Major changes to banking regulation, including the merger of the Central Bank and Financial Regulator, will be announced by the Government within weeks to "bring an end to a sorry chapter in Irish life", Taoiseach Brian Cowen has told 4,000 Fianna Fáil delegates attending the party's ardfheis in Dublin.
"There is huge anger and disgust out there at the way some of our bankers behaved. What they did was wrong, it was selfish and it caused a lot of pain and hardship to Irish people. They will not be forgiven easily. There is little return however, in wasting anger slamming the banks," he said.
The Garda Fraud Squad and the Director of Corporate Enforcement, Paul Appleby "will look after that", said Mr Cowen, who insisted that the Government's actions to date with banks were necessary and justified: "If any market economy is to function properly, and if enterprise is to prosper, we need a fully functioning banking system that works."
"What we need to do now is fix the damage they have caused.In the weeks ahead, I will introduce new standards of banking regulation and new standards of corporate governance, which will restore our reputation and move us to the forefront of best international practice," he went on.
A Central Banking Commission, incorporating the responsibilities of the Central Bank and the supervision and regulatory functions of the Financial Regulator, will be created based on a Canadian model, while an overseas banking regulator will be brought in to keep oversight of the banks.
The changes will "underpin confidence in our financial system", get credit flowing again, lay down clearer lending rules and ensures that the financial system "that acts in the interest of the customer rather than short term gain. This initiative will mark an end to a sorry chapter in Irish banking history".
Taxes will have to rise, he said, but he did not say by how much and when: "Our tax system needs to change. During the good times, we developed a fairer and more progressive tax system that allowed people to keep more of their own money. Everyone had a better standard of living.
"That tax model was based on continuing growth. It works best when we have high employment and a thriving economy.
Unfortunately, we are not a thriving economy for now, and we need to adapt our tax system to fit our new circumstances. Everyone will need to pay more," he said.
Hinting that some workers currently not in the tax net will have to be brought into it, the Taoiseach said: "And while no one can be insulated from this reality we will seek to do it in a fair way that is based on ability to pay. Those that can bear it best will have to bear it most.
"But all will have to bear some burden; the scale of the challenge is so big. Through this combination of higher taxes and increased cuts in spending we will restore balance to our public finances by 2013," he said, in a clear indication that he will not bow to demands for an emergency budget.
Opening his speech, he said: "I realise tonight as I talk to you that many of you here in this hall and around the country have worries for yourselves, your families and your future. We are living in uncertain times and people are concerned about their jobs, their businesses and their homes."
Describing the crisis as the worst since 1929, he said: "The choices we make now as a society will have a profound affect on our country, and the generations of Irish people to come. How did we get here? Recessions are tough. They hurt people. They create anxiety. They say that the pain of losing something is greater than the joy of gaining it."
Clearly conscious of criticisms that he has not offered leadership, Mr Cowen said: "Now as Taoiseach, I am tasked with guiding this nation through one of the biggest challenges of her history. It is the greatest honour of my life to lead this Republic, but like you, I wish these were better days.
"But this is the situation we are in. And it is my job now, to work with all of you to make things better, for all of us. And for our country. I am confident that with your help, we can survive this situation and return Ireland to growth and to better times. We have done this before, and we can do it again.
"The fact is, we are now spending too much on the day to day running of the country. During the good times we could afford it, during the bad times we just can t. It s as simple as that," he said, adding that "every item of Government spending" is currently being reviewed.
The Cabinet will approve a Enterprise Stabilisation Fund with an opening budget of €100 million to be run by Enterprise Ireland: "The aim of the fund is to support viable but vulnerable exporting companies who, but for this recession, would be thriving," he told the 4,000 delegates attending.
The recession is causing, and will cause pain: "The measures we are taking to restore our economy will be painful for all. Living standards will fall across the country, and we will need to adjust. Services will suffer in the short term, and we will need to be patient," Mr Cowen said.
"But if we want to get back on track, if we want to get our country moving again, we have to do the right things now, regardless of the short-term political consequences," he said.
Urging people to co-operate and help each other, he said: "I want to see an Ireland that backs herself. Sometimes we are too quick to condemn and criticise in this country. There are cynics who will always say we can t do it, that there is no hope. Well, the Irish people don t need that now. It s a time for pulling together.
"I want to see a society that benefits all of us on this island, irrespective of class, colour or creed. Rural, urban, foreign or native, private or public. We are a beautifully complex people, a nation of a thousand parishes. But we are on the same island now, and to make this day dawn again, we have to stick together. Ireland holds us all together; we must all mind her now," he said.
