Brian Hayes (Dublin South West, Fine Gael)

I am grateful for the opportunity to participate in this important debate and I congratulate the Labour Party Senators for putting down the motion and instigating it. Nobody has a fount of exclusive wisdom on this issue. It is an enormous problem. Thankfully, the problem is still small in terms of repossessions in the last number of months but it will undoubtedly be with us for some time to come. What this Oireachtas and committees of both Houses must do is work with the Government on a cross-party basis to try to address the problem, to learn from international best practice and examine what has worked in other countries. It is not easy or simple; there is no magic bullet. Anybody who pretends there is a cost-free solution to this issue is delusional, given the current position of the public finances.

If we are honest, the primary task of the Government in its first 100 days in office was to try to get the banking system working again and to generate some confidence in the country. We need a banking system that works to boost the domestic economy, and the big decisions taken by the Government in the first 100 days related to the bank restructuring plan, the jobs initiative and the comprehensive spending review being conducted by the Minister, Deputy Brendan Howlin.

However, I assure Senators that the Government is actively examining the issue before the House this evening. We accept that a package of measures must be introduced and that a variety of solutions is required. There is no single solution that fits all situations. We are anxious to listen to and work with colleagues on a means of bringing forward a workable range of solutions to meet the needs that exist within the depressed housing market. As Senator Keane said, the programme for Government puts forward a number of proposals but they are by no means exclusive or exhaustive. We are open to suggestions from all sides. We want to work with people to ensure that solutions can be found.

One of the key parts of the banks restructuring plan was to demand certain conditions of the banks, which we have recapitalised again to the extent that they are now more capitalised than Swiss banks. One of those conditions is to bring forward plans for more cost-effective and smaller banks, but banks that will be able to control their costs. If we do that, we will be in a better position to seek from those banks a much greater focus on mortgage protection for those people who are in difficulty at present.

I fully agree with the comments made by Senator Whelan. The banking sector was absolutely responsible, with others, for getting over 400,000 people into their current mess. Traditional banking methods were thrown out the window. The get rich quick scheme was the order of the day. Directors and senior members of the banks never went near the branches to meet ordinary people. They were more interested in and obsessed with developing their non-core business than in traditional banking. What we must do with the new banking system is demand that the banks get back to doing the job they are supposed to do and get down and dirty with people in their customer base, like any other business. The day of the high and mighty attitude of people who played roulette for all kinds of property speculation purposes is over.

One of the key parts of the Minister, Deputy Noonan's, bank restructuring plan was to ensure that the directors who were in place since 2008 are no longer in place. My understanding, and I hope I am not incorrect in it, is that all those people are now gone. It is an absolute prerequisite that those who were responsible for the crisis cannot be part of a solution. It was caused by their reckless behaviour. I also fully agree with the Senator that a fundamental culture change within the banks is required. The banks have given a commitment to put €10 billion per year into the Irish domestic economy for lending purposes to help people buy houses and so forth and to help small and medium enterprises, SMEs, to recover.

The new Government has a political imperative to ensure that this lending takes place. We must get reports on a monthly, sectoral and regional basis to find out if the banks have delivered on their commitment. The bank restructuring plan was a type of quantative easing through the banking system, whereby the banks would be stuffed with cash and the cash must be used for the purpose of recovering the economy by getting it into circulation. I am not convinced that is happening, and I suspect that is the collective view across the House. It is the task of the Government, through the Department of Finance, to take a much firmer view about lending practices, particularly for those viable businesses which have a chance to get off the ground and create the jobs we need.

Debt forgiveness is difficult; there is no easy solution. This issue was examined by the Cooney report and it did not recommend in favour of it. The dilemma can be seen in the example of the United States. Most US mortgages are on a non-recourse basis, that is, people simply hand back the key and walk away, after huge subsidisation by the state. One of the reasons the US is in its current appalling deficit position, which is no different from what we face, is the massive subsidisation of the housing market brought about by successive US Administrations. The cost of this is colossal. In circumstances where we are trying to balance the books and reach the 3% deficit target by 2015 it will be difficult, but we will examine all the issues.

Members raised the issue of the credit history system; I believe Senator O'Brien first raised it. A report currently being drafted for the Minister for Finance in respect of establishing a credit assessment systems registry, which will improve information available to the banks, will be available by the end of June. That will give a much fuller picture about people's indebtedness, because this is not just about one's house but also personal and credit card debt, and all that is associated with it.

An issue was raised about the code of conduct, which was a product of the Cooney report.

Lenders are required to comply with the code as a matter of law. It was introduced on a non-statutory basis but I understand that from 30 June it is effectively on a statutory basis and they must comply with it. They were given a six month period of grace from 1 January until 30 June, so in eight days it is statutory requirement or a matter of law-----