Michael D'Arcy (Fine Gael)

I welcome the Minister and the work done in the past week by the Taoiseach. I am sure the Minister will be putting flesh on the bones of what has been agreed to date. It looks like a big step in the right direction on behalf of the nation and I think everybody would agree with that.

I refer Senator O'Brien to the Minister's contribution where he said that the recently published Bill should act as a stimulus for banks to develop and bring forward realistic and sustainable options and that it is hoped the majority of agreements can be done on a bilateral basis and will not require use of the formal provisions of the Bill. That was a crucial statement, specifically in regard to mortgage arrears.

I have concerns about the banking sector. We saw another scandal in London in the past number of days and we see a scandal developing in the United States with JP Morgan. There seems to be no end to what the banking world is prepared to do. The big issue, which was not reported as it should have been, is Europe-wide supervision of the banking sector. As we saw in Ireland, too often governments have not had sufficient control over banking. This may have happened in the past in Ireland, although it is not happening currently. The Taoiseach has been critical of the situation in the banking and development sector. It was insanity in its highest form.

The Government has already placed €7 billion into the covered banks, based on the Black Rock assessment. That is a lot of money, when one considers the mortgage loan book. It amounts to approximately 10% of the amount that would be required if people default fully. That is unlikely to happen, and I hope it will not happen. The €7 billion is there for the banks to write down the debts of those who have no prospect of meeting their debts. That is what it is for, but it is intended to last for the life of all outstanding mortgages. People must understand that.

The number of repossessions in the State is not large. We are told they are being logged in the courts and are occurring in double figures and not in hundreds or thousands. I welcome that. Repossession is something no Irish person likes. The number of repossessions is low, partly because of the quantity of emergency lending assistance from the Central Bank and the European Central Bank. At the end of May, €128 billion had come from those two governing banks, which is a huge amount of money. I believe it is the reason the banks are not repossessing or chasing creditors in the same aggressive manner as other lenders. Those others, unlike the Irish covered banks, are doing genuine deals and are writing down all the remaining debt of people who return the keys of their properties. Many sub-prime lenders are prepared to do this because they want to cease trading in this jurisdiction.

I welcome what looks like the severance of the link between bank and sovereign debt. The Minister has been an advocate of this and has worked to bring it about since coming to office. I do not wish to overstate what the Minister has done, but he is the one person who has said repeatedly that the mistake made in Ireland should not be repeated in other jurisdictions. At one stage, it looked as though it would happen in Spain but, as a result of the leaders' communiqué last week, it looks as though it will not now happen.

The loop of doom being predicted by some, whereby the ECB would dole out money to banks that were not properly capitalised so that they could buy government bonds at spreads that were too high, was bound to end in a collapse. We thought we were going in that direction but it now seems that will not continue.

I welcome European oversight. I have been critical of how business was done in this State between regulators, Government and the banking sector. The sooner the working document on recovery and resolution of credit institutions is concluded so that the banking sector can put its own funds in place to cover collapses, the better. That will be the real game changer on a European-wide level. If we can get that in place there will no longer be a need for sovereign support of banks. It is an enormous piece of work but it will be crucial. The working document, at least, is there to be assessed.

The passing of the referendum on the stability treaty was crucial. Calm voices were listened to by the voting public and prevailed. The European Stability Mechanism, ESM, is in place. If we had listened to those who advocated a "No" vote in the referendum we would not have access to the ESM and our banks would not have access to direct funding. Those who stated that would not be the case are wrong and I would hope that they will accept that they are wrong.

We must grow. Without growth the economy is doomed. The levels of growth on decadenal analysis show that we will grow. We are going through the worst of it. We have had four tough years of recession. While our growth levels are low, our numbers at still at least in the positive; other countries are in the negative.

Looking at the numbers, there is, potentially, €120 billion available from EU income. I very much welcome that some of those funds will be channelled through the EIB and that there will be consideration given to those countries that are in programmes which are not able to be funded via the bond markets.

There has been much comment that we should remain in a programme because the funding we are receiving is cheaper. No doubt it is cheaper. However, we are in a programme because we are locked out of the bond markets. One stays in a programme, not because it is cheap but because it makes funds available when one is locked out. It is something that needs to be understood.

I stated on a number of occasions that everything will revolve around trying to get to grips with the deficit. While the Government is in office 15 or 16 months, it spent that time trying to grab hold of the reins of power, steady the ship and get us to a position where we can advance. To put it in context, the deficit of the past two years is the equivalent of what Anglo Irish Bank cost the State. While the people seem to be okay with the deficit, they certainly are not okay with the cost of Anglo Irish Bank to the State.

As always, the Minister, Deputy Noonan, is welcome. Some very good work has been done and I wish him well in advancing the detail on it.