Marc MacSharry (Fianna Fail)

I welcome the Minister of State to the House. I also welcome the Bill which is long overdue. It was in the programme for Government and it was announced three or four times over the last year, so it is good to see it finally before us. It was promised in May 2011 and was announced a few times after that also by the Minister, Deputy Bruton, and the Minister of State. It is good to see it has finally been published. Nonetheless, I have a few concerns about it. The Bill gives authority to the Minister to establish a credit guarantee scheme. In addition, there is some basic information on what the scheme might involve in terms of €450 million per year and 75% loans. However, what will the underwriting criteria be and whose criteria will be applied? Who will the underwriters be? Are they the same people who are underwriting the banks at the moment, who are taking a very literal approach to ticking boxes in terms of what can or cannot stand up?

One of the many downsides of the financial crisis in which we all find ourselves, is that so many people have gone out of business or bankrupt and so the risk-takers are out of the picture. The people who naturally take risks which can lead to successful companies and employment creation are somewhat out of the game. From a banking perspective, having prohibitive underwriting standards and conditions is like shutting the stable door after the horse has bolted. I may go to a bank with an idea that I feel can work, create jobs and be successful but the underwriting criteria being used by banks to assess such ideas are too stringent. Underwriters should probably have taken a stricter approach over the last 15 years when a lot of the problems were caused. I am not sure, however, that taking such a strict approach now will nurture the natural innovative genes of entrepreneurs who are trying to get business ideas off the ground. I have concerns about that approach.

Most banks have centralised underwriting so the local knowledge of senior lending managers of Ulster Bank in Ballymote - the Minister of State's own town - or in Sligo, Wexford or elsewhere, is not taken into account as much as it was in the past.

Of course we need more stringent guidelines and need to be prudent and not throw money around, but equally we are just taking a clinical approach to lending. If one ticks the boxes one gets the money, but that approach is not adequate given what is needed at the moment. Money will have to be loaned to ideas that will fail in order to achieve a percentage of successful ones. Ignoring local knowledge and expertise is not the way forward. In putting together details of the scheme, I ask the Minister of State to adequately address underwriting, which does not just tick boxes but which also takes into account local factors and knowledge that will contribute to the success or failure of a business idea.

The commitment of pillar banks to lend €3.5 billion or €4 billion specifically looks to existing business and safe bets, including extending a local authority's overdraft or financing blue-chip schemes. While that is of course necessary, I am not sure that in meeting those targets enough of that finance will go to risk takers. I am not talking about reckless lending, but we should ensure that the money gets to those ideas. Some of them may be crazy but if they are not backed they will not end up being successful. Can anyone imagine someone coming into a bank in Ballymote with the idea of setting up Facebook? If the banks were to apply their current box-ticking method of underwriting, there would be no hope of the John Perry Facebook idea getting off the ground.