Time for the Oireachtas to scrutinise the financial mechanisms

It is completely misleading for anybody to give the impression that the package proposed in the legislation currently before the Dáil does not come at a cost to the State and the Exchequer. The extent to which that was suggested, implied or, I believe, stated by the Taoiseach yesterday was that no money is changing hands. On the face of it, that is true, but it is only half or a very small part of the picture. First, there is the obvious cost associated with a risk, namely, if this guarantee is called upon at some point in the future. The guarantee would not be given or would not count for anything unless there was a prospect or a possibility at least that it would be called upon at some point in the future. That is a cost or at least a contingent cost or liability.

A second cost is that there is a real risk that the ability of the Irish State to borrow and the interest rates that would be charged to the State on foot of those borrowings will be affected by this. There is a real risk that will occur. That takes the matter into the political arena. It was always a political question but it makes it a highly political question for us and a huge issue in terms of the democratic dimension for these Houses because it affects the ability of the State and the Exchequer to expend money on public services, including health. The Minister for Health and Children said yesterday that the likelihood of increases in expenditure on health would be negligible in the coming period. There is a not even a potential but a very real and likely cost to the State.

This brings me back to the point I raised yesterday, which relates to these Houses and the effect or involvement we should have in this regard into the future. We want more detail from the Minister for Finance as to how he will exercise the powers he will take and the extent of the scrutiny that will be brought to bear on the banks, but what about the scrutiny that the Houses of the Oireachtas should be involved in regard to these matters? I mentioned the issue yesterday in regard to the Joint Committee on Finance and Public Service and that perhaps we should consider having a more dedicated committee or facility for the Houses to examine the question of the banks. The Joint Committee on Finance and Public Service dealt with this issue and I took the opportunity last night to check back on the debate on the matter in July.

I suggest that people examine the transcript because on any reading of it, one would not describe what occurred as a debate. It appeared, from what was stated, that there was no problem at all. The representatives of the various banks stated that there were no issues arising, that there few loans at 100% and that there were no concerns. That was the tenor and level of the debate that took place in July.

What happened in the interim? We are aware of what occurred in the United States but what gave rise to the so-called catastrophe into which we were facing? The Houses should be involved in considering what took place during the past three months. The role of the Financial Regulator should be examined. What about the role of the Central Bank and Financial Services Authority of Ireland? There are already suggestions in the United States that there should be criminal investigations in respect of what occurred on Wall Street. I am not stating that something similar should happen here but there should be a role for the Houses in scrutinising what took place during the past three months that led us to the position that obtained from Monday night into early Tuesday morning.

For the past six to 12 months, people in pubs and restaurants throughout the city have been discussing the possibility of a major bank collapsing. We were informed yesterday that this almost happened. There is a complete disconnect between these Houses, the Members of which are the democratic representatives of the people, and what is happening in the real world.

In that context, I reiterate that we should put in place a mechanism that would allow the Members of both Houses to scrutinise what is happening in the banks, examine the extent to which the new facility being afforded to them will be applied and consider the sensible proposals put forward by Opposition spokespersons in respect of what will be the payback to the taxpayer in light of the real cost that arises on foot of this proposal.

More :: Click here to read the Credit Institutions (Financial Support) Bill 2008