David Norris (Independent) | Oireachtas source

I agree with the Minister of State that this House is immensely in debt to Senator Barrett. This clearly shows the value of the Seanad because we are tackling this matter in a way that displays the intellectual strength of the House.

I would not start from here, not being in that position, but I would like to analyse this Bill because it is my firm belief that the entire financial system, Europewide and probably globally, is irretrievably compromised. The capitalist market system has had its day and will have to find a new way. It simply does not work, certainly not in the interests of the people. The intention of the Bill is splendid, from the first phrase: "An Act to promote the financial stability of Ireland by improving accountability". Who could possibly quarrel with that? It is splendid. It is what we need and have not had. When the Senator states in the preamble that: "The principal aim of these items of legislation is to reduce the probability of the State being forced to actively support the banking community from public funds", I say, "Hear, hear", in spite of the split infinitive. The Senator refers to Professor Edward Kane and the Government put option which is not a Government put option, rather a taxpayer put-upon option, the taxpayer forced once again to pick up the bills for lazy banking practices and sheer dishonesty.

I raised in this House a question about one of the major banks in the financial services centre which flagrantly and repeatedly broke the liquidity ratios. The matter was eventually picked up by the Frankfurter Algemeine Zeitung, following which The Irish Times had a piece. It never mentioned the Seanad, of course, but repeated the debate that took place here, word for word. The Central Bank did sweet damn all about it even though it was aware of the matter. It covered it up and the whistleblower lost his job, which was an absolute disgrace.

I was present in the House when all of this was going on. I remember the Lehman collapse and people saying that bank was too big to fail. It was a big and complex issue and we were all under pressure. I remember a reporter telephoning to say that he could not quite make out what I was saying, and asking if I would clarify. I clarified it in a way that made it appear I was saying something I did not at all mean, which just shows how complex the issue is. However, I maintained consistently that nothing should be too big to fail. Senator Barrett is absolutely right that the problem was not deregulation on its own; it was "de-supervision". Many safeguards were in place but were not acted upon, a situation that continued, at least until some years ago when I raised this significant problem.

This is history repeating itself, there is no question or doubt about that. The depression of the 1920s was followed by the Roosevelt administration and the introduction of the Glass-Steagall Act in 1933 which managed to separate what I would call main street, over the counter banking from casino banking, the gambling, investment banking of Wall Street. Main street and Wall Street were separated until 1998 when the idiots in the American Parliament reversed the situation. From that sprang many if not all the woes of the present situation. They then tried to repair it with the Dodd-Frank Act. Thank God for Barney Frank, a man of wide intelligence and decency. Then there was the Brown-Vitter Bill and, in the United Kingdom, the Financial Services (Banking Reform) Bill 2012-2013.

I am concerned about some of items in the Minister of State's extended script, which I assume will either be read into the record or just plonked down into it. He answered a number of points made in the debate but there was much more in his script. He referred to various measures which were similar to those being implemented in France and Germany but these are not necessary in this country as we do not have the same banking system. I point out to the Minister of State that in this Bill we - or rather Senator Barrett, because I can take no ownership of it and simply attended a very interesting briefing yesterday - are trying to prevent this course happening in the future. I do not accept for one minute that we should not foresee circumstances and try to anticipate them. The notion of raising equity to 10% is a good one. I do not believe the ratio is too high. As I understood it, from skimming through the Minister of State's typed speech that we have just received, he spoke of a rate of 4.5%. The people of Ireland need firewalls and must be protected against stupid Government decisions made under immense pressure from the banks which should never be allowed into that position again. The rate could go to 15%, in certain circumstances and in extremis.

We have too many machines in the banks. The ordinary people are picking up the tab all the time. Our pension reserves are gone. The ECB and the troika, those dictators from Europe, told us we could not touch the senior bondholders but then they went to Cyprus and said it had to be done. There is complete inconsistency and there is no European solution. They are picking us off, one by one, the weakest people, using us as an experimental laboratory. The situation is changing so dramatically because of technology. One of the illustrations in Senator Barrett's magnificent brief, using the doctoral work of his splendid friends from Trinity College, showed how banks have changed. They are nothing like the banks of 40 years ago; they are completely interconnected. It is like the butterfly that flutters its wings in South America and somebody in Chicago gets a cold. That is the way it is. No bank is an island, unfortunately. I wish to God it was.