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Credit Institutions (Stabilisation) Act 2010: Motion (Continued)

Friday, 14 December 2012

Dáil Éireann Debate
Vol. 786 No. 4

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(Speaker Continuing)

[Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty] When the Minister was in opposition he criticised the reckless way Fianna Fáil plundered the National Pensions Reserve Fund to recapitalise the banks. However, once he got into office he continued to pour taxpayers' money into the same institutions, some of it from the National Pensions Reserve Fund, to the tune of €21.4 billion. I remind the Minister that when he was in opposition he criticised Fianna Fáil for socialising the toxic debts of Anglo Irish Bank and for landing the State with an annual €3.1 billion repayment of the infamous promissory note. Despite this, in 2011 and in 2012 under the Minister's watch the Government has used public money to pay the same toxic debt.

  With all of these reversals and U-turns, the Minister's head must be truly spinning. Does he ever take a step back to catch his breath and let the dizziness wear off? The answer is "No". What he has done is to pile on another U-turn by seeking to extend the Credit Institutions (Stabilisation) Act by two more years. Today, the Minister has come into the House and asked Deputies to support an extension of legislation which he, his party and the Labour Party vigorously opposed when in opposition. Like so many other principles and policies that Fine Gael and the Labour Party have abandoned since taking office, the Minister's opposition to the failed banking policy of Fianna Fáil must be an embarrassment to him now as he slavishly follows the same policies of his predecessors. The public should be reminded of what the Minister and his colleagues said when opposing this legislation in 2010. The Minister, Deputy Noonan, was at the time rightly concerned with the extensive powers given to the Minister for Finance and the potential impact it could have on the Governor of the Central Bank. The Minister said:

I am concerned about the role of the Governor of the Central Bank under this legislation. I would have expected resolution legislation to have conferred the special powers on the Governor of the Central Bank, rather than on the Minister. In this Bill the special powers are conferred on the Minister on all occasions. There is a section which states that the independence of the Governor of the Central Bank is not affected, but the powers taken by the Minister and the lack of additional powers being given to the Governor of the Central Bank are quite noticeable.

The Minister's colleague and the Acting Chairman today, Deputy Olivia Mitchell, said during the debate:

The Minister must be aware that this is possibly the most far-reaching and significant financial legislation to come before the House. It is potentially so far-reaching and draconian that it contains a sunset clause.

That sunset clause is now being disregarded by this motion. The Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, was particularly exercised by the failure of the legislation to deal with the issue of unguaranteed senior bondholders. He said the legislation:

...does not contain any provision for the restructuring of the debts of senior bondholders, particularly those who are not under the guarantee. There is perhaps up to €16 billion of taxpayers' money that could be saved by imposing losses and haircuts on those bondholders. That is the key change of policy that needs to happen when we have a change of government in this country because the people are not responsible for the debts of those banks and should not be held liable for them. That is the big lacuna in this Bill.

There has been a change of government but there has been no change of policy and when the Minister extends this legislation he will be ignoring the comments made by Deputy Leo Varadkar during that debate. Deputy Joan Burton, speaking as Labour Party finance spokesperson, echoed the sentiments of her future Fine Gael coalition partners because at the time of the original legislation she told the House:

Today's stopgap Bill is too little, too late. It is too late because the horse has bolted since the expiry of the original bank guarantee, and too little because it does nothing to address the treatment of liabilities other than subordinated bondholders. It fails to address the issue of senior bondholders now out of the guarantee, the debts for whom amount up to €20 billion.

  When the debate finished and the walk-through vote was called Fine Gael and Labour Party Deputies to a man and to a woman stood with Sinn Féin and voted against that bad legislation. I note the Minister's comments today. He said that a good deal of water has passed under the bridge since then. Fine Gael and the Labour Party have abandoned their opposition to the banking guarantee. They have abandoned their opposition to the payment in full of unguaranteed senior bondholders. Today, they are abandoning the last vestiges of their opposition to the failed banking policy of Fianna Fáil by proposing an extension of its policy, which the Minister once described as draconian, by two years.

  Naturally, none of this will surprise anyone. No one at home or in here will be surprised by these U-turns because the story of Fine Gael and the Labour Party in government is the story of a steady stream of broken promises. They have broken their word so many times since taking office that it is impossible for us to keep count. Why should we expect anything different today? As in 2010, Sinn Féin will oppose the motion tabled today and we will oppose it for the same reasons that we opposed the original legislation, reasons which the Minister allegedly agreed with in 2010.

  The failed banking policy devised by Fianna Fáil and now being implemented by Fine Gael and the Labour Party continues to cost the people billions of euro every year. What do we get in return for that policy? Do we have a banking system that has reformed since the excesses of the boom years? No. The excessive remuneration of bankers is alive and well in all of the covered institutions. We have the figures. A total of 3,000 of them are paid over €100,000 per year and 27 are paid more than €500,000. Some one and a half years since the election there is still no sign of the report on bankers' remuneration. When in opposition the Minister's party proposed an amendment, as did the Labour Party, to cap bankers' pay at €250,000. The only people in the House today who voted against that amendment were from Fianna Fáil. When in opposition the Minister wanted to cap their pay. Now, we have seen reports but 18 months later nothing seems to have happened. The budget was another missed opportunity.

  Do we have a banking system that assists distressed mortgage holders to make their debts more sustainable? The obvious answer is "No". The covered banks continue to sit on their hands as the mortgage crisis escalates every day. The report that came out yesterday is a wake-up call for everyone, especially for the Government. During the summer months the Government was spinning that there was a flattening of the mortgage crisis, that we had seen the tip of it and that it would no longer get worse, but that is not the reality. Some 115 people have fallen into mortgage distress each day since the last report. One in four people who have domestic mortgages are in mortgage distress. The Bill before the House will not go far enough to deal with that issue. I do not make the point simply from opposition. I believe that the Minister believes this is unsustainable and that the banks must do more, but the banks have not done more. The Minister should bring in new powers to compel the banks to ensure debt relief for those who simply cannot afford to pay their mortgages.

  Other questions need to be asked. Is the banking system lending to the real economy and helping employers stay in business? Deputy McGrath touched on this point and he was right. The answer is "No". New lending targets have not been met and access to credit for viable businesses continues to be restricted. Banks are playing with the numbers. It is clear that they have been facilitated in trying to massage the figures. The targets set down were not about restructuring or loans. They related to new additional lending to the economy. The Government must take the banks to task over this or at least stop perpetuating the myth that there is new lending to small and medium enterprises as per the numbers suggested.

  The reality is that our banking system remains broken. The Government's banking policy is in tatters and the reason is simple: upon taking office, Fine Gael and the Labour Party have continued with the failed banking policy of their predecessors. The motion before the House is an extension of legislation that contained a sunset clause and was not supposed to exist after this year. It was bad legislation in 2010 and it remains bad legislation today. It should be allowed to fade into obscurity as section 69 of the Act recommends. Only then will we have a chance of developing a new banking policy that works, not just in the interests of the banks' shareholders, officials, executives or boards, but most importantly, a banking system that works in the interests of ordinary citizens.

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