IRELAND'S BANKING system would have "totally collapsed" if the Government had not introduced legislation to underwrite the banks, Tánaiste Mary Coughlan told the Dáil.
In the strongest declaration by any Government member about the need for the emergency Bill, Ms Coughlan said:
"We would have found ourselves in a different set of circumstances yesterday if we had not brought in this piece of legislation.
"We would have completely undermined the system of banking. It would have totally collapsed."
She was responding to Labour leader Eamon Gilmore who warned that his party would not support the legislation, which guarantees all deposits and certain debts in six financial institutions, if fundamental questions were not answered.
"How much exactly are we being asked to guarantee?" Mr Gilmore asked. "What exactly are the banks going to pay for the comfort?
"Are we going to see the exact conditions before the guarantee is signed up to and are you going to allow top executives at the banks to keep their fist in the till?"
Fine Gael leader Enda Kenny said he had been contacted by a number of institutions operating in Ireland, confirming "evidence of substantial outflow from their institutions to institutions covered by the guarantee". He asked if the Government had considered "a mechanism of ringfencing the Irish activities of those financial institutions in order to keep a competitive playing pitch".
Ms Coughlan said the Minister for Finance pointed out that "there would be facilitation in the advent of any competitive distortions".
"The regulator is monitoring the balance of flows between institutions and his job is to maintain a stable banking environment and it will be on the basis of that information to the Minister for Finance that any further decisions will be made."
The Labour leader said "the Bill itself explicitly provides for payment, with a financial resolution which requires payment from the exchequer. It seems to me that there's no limit at all on what we're being asked to go guarantor for. But in the Bill no charge is specified."
Mr Gilmore said the Labour Party "is not prepared to do with the taxpayers' money what we wouldn't be prepared to do with our own personal money".
When Ms Coughlan said the Bill was a broad enabling measure, Mr Gilmore replied that that was "a blank cheque for the banks".
Ms Coughlan stressed that the assets of the banks exceeded the guarantee.
She said: "We would have a very sorry situation as members of the Oireachtas if this legislation was not put forward".
