Larry Butler (Fianna Fail)

I agree with the previous speaker on how the banks have behaved. In short, they have behaved in an appalling manner. The public will be obliged to foot the bill for bailing them out. It is important to bear in mind, however, that a new Governor of the Central Bank and a new Financial Regulator have been put in place. In addition, new legislation to support the activities of these two individuals is due to come before the House next week. The legislation to which I refer will ensure there will be no light touch regulation in the future of the banking system. From now on, that system will be properly capitalised and will, as should be the case, be run in a proper way.

The previous system of lending money to people should not come back into play. In recent years the banks became extremely irresponsible. If someone sought a mortgage, he or she obtained 90% or 100% and was also given extra in order that he or she might purchase a new car or take a holiday. That was ridiculous; it would never have been possible to sustain such a system of lending. When the situation relating to the banks has been dealt with, we will owe €32 billion or thereabouts. There is, however, light at the end of the tunnel because important sectors of the economy are showing strong signs of recovery. That is a welcome development.

I defend the action the Government has taken to get the banking system back on track. Two years ago everything was disintegrating and the Government was attempting to hit a moving target. It did two things: first, it introduced the guarantee scheme; second, it established NAMA. We would never have come to know what the banks actually owed if the latter had not been set up. The banks came clean on the basis that they were obliged to do so in order that they might transfer loans to NAMA. That is the only reason they revealed the actual position. Representatives of the banks appeared at successive committee meetings and told lies. They stated they did not want our money and that they would rather die than accept it. Suddenly, however, they were obliged to admit that they were broke. As a result, taxpayers are being obliged to bail them out.

It is important to bear in mind that the Bank of Ireland put on a good show in recent days. The fact that it is raising private investment shows that there is international confidence in the economy and the way the Government has reacted to the banking crisis. The European Union, the United Kingdom and elements of the international financial markets are convinced that the banking system in this country is now properly structured and being supported by the Government. The private sector is prepared to invest money in our new banking system.

We must ensure the banking system will be competitive. It cannot be the case that, ultimately, only two major banks will remain. There must be at least four or five banks. The position must be the same as that which obtains in respect of insurance companies. In the interests of the economy, it is vital to ensure there will be a good, competitive banking system in place and that money will be lent, not for the purchase of luxury goods but for the right reasons.

In the United Kingdom the banks that have been nationalised are prepared to accept 40p in the pound in respect of personal debt. Banks in this country could take in much more money if they accepted 40 cent in the euro. There is probably €35 billion they could obtain in this way which they might not otherwise obtain. I do not refer to those involved with NAMA in this regard, but rather to those who have personal credit issues. On personal credit, there will be a further downgrading and the banks should begin to try to take in some of the money to which I refer.