Joe O'Reilly (Fine Gael)

I welcome the Minister. Fine Gael welcomes, in principle, the tightening of regulation and structures that improve it. Our amendments will be proposed in support of the principle of regulation and its improvement.

Not only did we have light touch regulation; for years we had almost no regulation. There is a trail of human misery and people throughout the country are suffering hugely as a consequence. They are suffering on an emotional level and, in some instances, children are suffering deprivation. The principle of regulation is, therefore, not at issue. There is a continuing need for the tightening of regulation, both domestically and internationally. The Regling and Watson and Honohan reports underscore the dearth of regulation and the irresponsibility that obtained. The reports indict bankers, the regulatory process and the Government of the time. It is important that we move from that situation.

While we welcome, in principle, the concept of a commission controlling the Central Bank and banking, we are concerned about the appointment of eight of its members by the Minister, on whom this is not a reflection. The issue concerns political appointments. Fine Gael proposes an independent, objective, testable and observable process outside party politics. This is a prerequisite to ensure transparency, public confidence and effective ongoing regulation. We feel strongly about the issue and urge the Minister to review this aspect of the Bill. We will make this suggestion on Committee Stage. An objective and transparent process capable of being publicly monitored outside party politics must be established. The history of regulation of banking and the dangerous and sinister interconnection between party politics and banking practices make an unanswerable case for the Fine Gael proposals.

In the midst of the recent financial morass, bubble, hubris, greed and all the awful things that happened and which we collectively regret and seek to put right, the great beacon of light and hope and the champion of the people was the credit union movement which made a difference in the social lending sphere and kept the fabric of our small communities and families together. It has been exemplary. There was no light touch regulation. There were the occasional errors, alluded to by the previous speaker, but there will be human error in every endeavour. There was, essentially, a highly principled, socially motivated, consumer oriented, well directed and regulated process within the credit union movement. That needs acknowledgment at all levels. Credit unions hold a separate and distinct position in the financial system and should be regulated differently. They exist to help and serve members who have long been associated with them. Their loans are also stressed, in many cases by virtue of banking practices that have impinged on families. Often, when the mortgage must be paid, the credit union loan for the car, home improvements or holidays becomes stressed.

Flexibility must be applied to credit union loans. The Bill allows 30% of credit union loans to be extended for a period greater than five years. That is an improvement on the figure of 20% originally mooted of credit union loans to be allowed to go through this process. However, credit unions should have a greater level of discretion. Those which are dealing with small loans to families and individuals within a community setting should have even greater flexibility. We must not throw out the baby with the bath water. In the rush to correct years of dalliance, laissez faire practices and roguery and clientelism in banking and high finance we must not do down the single institution which is the people's friend in every village and town. Even the figure of 30% is tight. Moreover, the reserves credit unions are being asked to hold are excessive, to the extent that they will not be in a position to lend adequately.

I appeal to the Minister to put the credit union regulatory element of the Bill on hold, to carry out a review of the credit union movement and to look at a separate regulatory process for credit unions. These are very distinct institutions with a very distinct role and societal function. I believe the public would thank us for that. I appeal to the Minister to do it. We cannot paint all with the one brush and we cannot be excessive in our regulation of credit unions. I appeal for reason and for adjustment.