Joe McHugh (Donegal North East, Fine Gael)
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Question 115: To ask the Minister for Finance his views on whether false assumptions obtaining between 2000 and 2007 about consumer income, long-term economic productivity and consumer behaviour resulted in the collapse of the Irish banking system; his further views on whether the various bank guarantee schemes and bank bailouts, including budget 2011 introduced by the Government, in effect transfer credit institutions' liabilities onto the State; if a logical continuation of this principle requires credit institutions to enter into debt clemency agreements with creditors whose 2000 to 2007 investments were based on the same false assumptions; and if he will make a statement on the matter. [47029/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I would not accept that reliance on false assumptions about income, long term economic productivity and consumer behaviour were the sole reasons for the difficulties faced by the banking sector although they could all be classed as playing their part. Other factors included loan impairments, particularly in the property sector, falling asset prices, bank lending policies and bank remuneration policies. The Irish Government took a number of decisive steps to stabilise and maintain the banking sector including the introduction of the Credit Institutions (Financial Support) Scheme 2008, the initial recapitalisation of AIB and Bank of Ireland, the nationalisation of Anglo Irish Bank, the Eligible Liabilities Guarantee scheme, NAMA the investments in Anglo, Irish Nationwide and EBS and most recently the joint EU-IMF Programme for Ireland which includes a facility of up to €35 billion to support the banking sector.

I would not accept that these actions should be categorised as transferring the credit institutions' liabilities onto the State and I want to make it clear that debt clemency arrangements would further increase the exposure of the State. In relation to debt clemency for NAMA debtors, the NAMA Board has stated clearly in its Business Plan that it will enforce personal guarantees to the greatest extent feasible.