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President Michael D. Higgins
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30-06-2013 9:25pm#1
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I don't recall Michael D making a big deal about the bank guarantee at the time.
If you don't remember Higgins's contribution, it's not because he didn't make any.
September 30th 2008
2nd stage
Dail EireannI welcome the opportunity to say a few words on this Bill. I listened with interest to those who suggested the Bill is necessary to re-establish trust in the lending and credit relations, particularly between banks.
There are those of us who have made reference to this in terms of “whether”. The Minister, Deputy Gormley, asked whether, if there is a blizzard in the United States, we can be far behind. It is important that the Irish public, who are watching this, will require of us that we make a proper analysis. The reality of the United States, for example, was that there was a liquidity crisis and the reason the legislation was not passed in Congress was that many representing their constituents felt that the way in which the United States problem was being approached should not require the purchase of €700 billion worth of toxic debt, the equivalent of approximately $2,200 per taxpayer in the United States. There were several other ways in which one could have addressed the liquidity crisis. The IMF, in a conservative document looking at 42 banking crises internationally, showed that few — I think ten, including Paraguay and Pakistan — had got involved in purchasing toxic debt. That is a reality.
It is not about “whether”. Neither is it about, unfortunately, some sort of Lego approach to the economy about which the Tánaiste is talking about — tools in the toolkit. It is about giving a guarantee and people will reasonably ask what we are guaranteeing. One turns then to the Minister for Finance and the Taoiseach.
... For example, the six institutions mentioned in the legislation differ entirely in their exposure to risk. Some are heavily exposed, as has already been established in the financial accounts, in relation to commercial property liabilities; others are not. It is nonsense to be using phases such as “the banks” because they differ...
Dail Eireann
1st October 2008
Committee Stage
..and so on, there are pages and pages of Michael D Higgins's response to the bank guarantee....it would be assumed that the charge that will eventually be made on the banks would somehow or another be related, if one believes in market principles, to the degree of the risk being undertaken. The risk is different in a cautious, conservative bank than it is in a highly speculative bank but the Minister is asking us to blindly wave them on as they were and continue to trust those who have been guilty of a massive breach of trust, be it in terms of the Central Bank or the Financial Regulator.
Members will have heard that representatives of both gave assurances to Oireachtas committees that everything was fine. Everything was fine when it was not disclosed. Those of us who believe in democracy in many cases now ask for a minimum of transparency in regard to the banks.
The question has been asked: what exactly are the public being exposed to by way of guarantee? If the Minister answers the question posed by Deputy Noonan as to whether it is a liquidity or a solvency crisis to the effect that it is the latter, how then will the Minister decide what should be the taxpayers’ exposure? Does that mean that in the unlikely event, we all hope, of any aspect of insolvency, the taxpayer takes responsibility for the speculative bad debts of a bad bank that engaged in bad banking practices, that was rewarded with millions of euro and where people awarded themselves, sometimes at a slight remove by having a remuneration committee, hundreds of thousands of euro for speculative risk taking to people who in turn fed into the economy destructive principles in regard to the cost of building land, property and housing? The Minister may say that gentlemen or bankers do not talk about this and that it can all be taken for granted, but that is not good enough in terms of answering people’s questions on the nature of the guarantee and its general or specific effect.
Another question will be asked of the Government, namely, if there was to be more discipline, transparency, responsibility to the Oireachtas and so forth, would it not look for pre-conditions before people were allowed to participate? This is an extraordinary club where one does not need any kind of character in terms of banking to belong. Membership is open. The only qualification for membership is perceived distress or having been caught out in one’s irresponsible banking.
[289]On the question of participation, if a bank, for example, was not willing to disclose the degree of its exposure to assets that are highly speculative or unreal, a Minister could say it cannot participate. I read the Bill and I do not see evidence of that in terms of it being a pre-condition...
The Minister, for the sake of the economy, may not want to be specific in his disclosure but everyone on the street wants to know which banks are exposed to highly risky speculative loans and to what extent. We are familiar with the notion that this is about the blood of the economy. It has been suggested the economy is about to freeze up. That follows on from the notion in the United States that people will be unable to get a student loan or buy a car. None of us wants the economy to grind to a halt in such a manner. There is no comparison between a person who wants some money to stock the shelves of his or her shop — a person who needs some liquidity to start a small business, to keep such a business going, or to pay his or her staff — and a person who has borrowed €500 million or €1 billion for a highly speculative development, much of which may not be in this State at all.
I wish to speak about the Minister’s general approach to these matters. I assume he will reflect on the reorganisation of banking philosophy and practice during his considerations in advance of the budget etc. He will have to do so in the context of the national development plan. Is there the slightest indication that the banking system will adopt a new credit policy to assist employment-rich social projects? Is there any suggestion that there will be any shift of lending or credit into what have been described as “green technology” projects? The banking sector has not given a whit of commitment to doing anything differently. Those at the very top of the sector seem prepared to stay at the trough. It appears they are prepared to continue with the mad speculation in which they have previously engaged. Perhaps they made some kind of confession when they were in Government Buildings. Did they get down on their knees to say “we are very sorry we let the Government and the construction industry down”? Did they admit they have been caught out? I do not think they have offered a jot of admission that they brought us to this point, or suggested they will ever change.
It is entirely reasonable to ask the Minister to outline the circumstances in which he was forced to introduce emergency legislation to deal with this crisis. With respect, the Bill is rushed and sloppily drafted...
It is terribly important to point out that people need to get real when they reflect on what happens during banking transactions. I am sure the Minister, Deputy Ryan, remembers the campaigns which his party and my party ran in respect of the Tobin tax. I wish to remind him that just 2% of all international capital transactions involve goods. If one includes foreign direct investment, that figure increases to 4%. Therefore, 95% of international transactions are highly speculative. I agree with the suggestion made by the Minister, Deputy Gormley, that it is time for international regulation. When Lord Keynes suggested that in the 1940s, the institution was agreed but never came into existence...
The reality is that we have an international financial crisis for certain reasons. I agree with the Green Party that new initiatives are required at UN level, for example. At home, the Government has produced an emergency Bill and is asking us to wave it on. It wants us to keep things as they are, with no additional increment of transparency. Deputies on all sides have spoken about the appearances of representatives of the Financial Regulator and the Central Bank before committees of this House. Where are the Minister’s proposals for giving additional disciplinary powers to such bodies? Is it the case that the Minister’s proposed scheme does not follow any principle of disclosure? Does the Minister intend to give additional power to the Financial Regulator or the Central Bank to require compliance with the scheme?
Deputy Michael D. Higgins: Yes. I am about to conclude. I wish to set out the fundamental principle in this regard. We are not talking about amending section 6 of the Bill. We are talking about the fundamental obligation on the Minister to come in at the beginning of the debate on the legislation to set out what he is proposing and the basis for it. In our amendments, we are seeking a guarantee that this is not more of the same. We need to be assured that things will be different. We are willing to listen to the Minister’s proposals. We are being asked to place trust where it has previously been abused. I refer to institutions where certain practices took place in the absence of control or accountability on the part of the Financial Regulator or the Central Bank. That is simply not on.
We need to consider these matters before we move on to section 2 of the Bill, which invokes the public interest. I suggest that clarity and transparency are required in the public interest. We need a different kind of banking. The banking practices I demand will help this country to protect employment. We need to acknowledge that wild and mad speculation, which has been a destructive principle within the economy, must end. The suggestion that we must fumble on the way we were, bad and all as it was, is irresponsible and destructive of the economy. It will have social consequences. As the public discusses what we did last night, it is raising the questions I have asked. They want to know if the status quo will continue...
and also on the guarantee, some weeks later
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https://www.youtube.com/watch?v=0Dqw4XNGIks
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