were to listen to the Government rather than do the best for their shareholders. That was the reason to which I referred.

One has to look to the future. Previous speakers pointed out the importance of having a third banking force. Senator Butler touched on this and it has been done before. I advise the Minister of State to look at the origins of Rabobank which came about through a conglomeration of co-operatives, or small credit unions. There is a way in which credit unions might be developed into banks. In New Zealand, for example, there is the Kiwibank, a post bank which has developed enormously in the past five years. We have a post bank in this country and we should look to that as well as at other options now being considered that would put two institutions together.

I apologise for going over my time. I welcome the Minister of State to the House and I hope he will bring some of the issues raised back to his Department.