SEANAD REPORT:THE GOVERNMENT had rolled over in front of the banks and the Financial Regulator, Shane Ross (Ind) said when criticising the scheme to provide a guarantee for financial institutions.

The scheme was approved by 30 votes to five, with Fine Gael supporting the Government in opposition to Labour's Dominic Hannigan and Brendan Ryan, along with Independents Ivana Bacik, David Norris and Mr Ross.

Mr Ross said if the Minister for Finance intended to act on behalf of the taxpayer, he would have made it clear that he would make appointments to bank boards. "While that also has its dangers, at least the banks would have board members they did not choose."

The observers placed on key bank remuneration, credit and audit committees would be like "stuffed dummies". The UK government had taken equity in financial institutions and "we would be forced to do so sooner or later".

"Instead of the Minister saying that those responsible would need to go, he had stated that the Government would guarantee the banks' deposits and that there would be a bit of a payback."

Mr Ross said the cost of the payback would be passed on by the banks to their customers.

Minister of State for Finance Martin Mansergh said the issue of the quantification of bad debts had been mentioned and it had been queried as to why there was no provision to ensure impaired assets were written down.

"The purpose of the scheme is to assist the covered institutions to access their required liquidity through the provision of a guarantee for certain covered liabilities," he said.