CHALLENGE:THE GOVERNMENT has been challenged to give more detail to the Dáil about its emergency legislation guaranteeing the banking system.
Michael Noonan (FG, Limerick East) called on Minister for Finance Brian Lenihan to share more with the House. "The banks operate very secretively and it is time there was more transparency," he said. The Minister must make clear to the House the genesis of the crisis.
"Is it liquidity, solvency or both, because what solves the liquidity problem - this Bill - will not necessarily solve the solvency problem without it being implemented in a detailed way."
Mr Noonan said he could not measure the effectiveness of the Bill without knowing more
Publication of the Bill should solve the problem if it was liquidity solely and the Minister would probably not be asked to invoke it.
"If, on the other hand, there is a solvency problem attached to the liquidity problem, or if the solvency problem was the primary issue when the Minister stayed up all night with the Taoiseach and the various bankers, that is a different matter." she said.
Mr Noonan warned that if it was a solvency issue, there would be a transfer of taxpayers' money at some point, probably sooner rather than later, to underpin one or more of the financial institutions in question.
He was speaking during the lengthy committee stage debate on the Credit Institutions (Financial Support) Bill 2008.
Labour finance spokeswoman Joan Burton moved an amendment, supported by the other opposition parties, calling for full particulars of the terms and conditions of the Government's scheme.
Ms Burton said the scheme was being toasted by bankers and financiers, not just throughout Ireland but in Europe.
"I am reliably informed that the figure involved is €400 billion, although nobody as yet has confirmed the figure, so, perhaps, the Minister will do so.
"If the State steps in as the final guarantor of banking probity, underwriting banking depositors and borrowings to that extent, we need to know the terms and conditions of the scheme."
Ms Burton said that bank compensation packages should also be addressed.
"Unlike other people, senior bankers do not get paid. They do not get salaries or wages: they get compensation for their strenuous efforts on behalf of the banks," she said.
She wanted to know what the Minister proposed to do "to rein in the climate of recklessness that has infected the banking system in Ireland and around the world".
Fine Gael finance spokesman Richard Bruton said the Minister was asking the House to make an act of faith and trust that he, in consultation with the regulatory authorities, would come up with a robust scheme.
"Prudence would suggest that we should not make the act of faith quite so easily. We need to see a scheme," he added.
Seán Ardagh (FF, Dublin South Central) suggested that it would be difficult to put the Labour amendment into effect, given the terms and conditions under which a bank could get into trouble and the way fees and sanctions could be applied.
"There is an extensive matrix of the type of problems that a financial institution can get into," Mr Ardagh added. "Some of those difficulties have not yet been defined."
