Marc MacSharry (Fianna Fail)

It would be appropriate to schedule such a debate.

I welcome the report, which highlighted systemic and regulatory failures and the cosiness of the relationship between regulatory authorities and banks in the past. There was a lack of expertise in key areas. When key figures were asked why certain actions were not taken, the reason provided was that officials found the issues to be complex and they could not take the necessary actions. It would be useful to go over the report in detail, perhaps through a joint Oireachtas committee, which has the ability to call witnesses. The Taoiseach referred to this. I was a member of the previous Joint Committee on Finance and the Public Service and we had the opportunity to ask questions. A continuation of that dialogue would be useful because the people want their pound of flesh. Due process will provide that for them but finding solutions is much more urgent.

The new Government must acknowledge that much of its banking strategy is in line with that set out by Fianna Fáil. The previous Minister for Finance commissioned Black Rock Consulting in January. During the election campaign, the Minister for Transport, Tourism and Sport, Deputy Varadkar said "not another cent" would go into the banks while the Minister for Foreign Affairs, Deputy Gilmore, said it would be "Labour's way or Frankfurt's way". However when the votes were cast, reality had to be embraced. In the real world, real policies must be pursued and the Government's banking policy is similar to that pursued by the previous Minister for Finance.

On the issue of burden sharing, both Fine Gael and the Labour Party said they would burn the bondholders. During the negotiations with the IMF and the ECB, the then Minister for Finance, Deputy Lenihan raised the issue of burden sharing with senior bondholders and this was flatly rejected by the ECB. The new Government continued to pretend this was an option until very recently when the Taoiseach said it was not "reasonable or logical" to go after the bondholders in "live banks" which depended on the markets for funding.

Last December, Deputy Lenihan introduced the Credit Institutions (Stabilisation) Bill, which allowed for burden sharing with subordinated bondholders, despite claims from the Government parties that they were the first to deal with the issue. It is incorrect and misleading to suggest that. Subordinated bond holders have contributed approximately €10 billion to the cost of the bailout to date and negotiations are ongoing, which is welcome. The reality, as Fianna Fail has continually pointed out, is that if we keep talking about burning bondholders, we can hardly be surprised if depositors remove their funds from the banking system and have little faith or confidence in it. This is a worry.

The Government parties were oblivious in opposition to the fact that senior debt has the same legal status in this State as deposits. People will not leave their money on deposit in our banking system if there is a constant barrage and chorus of calls not to honour Irish senior debt. It is no coincidence that the withdrawal of deposits from Irish banks has been stemmed since the Government's confirmation last week that it was holding true to Fianna Fáil's policy.

The Minister for Finance, Deputy Noonan, announced the restructuring of the Irish banking sector into two pillar banks, made up of Bank of Ireland and AIB and incorporating the EBS, as agreed under the memorandum of understanding with the EU and IMF. Fianna Fáil has always maintained that we needed to restructure our banks to better reflect the size and scale of our economy, but it was clear this could not be done until the completion of the stress tests commissioned by Fianna Fáil in January.

On the issue of strategic investment banking, the Minister of State mentioned the speech delivered by the Minister for Finance, Deputy Noonan, three weeks ago. The programme for Government pledges to establish a strategic investment bank as proposed by the Labour Party. We have never agreed with this policy. Our two main banks already compete in the financial markets for funding and putting another bank there would detract from their ability to secure funds, taking funding away from the two pillar banks and threatening their sustainability. I have noticed there has been no mention in any of the important banking statements made by the relevant Ministers in the new Government of the strategic investment bank. Is this a U-turn or what is the situation?

There is clearly still a difficulty with regard to getting credit flowing. We have all met people with first hand experience of the difficulty in this regard in our constituencies. Yesterday, I dealt with a person who had secured a mortgage within the past six months and who was making some adjustments to the house while the mortgage was being completed. However, the mortgage sanction expired just days before completion of the work and drawing down the mortgage. Now the person must go through the process again. The fact this person had used some savings to pay for additions to the house while being built have been taken into account and now the person may not be accepted for the mortgage.

There is also an issue with regard to businesses. The Minister of State said we must get back to the time where the bank manager knows and appreciates the customer. I agree. We are now applying a level of regulation that was probably appropriate to the height of the boom. However, it is being put into practice today when it is not fit for purpose. While it is good to have banks that are well capitalised, we cannot expect people to be required to do the equivalent of filling their petrol tanks every ten miles. Much of what Fianna Fáil was doing was correct and the new Government is continuing that, but it is important it acknowledges that in the interest of credibility.

I urge the new Government to be relentless in its pursuit of savings through the Croke Park agreement. While on the Government side of the House, I said we cannot have a business plan for the public service, but that is what I would call a Croke Park agreement that takes two years to implement, or two years to agree to implement. If we were talking about private agile industry, the deal would have been agreed yesterday and implemented this morning at 9 a.m. We must aspire to a public service that operates the same way. I am aware the new Government has appointed a Minister in this area. Reviews, considerations, meetings and forums are a waste of time. While we all yearn for that place from which we can begin to grow again - many good things continue to happen to contribute to arriving at that destination - until we get in deep and dirty and have the rows that are needed, we will not achieve the kind of structural reform that will provide us with the fuel to take the next step.

I thank the Minister of State, a former Member of the Seanad, for coming to the House and congratulate him and his family on his deserved appointment. He will have the best support from this side of the House, whoever is here, provided the measures being taken are in the interest of the State, as I am sure they will be.