There was a crisis and whilst being critical of the Credit Bill I wanted to help solve rather than obstruct the problem. I asked in the Senate whether the right action has been taken and whether we have the right Bill?
I was disappointed by the Minister’s speech because what did not come through in it and all the discussion is what happened last Monday night. Who came to the Minister and told him it was a desperate situation, or did he ask somebody to come and see him? Did the banks come to him or did he summon the banks? In his speech the Minister attributed no blame for anything that happened in Ireland. The blame is being placed fairly and squarely on the global economy and what is happening overseas. That is nonsense.
I agree there is a considerable element of blame for what happened to be attached overseas. There is no doubt about that, but to pretend that is where all the blame lies is ridiculous. For months and years we have heard the leader of every bank in Ireland smugly telling us not to worry because Ireland does not have sub-prime lending, is pure as the driven snow and everything is fine. What is the crisis about here if we do not have the problem and others do? Ireland does not have sub-prime mortgages in the same sense as the United States, but has the problems the Minister and others have identified in the wholesale money market, and liquidity problems. We also have special problems here which we refuse to recognise. Instead, we try and pretend they do not exist and blame the whole problem on America. That is not right. We have our own toxic mortgages here, but we like to pretend they have not happened.
We have a serious situation in Ireland and this was acknowledged by the international markets last Monday. Why did investors from overseas sell Irish shares like there was no tomorrow and far more than overseas shares? It was because the message overseas was that Irish banks, in particular, were behaving irresponsibly in the domestic property market. That was what was happening and that is the reason there was such a run and selling of shares. The result was a crisis and if it had gone to Tuesday, God knows what would have happened. The Minister might be able to enlighten us on what the catastrophe would have been, which Government spokespersons admit would have occurred, but there would have been an unsustainable catastrophe. Why? The reason is that international markets feel Ireland was behaving especially badly and irresponsibly. The result was a magnificent operation – a public relations job which was superbly handled and came out on time – and the markets rose on Tuesday. The banks and the bankers were saved. I agree the banks should be saved, but not the bankers. The shareholders were also saved.
What about the taxpayers? They have not been saved. This solution does not come without cost. It has an immediate cost. Already, on money and bond markets the guarantee the Minister has given will cost us millions. The rate at which Ireland borrows money has risen on bond markets overnight. It is now more expensive for Ireland to borrow than it is for Italy, which is nearly bankrupt. We have leapfrogged other European countries in recent days as a direct result of this guarantee. Those who are going to lend us money will lend it, but will charge us more. That is a direct cost to taxpayers.
It is an extremely bad time for this to happen, because we will go to the markets shortly in our budget, to which I am looking forward, to borrow money to fund a deficit. We will look for billions that will cost us more as a result of the guarantees we have given. We should be aware of this, aware taxpayers will have to pay significantly for the guarantee we have been given.