Catherine Noone (Fine Gael)

I welcome the Minister of State to the House and I also welcome the Bill. It will ensure a cohesive strategy will be put in place which will help stabilise our financial institutions and restore confidence in the market. This is an urgent challenge and one which requires problems to be addressed very quickly, as the Minister of State and previous speakers have pointed out. The problems in the most troubled credit unions cannot wait until further credit union legislation is published towards the end of the year.

A series of changes within this Bill will address the concerns of the Commission on Credit Unions, the Irish League of Credit Unions and the Credit Union Development Association. Beyond credit unions, the Bill also seeks to ensure a number of other measures are implemented and extends the remit of the stabilisation Act, as other speakers have said, beyond 2012 in order to ensure further consistency in policy.

A key part of the Bill involves special resolution regimes, as Senators Gilroy, Clune and others have mentioned. Special resolution regimes were not in place in most industrial countries prior to the crisis, something to which Senator Mooney referred. It is worth stating that they give an increased range of policy options when in place, and also increase the flexibility of a Government to respond in the event of a liquidity crisis.

It is my belief that had this legislation been in place in September 2008, many of the problems may have been addressed earlier and effective legislation could have been put in place at an earlier stage. As such, this is a Bill that will aid our current situation and plan for the future to ensure that the Government of the day - whoever it may be - has the tools at its disposal to deal with a future crisis.

Normal corporate insolvency procedures are inadequate for financial institutions in various ways. A special resolution regime is a useful mechanism for financial institutions and for the Government of the day in a liquidity situation. There are a number of reasons for this. The most relevant is that banks are much more likely than businesses to trigger knock-on effects throughout their industry and need special mechanisms.

A special resolution regime, as approved and advocated by the IMF, seeks to create such mechanisms. The Bill empowers the Central Bank to establish bridge banks, which would be licensed to carry on business and whose capital would come from the resolution fund. This would compartmentalise systemic risks and would strengthen the system further. It would help confidence to flow, as various speakers have said.

Another element of this Bill is that many of the provisions laid out in the stabilisation Act will now apply indefinitely. The stabilisation Act and its provisions will expire on 31 December 2012. This Bill is very much drafted with a view to the future, something I welcome. Similarly, it would widen the scope of the financial institutions which fall under the stabilisation Act, which would be a positive development in order to ensure cohesion in the system.

I commend this Bill to the House. It is an essential mechanism for the present and an important building block for the future. We are confronting our current challenges, as we in this House know all too well, yet this Bill also sets out a course for the future to ensure we never find ourselves in such a situation again.