John Gerard Hanafin (Fianna Fail)

In supporting the Credit Institutions (Stabilisation) Bill 2010, I am certain the banks gave wrong information at committee and directly to the Department of Finance. Whether this wrong information was given knowingly remains to be seen. Notwithstanding that, in checking the stability of banks recently, the European Union found that all Irish banks other than Anglo Irish Bank and Irish Nationwide Building Society were believed to be in a solvent and solid position. We now find that was not the case. It was not only the Irish Government and the Oireachtas that were misled but also the European Union. The Government must take strong and firm action, therefore, and take a strong and direct legislative role in dealing with the banks.

When we look at the banks, we must look at the context in which they operate. If the situation is one of a permanent downward spiral we will have very severe difficulties and it will be almost impossible to reach their lowest tier. In the last quarter the economy grew for the first time since 2007. This is very good news because it underpins the presumption made in the budget that we would have a modest growth rate of 1.7% next year. That is very achievable and we may even see modest growth within this calendar year.

With this in mind, what else has been done to ensure the stability of our banks? Given that our banks have such a dependence on property, another welcome measure in the budget is the reduction of stamp duty to 1%. That should provide a floor in order that we would know what the losses will be.

We are certain the Minister needs these powers, as will any future Minister for Finance. These bonuses were going to be paid by the bank, albeit not willingly. In that situation we see the old culture again. Some people still have not fully grasped the new dynamics operating in the economy. These are very straightforward. The old ways are finished, there is a new way of doing business and it will not be along the ways that were in place in 2007, the year that got us into these difficulties.

We will see a significant recapitalisation of the banks in conjunction with the Basel requirements. The Irish banks will have a 12% core tier 1 ratio of reserves which is a very strong backing. It is necessary and the markets need to know it will be in place, especially because there has been a haemorrhaging of funds from Irish banks. In addition, the international press, either deliberately or because it does not fully understand our situation, has given very bad press to the Irish economy. With that in mind we are underpinning the banks. We are insisting that non-core assets will be sold off and that non-performing loans will be transferred to NAMA. We want to have a good banking system. It is not a case of saving the banks, as has often been suggested by the Opposition. It is never about saving the banks but always about saving the economy.