Pádraig Ó Céidigh (Independent) | Oireachtas source

Tá díreach cúpla pointe agam. I strongly support my colleague, Senator Craughwell, on his points in regard to the members of Óglaigh na hÉireann and the work they do in protecting our people and our country, which, unfortunately, is very undervalued. We are having a huge issue because, with unemployment at just above 5.2%, it is very difficult to keep them and we need those people. We never see 99% of their work and it is only when we have floods around the midlands that we see what these people do. They are protecting our seas and our country. I am very proud we have those people doing what they do for us. Well done to the Senator and long may he keep that flag flying. Go raibh maith aige.

Inniu táim ag iarraidh labhairt leis an Teach seo mar gheall ar "shadow banking". Has the House ever heard of shadow banking, which is a major issue? In fact, it could be the single biggest reason that this world goes into another recession. We do not have figures for this in Ireland, the UK or Europe. In the US, however, the traditional, normal commercial banks that we are used to have a turnover of in the region of $12 trillion per year, whereas shadow banking has in the region of $18 trillion per year, or about 50% more. I ask the Leader to ask the Minister to come to the House to talk to us about shadow banking and explain it to us because the public need to know and they are not aware of it.

The traditional, normal banks are regulated by the central bank in all countries. Regulation means there is a safety net for the public - for people who have loans and people who pay in deposits. Shadow banking is, by and large, totally unregulated. In the US, and it is probably similar in Europe, shadow banking is 50% larger than traditional banking, so the unregulated sector is 50% larger than the regulated.

I will give a straightforward example of how one key part of shadow banking operates. Let us say a person goes for a loan of €200,000 to buy an apartment and, although the person will not get an apartment in Dublin or Galway for that amount, there are some places where they might where people are leaving rural Ireland. The person goes to the bank, which says it will give a loan and will charge the person 6% interest, and that is regulated. If the person goes to an unregulated bank and asks for a loan, it will give the loan at 4.5% or 5% interest. Why can it do it cheaper? It is because regulation costs money. It is probably making the same profit, if not more. What happens? The person goes with whoever they get the best deal from. What does the shadow bank do? It has a couple of thousand people, like the Leader and myself, who get these loans, it bundles the loans and it sells them on. There are good loans and bad loans. Does that remind anyone of the recession, and of Freddie Mac and Fannie Mae? That is exactly what happened. An organisation like Lehman Brothers was totally unregulated.