Michael D'Arcy (Fine Gael)

I take this opportunity to respond to Senator MacSharry's comments on the mortgage situation. Those of us dealing, on behalf of members of the public in mortgage distress, have had our experiences with the banks. I refer to the BlackRock assessment of Irish banks, which was undertaken approximately six months ago, and to the statement of the Minister for Finance that BlackRock believed approximately €6 billion was needed for covered Irish institutions in difficulty with their mortgage loan books. Non-covered institutions which trade in this jurisdiction also bring other money to the table in terms of funds required to write down loan books. The loan book of the covered institutions is approximately €116 billion. It is not possible to calculate the exact amount for the non-covered institutions.

In my experience - I put this to the Minister on the last occasion he was in the House - the Irish covered institutions are not writing down their mortgage loan books. This was verified by a gentleman from AIB when he said that to date, its mortgage loan book had been written down by €600,000. I do not know the full amount of its loan book. That AIB has to date only written down €600,000 means the covered institutions are not writing down sufficient amounts of their loan books despite having received recapitalisation of €6 billion plus. Despite the money having been put in place to allow this to happen, it is not happening.

I congratulate the regulator on his intervention last Friday in regard to increases by banks on variable interest rates. While I accept Senator MacSharry has his own views on the Bill, I wished to put those comments on record. The banks, in particular the covered banks, are not moving on this issue.

During that fateful night in September 2008, when we were engaged in debate, many speakers made a contribution but only one asked if there was a liquidity crisis, to which the response was that it was purely a liquidity crisis as a result of the collapse of Lehman Brothers and the banks opting not to lend to each other. It was the current Minister, Deputy Noonan, who asked if what we were experiencing was a solvency crisis, to which the response was "No". However, it turned out to be a solvency crisis, leading to the putting in place of the Credit Institutions (Stabilisation) Act 2010. There was a substantial debate in this House in regard to the significant powers of the Central Bank under that Act. As I see it, this Bill replaces that Act in time, in terms of putting those powers on a permanent footing.

The permanent special resolution regime is to be welcomed. This puts in place a trigger to prevent the transfer of public funds to institutions and to ensure the State coffers do not always have to underwrite our unusual version of capitalism. As I have stated previously, it is unusual because when profits are to be made shareholders benefit but when things go wrong the State must step in and the taxpayer ends up paying for everything.

This is good legislation, which I welcome. I have a couple of important questions for the Minister of State. All banks and credit unions are obliged to pay into the resolution fund. I assume these funds will be collected in a similar fashion to other levies, namely, via the Revenue Commissioners. If not, how are they to be collected? If money is to be transferred into the resolution fund, I can only assume that the banks will pass the cost on to the consumer in some guise. I am not against this if the charge on the consumer is not too onerous. The efficiency of the banks' practices and structures is one matter, but if they pass a substantial cost on to the consumer, the people trading with the banks - the taxpayer in another guise - will be hit. The shareholders took a hit, but the bondholders will get away again.

The Oireachtas Library's digest is excellent. I welcome that banks can be wound down and liquidated under the regime to be put in place. Too often, they have not been allowed to fail. We were told that Anglo Irish Bank was systemic, but I have queries in this regard, given that it only had a client base of 5,000 or 6,000 people. While a great deal of money was levered in different directions, one bank with a small client base has cost the State tens of billions of euro.

Page 15 of the Bills Digest contains the analysis. The IMF and the World Bank state that the priority of different classes of claimants should be set out by a special resolution regime. Under the tiering, the first person who gets his or her money-----