Dan Boyle (Green Party)

I thank the Minister of State for his co-operation in that regard.

The installation of the bank guarantee two years ago was accompanied by much political comment about the certainty that it would cost the State €400 billion. While that might pass for normal politics, it has helped to inform much of the misuse of figures we have seen since. It is also true that the report of the Governor of the Central Bank on the banking crisis pointed out that while the bank guarantee was the correct instrument to introduce for the right reasons, the way it had been introduced was probably too broad in its application. I do not believe he imputed any political charge in that regard. The situation two years ago was so serious that the Government was required to take immediate action. For the most part, the guarantee has been a successful instrument.

Members might remember that the reaction from other jurisdictions was violent towards it in the opening weeks until many of those same governments decided to replicate the measure in their own systems. The Minister of State has pointed out that many of them have since renewed their bank guarantee schemes, which puts an onus on us to extend the time period in which ours should be considered. The amendment has also been informed by the observation made by Professor Honohan in his most recent report that it must be a different type of guarantee. The necessary measures have been taken.

That said, it is fair to say about the unacceptable spiralling costs of Anglo Irish Bank and its debts that the existence of the bank guarantee and the way in which NAMA as an organisation worked very well within its remit in properly costing the loan book of Anglo Irish Bank has led us to the situation where the figure we will see tomorrow, while it might not surprise at this stage, is well in advance of the figures that many of us had been anticipating two years ago. It is an unacceptable figure. It is a period of Irish history on which we will look back with no great fondness and a great deal of horror in terms of the individuals and institutions whose reckless behaviour brought us to this situation.

Government policy has been founded on the basis that if this situation is not sorted out, the access to borrowing which we need because of our public expenditure crisis and the long-term cost at which that money is borrowed would spiral out of control. While some might look at current rates and argue that this might not seem on the surface a particularly successful policy, it is fair to say also that the current spiralling of the interest rates has much to do with an expectation within the markets that the bondholders in institutions such as Anglo Irish Bank may not get the money they put into those institutions in the first instance. The Minister has gone to great lengths to ensure the debts this country has incurred will be met. In putting in place a new guarantee, the question of people who provided bonds on an unsecured basis - the subordinated bonds - and the ability of even the senior bondholders to work towards the resolution of institutions such as Anglo Irish Bank is something we must now consider. I am confident that through institutions such as the European Central Bank, this is something that will be actively considered.

We must take on board the key lesson of Professor Honohan's observation that we cannot have an open-ended approach to this problem. The cost we have been asked to bear as a State has been too large and cannot be open ended. The difficulty with the use of this instrument and others is that within weeks, this action deciding what will happen with the debts that have been incurred and which were covered by the previous guarantee, the announcement of the total cost of Anglo Irish Bank and how that cost is likely to be met, and the budget in early December will probably constitute the most crucial economic period this country has faced in decades. I ask all Members when considering the approval of this motion to bear in mind that there is a shared political responsibility among all in political life to ensure instruments such as this have their desired policy goal because if we move offside in reaching the targets that are hoped to be gained under this policy while at the same time trying to cover our public expenditure crisis, the situation which is causing further doubt may become an impossible situation.

Like Senator MacSharry, I believe this is a situation that can be and will be overcome. It will not be overcome by sugar-coating the seriousness of the situation, nor will it be helped by people who want to play pure politics with it. This is a situation that will require resolution over a long period and will require a degree of political consensus that, sadly, has been lacking to date. We must give a qualified welcome to extending this guarantee. I look forward to a time when the benefit of having such a guarantee in place will at last see us with a more stable economy and a banking system in which we can begin to believe again.