Feargal Quinn (Independent)

I thank Senator Norris for sharing time. I welcome the Minister of State and his words. I also welcome the banking supplementary documentation booklet we received, in particular section 7 which contains frequently asked questions, which is very useful. I am glad we are having this debate today but I would like to ensure it is a debate which will help us to arrive at conclusions. Let us not only talk about the past and who is to blame. Let us look for alternatives to the proposed solutions if they are not the right ones.

What do we know today that we did not know yesterday? There is some good news. We know less money is needed for AIB and the Bank of Ireland on condition that they sell assets. The bad news is that we need another €10 billion for Anglo Irish Bank. I was embarrassed to read in one of yesterday's newspapers that I was a shareholder in Anglo Irish Bank, a matter to which I referred on the Order of Business today. I have never been a shareholder in Anglo Irish Bank. I am a shareholder in a fund which had an address at Anglo Irish Bank. I say this to ensure no one will believe I am speaking out of place.

There was good news yesterday. There is now clarity about what NAMA will pay for the loans and the capital requirements of the banks but questions remain. The real question is whether the cost of bailing out the banks will be lower than the cost of letting them go to the wall. The answer is not clear because we are not sure how much it will cost. There is talk of a figure of €31 billion in fresh capital and perhaps extra debt of €40 billion. There is not an easy answer, although there is an alternative in that we know what would happen if the banks were to fail. The credit worthiness of the nation would be severely damaged. In this regard, we need only look at the situation in Iceland and Greece. This time last year we were at the same level. We are not now included but there is no guarantee that this solution will solve the problem. However, the Government has taken action.

We will need to keep a close eye on the matter, as we know what happened in the past. I always worry about over-regulation because it stifles the economy but there is little doubt that regulation is needed. If we are to solve the problem and look to the future, we must ensure we have something in that regard. The target set by the Financial Regulator of a reserve of 7% for every €100 lent is tough.

The main aim, as stated, is to provide capital for small and medium-sized enterprises. We have allocated sums but we cannot click our fingers and instruct the banks to do something. If I was a banker, I doubt I would give money to people looking to borrow unless they had a proposition that could pay its way. I am not sure it is easy for a state to instruct a bank to do something.

Should the State-owned Anglo Irish Bank be kept? The State has put €22 billion into it but keeping it could cost a further €30 billion in the next ten years. The banks need so much capital because NAMA is valuing loans at a figure of closer to 50% rather than 30% as was the case last September. That is both safe and worthy.

A strong message must be sent to international financial institutions, investors and those about whom we are concerned. I also read the Financial Times which contained three articles, one of which was critical, while the other two would give one a great deal of confidence. In one article it was stated that, with the public finances stabilised, the Minister had already made the harsh political choices to reign in the budget deficit, in the process setting the standard for the eurozone's ailing economies. That is good news and for it to appear in the Financial Times is acceptable.

Another article welcomed the new Financial Regulator and stated he was untainted by his predecessor's cosy relationships with the banks. These are very strong words. It also stated the Minister, Deputy Brian Lenihan's plan of action showed determination to repair the damage inflicted by previous sloppy management and regulation.

I am concerned about how we are going to achieve the aims outlined. We will need to keep a close watch and maintain close scrutiny. However, I am very confident that the Financial Regulator will be strong in this regard. I am a gardener and spend a little time growing vegetables. I could never grow celery until I read somewhere that celery seeds should be planted in ground prepared two years previously. While I am still not good at growing celery, I have learned that one must plan, watch and wait. In the context of the banking system, we must be patient and alert and scrutinise matters to ensure the same mistakes are not repeated.

While I have always been concerned that excessive regulation poses a danger of stifling the economy, enterprise, enthusiasm and business ideas, in the case of banking, we took our eye of the ball. Let us ensure we do not do so again.