John Gilroy (Labour) | Oireachtas source

I welcome the Minister of State to the Chamber. Last year we discussed the legislation but I had a lot of concerns then and reluctantly lent it my support. Senator Darragh O'Brien said, in his contribution a few moments ago, that it is necessary. Of course it is necessary. The way the legislation has worked over the past year has changed my concerns a little. Hindsight is great and it is a pity that we do not have the same gift of foresight. It is a pity that the legislation was not in place when the banks ran into trouble, not so much at the time of the guarantee but from St. Patrick's Day when there was a massacre over the Anglo Irish Bank shares. It was blindingly obvious then that something was seriously wrong with our banking system, particularly at Anglo Irish Bank which suffered a collapse of 15% in shares over that weekend. The regulator responded by putting a halt to short selling but that was the extent of his intervention at the time. Perhaps if legislation like this had been on the Statute Book at the time we might have been able to act more decisively.

It has been said that the legislation has given the Minister for Finance wide-ranging and extensive powers. He could be seen as a benign dictator if he used those powers as they are laid out in the Act. It would do no harm if he acted in a less benign manner when dealing with banks. We can all see the outrageous behaviour that the banks are indulging in now with regard to their lending practices, etc. Perhaps if he bared his teeth a little more in this regard we would be better off and he would have the support of some Opposition Members.

The motion seeks to extend the legislation for another two years. Does the Minister of State think that is enough time? Will the Government be back here in two years' time seeking another extension? What will happen at the end of two years? The Government does not have the gift of foresight. Does he anticipate that the worst of the banking crisis will have passed within 24 months? I hope that his answer is "Yes". If not, does the Government intend to extend the legislation again? Will it be reviewed at the end of two years? If there are indications that it has not succeeded will the Government introduce a different type of legislation? This legislation is so wide-ranging that its effect can be anything or nothing so I would like to see more tightly focussed legislation.

It is self-evident that we need to appoint a special manager but it is a double-edged sword. Is there a concern that confidence in an institution will be undermined if it is known in advance that the Government is considering appointing a special manager?

Senator Darragh O'Brien said that it is time to see real banking measures. I contend that the legislation is a real measure. We know what would have happened if we had not introduced it. The aim was to restore stabilisation in the banks and at last deposits are being made in banks again as well as new overseas deposit accounts. We have seen a substantial reduction in our tier 2 liabilities which is welcome and the banks have resumed acting as clearing houses. They can find money on the private markets again but a year ago such a suggestion would have been laughed at.

Senator Barrett made a good point about the public interest directors and said that they have become feral. Like the Minister, they should be less benign and should be feral. The Senator said that they had been domesticated but had now gone native. Perhaps it is time that the Government made a statement on the role of public interest directors because the general public misunderstands their role and I am not clear about it myself. Perhaps the Minister of State would take two minutes to outline what the Government expects the directors to do.

I shall finish even though I have more to say. I welcome the evident success of the legislation which has led to the imminent withdrawal from the eligible liabilities guarantee scheme. That is very important. It indicates the fragility of the banks. Every time that we talk about banking and withdrawing or implementing something it is important that we reassure the public. We must ensure that the House sends out a message that we are not withdrawing the deposit guarantee scheme. It is important that we do that.