The Sunday Times last Sunday talked about British banking and stated that problems there were caused by irresponsible bankers who had to turn cap in hand to the government to be bailed out. Will the Minister’s proposal ensure that irresponsibility will not be rewarded and that it will be eliminated? I want him to convince me of that too.

Our economy depends on the banks and the availability of credit, about which Senator Butler spoke. Lending to business once again, especially to small and medium sized business, is essential. Without that credit and that banking system, activity will slow down, jobs will disappear and we will not have a successful economy. I want the Minister to convince me that his proposal is going in that direction and will solve that problem too.

I have a problem with this whole area of risk. I have a relative who sold her house ten years ago. The stockbroker or whoever her adviser was told her to put the spare money into something safe and not to risk it at her age as she was in her 60s. She put it into Allied Irish Banks, Bank of Ireland and Anglo Irish Bank shares. This year she got no dividends and her shares are worthless. Will the Minister’s proposal ensure safety while at the same time ensure banks are risk takers as well?

I worry there will be many stipulations. When I see the heavy-handedness of the State running the banks, or believing it has such a say in the banks, I fear the banks may not be risk takers anymore. That is as big a danger as being irresponsible.

A business wants the best people to work in it, so I have a problem with the Government saying it will control the salaries of the people working in the three banks. I was stunned by the huge amounts of money being paid but what happens if the best people say they are being attracted elsewhere? Will the heavy hand of the State mean we will not have the best people working there in future because they will say there are other banks which are not controlled? I want the Minister to convince me that we will have the best people working here.

Ten years ago I became a banker. My company, in conjunction with a financial institution, opened 14 branches of a bank called Tusa, but it failed. It failed because we stuck to the rules which were not adhered to by our competitors. Perhaps that is an excuse on my part and we were bad at running that business. However, we failed and had to close 14 branches and say to those working in them that we had lost the business.

As a taxpayer, I am a banker once again but I am not sure I am delighted about it. I want the Minister to convince me that his proposal is in the best interests of consumers, taxpayers, citizens, those who are threatened with losing their jobs and their businesses and, in particular, of getting the economy going again.

Senator Ivana Bacik:    As Senator Quinn said, apparently we are all bankers. I welcome the opportunity to put on record two fundamental concerns about the proposed recapitalisation plan. It is essential we have a cap on remuneration. It is simply not enough to talk about percentage cuts and so on when the base amounts are so enormous. In terms of the public having confidence in what is being done, it is important that a cap is put on the remuneration of the senior executives, as has been done in the US, if nothing more than as a symbolic gesture.

The second, more fundamental concern is that it appears the banks played hardball with the Government. They negotiated with the Government, which is a very disturbing thing to read when we know that €7 billion of our money is going into the banks. Surely they were not in a position to negotiate and the Government should have dictated and imposed terms on them. However, it appears from the language of the Minister’s speech that the banks accepted certain things and agreed other things. It seems conditions were not imposed in a way they should have been.

For example, there is no recognition of bankers being at fault, no commitment to a change in behaviour, no substantial commitment to free up credit for small businesses and no substantial commitment to ensure home owners will not be put out of their homes once the 12 month period, which is far too short, has passed. Ordinary people, quite rightly, have many concerns about this proposal and about the €7 billion of our money going into the two banks.

I express my concern about reports of the transaction which occurred between Irish Life & Permanent and Anglo Irish Bank. Again, €7 billion was involved. It was a back to back loan. We should not be afraid to use the “F” word and say this was fraud, this was fraudulent behaviour. It gives a lie to and undermines entirely what the Minister told us at the end of September when we were negotiating the bank guarantee. I am one of the few Senators who voted against that Bill. I voted against it because I did not trust what the Minister said at the time about the banks having a cushion of assets.

 For the full debate, please click here: http://debates.oireachtas.ie/DDebate.aspx?F=SEN20090212.xml&Node=H5&Page=6