FINE GAEL leader Enda Kenny demanded that Government representatives be appointed to the risk-management committees of the banks.
"The Irish taxpayer cannot be expected to underwrite a €400 billion guarantee without strings attached," he said.
Mr Kenny said banks approving credit or loans for small businessess appointed personnel to oversee the progress of the business in question. He said for the duration of the guarantee, there should be "no more bonuses, no more dividends, no more derivative trading".
Taoiseach Brian Cowen said the Financial Regulator had the statutory responsibility to continue to monitor and evaluate, and provide whatever conditionality required.
Mr Kenny said they did not want a situation, "where the gains are privatised and the losses socialised".
Mr Cowen said: "What we are providing here is simply a State guarantee, provided by the Irish Government, to those banks incorporated in the State, for the purposes of ensuring that they have access to liquidity and funds and conduct their business on the basis they are banks and institutions which have assets which exceed their liabilities.
"That is the situation . . . and it is the warranty, provided by us as a Government on behalf of the people, to ensure we have a stable financial system and sector in this country . . ."
Mr Kenny said the actions of the Government, since its announcement, did not inspire great confidence. "This is a wholly new situation and it requires a wholly new response," he added.
What the Government was doing, said Mr Kenny, was asking the taxpayer to underwrite a €400 billion guarantee so banks could chase their own losses. "That is the equivalent of up to €250,000 per taxpayer," he added.
The Taoiseach stressed the Government was providing a guarantee to deal with the basic problem relating to the banks accessing liquidity to conduct their business. "The banking system in Ireland has assets which exceed liabilities," he added.
"The assets of the Irish banking system are about €500 million, while the guarantee of liabilities is roughly €400 million." Any call relating to funds within the banks would be on shareholders' assets, capital and funds.
"I would also make the point that we have, in relation to the Irish banking sector, very well-secured loans . . . which are indeed underwritten by the European Central Bank", said Mr Cowen.
"In the event of any further call, it is my intention to ensure that the Irish taxpayer will not, in any way, be held liable for any deficit that might occur . . . I intend that the sector would have to discharge any liability that would arise".
Mr Cowen said that, in taking its action, the Government was, first and foremost, acting in the interests of the stability of the Irish economy and the long-term interest of the taxpayer.
"A secure and stable financial sector is essential for the Irish economy, and it is obviously in the best interests of the Irish people."
