Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

I would expect that from her and she has not let us down in that regard.

I remember distinctly the morning after the night of the guarantee because, for my sins I was a member of the Fine Gael Front Bench and we were asked to meet in emergency session that morning following a conversation the late Brian Lenihan had with the then leader of the Opposition, Deputy Enda Kenny, and the then Fine Gael spokesperson on finance, Deputy Richard Bruton. As a member of the Fine Gael Front Bench I recall that meeting and there is an inevitability when an Opposition party, particularly the principal Opposition party, is asked by the Government party to support an emergency measure, be it a defence or financial emergency measure or whatever. The natural inclination is to support that because some urgent issue has arisen and the immediate advice open to Government is to advance this particular policy. For the sake of the country, one feels a natural patriotic duty to stand by the Government in what it has to do in the circumstances it faces, albeit without all the information. I recall the discussion we had in the Fine Gael Front Bench meeting on that occasion and, despite our reservations, which were articulated in the Dáil, we believed the right thing to do for the country was to support the guarantee on the basis of the information available to us.

This goes back to the point Senator Gilroy made, and this is the crucial issue. We should never have been in that position. The country should never have been in that position. This decision was foisted on the people without any consideration at an EU level by our significant EU trading partners. With the greatest respect to the people who made that decision, and I am not casting any aspersions on their character, at the heart of that latent decision they wanted to make, and asked us and the Dáil to make, was an internal arrogance because of their closeness to the banking circles in this country. That is the problem we faced. We did not take advice. When all the great generals of the Irish banking sector, with their arrogance and sense of entitlement, rolled up that evening to the Department of Finance and gave information to the then Minister for Finance, the late Brian Lenihan, and the then Taoiseach, Brian Cowen, a man for whom I still have the greatest admiration and respect, the natural inquisition that should have taken place did not because of the closeness between the political system and the banking sector that had developed over a generation and a half. Senator Gilroy made an excellent point. Those who knew better and could advise better consequently felt that they could make this enormous decision on behalf of all of us without any consultation with our colleagues in Europe and, as they say, the rest is history.

To come back to the point Senator Barrett made, at the heart of this is enormous political failure added to the dreadful banking failure because of the policies upon which the banking model was pursued in this country. I refer to the boom to bust cycle of support for the construction sector, representing up to 20% of GDP at one stage in our economy, added to the regulatory failure. This was a collapse of authority in Ireland and a political, regulatory and banking failure.

What we must do now is restore the country after this collapse. Fianna Fáil has taken its hit for this in that its vote has collapsed. That regulatory system is no longer in place. We have a new regulator and a more robust system, and we now have a new banking system, but whether we have a new culture in that banking system is the question that must be posed and answered by colleagues on all sides. There is this triumvirate of failure - political, regulatory and banking - and one of the prerequisites in terms of recovery is to wean our new banking sector off the original guarantee that was put in place in 2009 and the subsequent eligible liabilities guarantee, ELG, scheme.

To take the point my colleague, Senator Reilly, made, what we are talking about here has nothing to do with the EU-wide bank deposit guarantee which is in place up to ¤100,000. What we are talking about here is approximately 2% of the total, that is, above that amount and the great majority of corporate cases.

In terms of what the Government has attempted to do, within a month of coming into Government our first big decision was to restructure the entire Irish banking sector around two pillar banks in a statement made to the other House and to this House in March 2011 by the Minister for Finance, Deputy Noonan. That was the first major decision taken by the new Government in March 2011 based on the results we obtained from the Blackrock assessment in terms of the loan to liquidity that exists in the Irish banking sector.

In terms of what followed that, there was a commitment from the pillar banks, built on the traditional AIB and Bank of Ireland, that, over a three-year period, ¤21 billion would be invested in the Irish economy by way of new or existing lending to businesses that needed lending to retain jobs; a radical deleveraging of those businesses; a sell-off of their successful components in third countries as a means of helping the capital ratios within those banks; a new banking unit in the Department of Finance which was to lead bilateral and multilateral discussions among the banks, the Central Bank and the Government on behalf of a smaller, more focused Department of Finance whose task would be banking recovery; new directors; entirely new management within those pillar banks - we have flushed out all those who were there at the time of the collapse and replaced them with new people to lead the new banking sector; and a new regulatory structure which would oversee the way in which the new banking operations and culture would act.

If someone told me in March 2011, when 100% of AIB and Bank of Ireland was owned by the State, that by December of that year, 15% of Bank of Ireland would be in the ownership of the State and the other 85% in private ownership, I would have thought the person was a lunatic.