Shane Ross (Independent)

I came into the House with my mind made up about how to vote on this Bill and I am now undecided. It is rare for people to say that in this House. I have listened to the Minister and Senators Donohoe and MacSharry. There are two ways of considering this Bill and I am now considering it both ways. One is to say it is the first of three extremely constructive and very important measures which are being taken to reform the banking and regulatory system. As that sort of measure, it is good and we should support it. The other way is to ask if it goes far enough to clean up the problem of details we have within the system and if it tackles the real problem.

The Bill is strong on the structures and attacks the problems we have had with supervision, systems, the lack of inspection and all those areas. What is described as fitness and probity is strong and a great improvement. It lacks strength in that it attacks the fundamental difficulty which was so apparent and which caused or was partially to blame for the Irish banking crisis, namely, the closeness between politicians, the Central Bank or the Financial Regulator and the banks. Politicians are members of that club to a lesser extent than the Central Bank and the Financial Regulator While it passes the test on structures and supervision as the first of three Bills, on the second issue it fails abysmally and Senator Donohoe pointed that out very tellingly.

The problem of regulation of the banks before the end of September 2008 was that there was no regulation at all. The reality is that the banks had run amok. The Financial Regulator was allowing them to do pretty well what they liked. There was no supervision. There was what was known loosely as a principles-based form of regulation which meant it was left to the banks to do what they wanted to do, and they did what they wanted to do, namely, ignore and break the rules, doctor the books and conduct themselves in a way which brought this country into a dire financial situation.

What is quite apparent from the new attitude and remedies which are proposed is there is at the very least - I do not like talking in terms of principles-based regimes and rules-based regimes - an absolute determination that there will be what is called an intrusive interest in what is going on in the banks. The Financial Regulator will be sitting on the banks, what they are doing and their supervision and systems from now until, it is to be hoped, forever. The next Bills, which will have a more detailed emphasis on these things, will ensure that is enforced.

This Bill, which goes into the area of enforcements and appointments of people inside the Central Bank, is very worthy. The Minister must be applauded for several of the appointments he has made, in particular in the State sector. I have no hesitation in saying he has been magnificent in his appointment of the Governor, Mr. Patrick Honohan. The appointment, election or selection of Mr. Matthew Elderfield was one which we have to applaud and it is certainly Government driven, if not Government selected. There have been others, which is undoubtedly a vast improvement. These appointments are already producing a change in culture in the Central Bank, the office of the regulator and other areas. I am on record as stating that in my experience Deputy Lenihan has, without a doubt, been the finest Minister for Finance. I say this in front of him and I have been in the House for 30 years. He has had to deal with hard times, whereas his predecessors had it so much easier and his performance has been absolutely magnificent. It has been almost impeccable. I have never come across a Minister who has performed so well in such difficult times and with such courage, determination and incisive understanding of his brief. However, there is always a "but". While his appointments to the Central Bank and elsewhere in the State sector have been strong, the appointments made in the banking system have been appalling. It is deeply regrettable that the banks continue to be directed by insiders, even after the events of 30 September 2008. I am particularly distressed by the appointments to Anglo Irish Bank, the State's bank. I cannot understand why the Minister appointed Mr. Gary Kennedy and Mr. Aidan Eames. I never heard him speak about this issue, but Mr. Kennedy is an insider - I have mentioned him before in the House - and was financial director of AIB when the property boom was at its height between 1997 and 2005. It is the worst appointment I could possibly conceive. On the same day Mr. Kennedy was appointed Mr. Aidan Eames was appointed to the board. Mr. Eames is, undoubtedly, a good solicitor, but he is also a Fianna Fáil fund-raiser, election agent and ex-Senator.