News

Finance Cttee to question bank chiefs

Thursday, 2 October 2008

The Oireachtas Committee on Finance is to question the country's banking chiefs following the Government's €400bn bank guarantee.

Legislation on the scheme has been passed by the Oireachtas and was signed into law by President Mary McAleese this afternoon.

'President McAleese has signed the Credit Institutions (Financial Support) Bill 2008,' her office said in a short statement.

Committee Chairman Michael Ahern said the committee needed to discuss how the current banking problems came about.

And he said the committee also needed to get some assurances and detailed answers from the banks on how they plan to proceed in light of the Government guarantee.

Taoiseach Brian Cowen has said the Government is committed to protecting tax payers.

He told the banks that they must respond to the guarantee scheme that has been put in place by the Government.

Speaking in Trinity College this evening, Mr Cowen said too many good businesses had run into difficulty because the banks had stopped doing what they were there to do.

The Taoiseach said they could no longer use the excuse of not having access to capital as a cover to avoid doing business.

Mr Cowen said: 'We did not take our decisions on the banking sector lightly. There have been those who have criticised our decisions. I understand that. But the intervention was absolutely necessary.

'People's jobs and livelihoods were at stake. Without a stable banking system, we have no economy and no prospects. That is how serious the situation was.'

Meanwhile, a National Irish Bank spokesman said that the bank has today formally requested the opportunity to join the scheme.

The Dáil earlier agreed the amendments made to the bill in the Seanad overnight.

The Seanad passed the emergency legislation giving effect to the guarantee by 39 votes to five at about 7.40am this morning.

The debate in the upper house began at 2.30am, shortly after the Dáil overwhelmingly endorsed the plan.

The Seanad had repeatedly convened earlier in the expectation that the bill would have been passed by the Dáil.

The Seanad made two amendments, the more significant of which is a stipulation that any agreement for support of a financial institution would have to be approved by both houses of the Oireachtas.

The Dáil sat until after 2am to debate the legislation, finally backing it by 124 votes to 18, with only Labour opposed.

In the course of the debate, Minister for Finance Brian Lenihan confirmed that representatives of the public interest will be appointed to the boards of institutions accepting the support. He said the State was getting deep into the banking system, and must ensure that the taxpayer is protected.

He will also take action to prevent what he called excessive risk taking being rewarded in the remuneration of top executives.

The minister confirmed the Government will consider applications for inclusion in the scheme from non-Irish banks with a significant retail presence here. Perhaps significantly, the only one he mentioned by name was Ulster Bank.

He told the Seanad that Monday night's crisis meeting, which led to the legislation, was requested by the chief executives of the two main banks.