Shane Ross (Independent)

I find this motion very difficult. When we deal with these issues in a piecemeal fashion, this type of motion and debate leads to a further loss of confidence by the global markets. I do not mean that the debate should be suppressed. The fact that it is temporary, that we do not know how long it will last and that we do not know what will happen tomorrow leaves us in an odd situation when debating. I always felt, and I feel more strongly now, that the better route would be to nationalise all the relevant banks initially. I still feel this would be a better solution because this proposal is presented, rightly or wrongly, as a temporary carryover of the problem that is Anglo Irish Bank. Anglo Irish Bank is the lead problem in the world markets and something bondholders see as threatening the economy, the Government and the solvency of the State. That may or may not be true. To ask us to vote for this in a vacuum is unreasonable. Had matters been addressed in a different order and we were given the detail yesterday that we will be given tomorrow, it may have been a reasonable request. When the nation, experts, politicians and commentators are in the dark about whether the figure will be €25 billion, €35 billion or higher, asking us to guarantee the bank in question is absurd and insulting. It will be passed but we should be armed with the information necessary so we can decide, perhaps not in an informed or educated way but in a way that is reasonable, whether it is worth the price. There is at some stage a point at which one says "To hell with it, let's default." There is at some stage a point at which it is too expensive and at which the credibility of the nation is not worth it. I would have thought that if we were to nationalise all of the banks, it would remove the extraordinary market uncertainty. The question being asked is whether the Government is going to let Anglo Irish Bank go. The Government continually states it is not going to let it go in order to reassure the markets, but I suspect the proof would be if it was to state every bank in Ireland would be nationalised.

The bondholders have a point. They look at the behaviour of the Government and make cold judgments. They are not sentimental or patriotic judgments. They are saying the situation is dire and that perhaps one of the banks will default or be allowed to do so by the Government. The problem being signalled by the dogs in the street and in the markets is not that Anglo Irish Bank is a basket case and beyond redemption, as now acknowledged by the Government because it is going to wind it down, and not just the price of Anglo Irish Bank - if that was our only problem, that would be okay - but that the next pillar to wobble will be AIB. The Minister knows perfectly well that AIB has sold its Polish subsidiary. It has a problem, as Senator MacSharry said, with Santander. I did not know that, but if it is true, it may sell it for a good price. It may also sell its British branches and a few other bits and pieces for a good price, but that will still not solve the problem of AIB. The next thing it will have to do is expose itself to the market, after which it will have to have a rights issue. No one in his or her right mind would subscribe to a rights issue in AIB. There is not a hope in hell of it getting a rights issue away. Bank of Ireland did and all credit to it, but its rights issue occurred in very different circumstances when things were not looking nearly as bad and market sentiment was very positive. It brilliantly exploited a window of confidence in the economy, but that is now lost. It has disappeared. The next thing that will happen is that AIB will fall short of what is required of it in terms of recapitalisation and when that happens, there is only one place from where the money is going to come from, namely, the taxpayer. As sure as night follows day, that is going to happen. The Government is going to bail out AIB next. There will then be all sorts of questions, perhaps not identical to those relating to Anglo Irish Bank, as it is not as bad and there are not as many colourful peripheral stories attached to it, but AIB will next be under threat. It will be majority owned by the State and identified with it. Would it not be far simpler if the State had moved in and taken the lot? If the speculators want to take on anybody, they will have to take us all on and take out the sovereign nation. There is no uncertainty. None of the banks is going to be allowed to float on its own, abandoned. That way we might have some chance of rescuing not just the banks but also the State.

It will depend to some extent on how the State has managed the nationalisation of Anglo Irish Bank. This raises serious questions. On many occasions I have asked what on earth the Government has been doing in appointing various directors with political pedigrees which stand out a mile or flawed banking pedigrees in a way anyone could have pointed to in advance. There have been some rather strange appointments already this week, with the appointment of Mr. Jim O'Leary, a "respected" economist, to advise the Department of Finance. I know and like Mr. O'Leary, as do many others in the House, but he was a director in Allied Irish Banks at the exact time the property frenzy was taking off. He and Mr. Gary Kennedy, recent key appointments by the Government to very delicate positions, were both members of the board of AIB when it was lending money hand over fist to property speculators. Why on earth has the Government chosen as one of the chief advisers to the Minister at this crucial time someone with that record to advise him? I cannot understand it. He may have wonderful ideas about many things, but a host of independent economists with equally good qualifications would undoubtedly have taken the job who do not carry the albatross of having been at the coalface at the time.

I read of another appointment in today's newspapers. Mr. Pat O'Mahony is one of the advisers to Mr. Nyberg who is investigating the banks. Most will not remember him, but he was head of the branch network in AIB at a very delicate time. If the Government is going to nationalise the banks, it will have to look at the pedigree of those whom it appoints. I worry about one thing above all else, namely, that the bankers are not reforming and that they are retrenching. They are retrenching with the co-operation of the Department of Finance. That is not a serious charge, but there is anecdotal evidence to back it up. It seems to be unreasonable, therefore, to ask us to give a guarantee to Anglo Irish Bank and the rest of the banks at a time when the Government is not taking the confidence measures necessary to help and that might make the guarantee unnecessary.