Minister for Finance Brian Lenihan was accused today of being “little more than a cheerleader for the banks” during the Dáil debate on the Government’s bank guarantee scheme.
Introducing the Credit Institutions (Financial Support) Scheme 2008 in the Dáil this morning, Mr Lenihan was at pains to point out that he had taken on board comments from deputies regarding the scheme.
“It has been a priority for me in developing the scheme to seek to reflect as far as possible in its design the many positive and constructive suggestions made by deputies during the course of the Bill,” said Mr Lenihan.
“I trust that the House will accept my assurance that I have tried at all times to strike an appropriate balance between the various and sometimes competing objectives of the scheme to seek and deliver the best possible outcome for the county at large, both for now and over the longer term,” he added.
However, the Labour Party’s spokeswoman on finance, Joan Burton, took the Minister to task for allegedly failing to punish bank executives for the role they’ve played in the current financial crisis.
Ms Burton pressed the Minister on whether bank executives would suffer as a result of their actions.
Referring to measures introduced in the Budget, Ms Burton said: “Pensioners are suffering, but it doesn’t seem as though the bankers are.”
“You haven’t had a hard word to say . . . you are the Minister for Finance . . . where is the big stick Minister? The big stick was taken out to the poor pensioners, they understand that they got a belt that they’re going to be reeling from for years, but where’s the big stick with the bankers?
“You have a different duty than to just be a cheerleader for them,” she added.
The 11 banks covered by the State guarantee scheme will pay €1 billion over two years to be covered by the deal.
Under the draft scheme, a three-person independent remuneration committee, appointed by the Minister, will oversee pay to senior bank executives and assess their bonuses on their ability to reduce "excessive risk-taking" and encourage "long-term sustainability" of guaranteed banks.
The scheme initially guaranteed €440 billion in deposits and liabilities at six Irish-owned banks, but the revised €485 billion plan includes another five foreign-owned banks with significant high street retail operations in Ireland.
Fine Gael deputy leader and spokesman on finance Richard Bruton suggested that the Dáil was being asked to put all of its faith in Mr Lenihan and the Financial Regulator.
“We want to see, and we’ve said this from the outset, the maximum protection for the taxpayer in the implementation of this scheme,” said Mr Bruton.
“I think the Minister has, in the development of this scheme met with a lot of the concerns in terms of bringing in restrictions on dividends, on remuneration, on having a public director on boards, and I welcome much that’s in this. However, I think the Minister has to recognise that he’s asking the House to make an act of faith in the capacity of himself as Minister and the regulators to implement these schemes effectively,” he added.
Mr Bruton went on to call on Mr Lenihan for more detail on how he would use the powers granted to him under the bank guarantee scheme.
“It’s all very well having the enabling powers, but the House wants assurances on how you will use those powers. We are giving you a good arsenal if you like, but we want to see the rules of engagement and this is important in order to protect taxpayers,” said Mr Bruton.
The Fine Gael TD also questioned the Minister for Finance on what other plans he had for dealing with the financial crisis, which he said was rapidly changing.
“While this Bill and this scheme may adequately deal with phase one of dealing with this crisis, there are many people out there who are sceptical about the assurances coming from the Financial Regulator, who feel that the game is moving forward and that Ireland is maybe not moving with it,” said Mr Bruton.
“We will want to hear the Minister’s move on the development, over the coming weeks and months, of his approach to using the huge powers we’ve given him,” he added.
Elsewhere, Sinn Féin Finance spokesperson Arthur Morgan outlined the failure of the terms and conditions to provide a real return for the taxpayer. He also questioned the lack of sanctions in places should a bank abuse the guarantee.
"the only sanctions that appear to be in place for the banks who abuse the guarantee, is expulsion from the scheme, and even then only after 90 days notice. There is no mention of fines for banks who take gambles with the taxpayers' money, let alone provision for the state to take legal action against such an institution," said Mr Morgan.
