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Inquiry crucial to restoring confidence in banking system

Issued : Wednesday 13 January, 2010

The Bill we are publishing here today, which has been drafted by my colleague, Deputy Pat Rabbitte, will put beyond doubt the power of Committees of the Oireachtas to conduct inquiries into matters of public concern. The capacity of the Dail and Seanad, operating through their committees, were thrown into doubt as a result of the 2002 decision of the Supreme Court in the Abbeylara case.

The capacity to conduct inquiries into matters of public concern is a normal part of powers of parliaments in most democratic countries and it is important that the Oireachtas should be properly equipped with similar powers.

The publication of the Bill is particularly timely given the mounting calls for a comprehensive inquiry into the origins of the banking crisis. The enactment of legislation, along the lines set out in our Bill, will be required if we are to have a DIRT-style inquiry into the banking crisis.

Decisions made by the banking sector, particularly in regard to the financing of property deals have created an economic crisis of unprecedented seriousness and have placed a financial millstone around the necks of successive generations of Irish taxpayers.

Taxpayers are exposed to a potential risk of more than €400bn as a result of the bank guarantee. In addition, €11bn of taxpayers money has had to be pumped into the banks and that bill may increase yet again over the coming year.

People are entitled to know why the system in place failed so spectacularly. For example they are entitled to know why the regulatory system failed to function as it should.

There is now widespread support for the holding of such an inquiry. Both Labour and Fine Gael support the idea. The Governor of the Central Bank, Patrick Honahan twice last month called for such an inquiry. A number of Fianna Fail backbenchers have endorsed the proposal while the Leader of the Green Party, John Gormley, also supported the holding of an inquiry. Indeed it appears from yesterday's emergency general meeting of the Bank of Ireland, that many bank shareholders are also anxious to see an inquiry. Brian Cowen and other senior Fianna Fail ministers are now the only ones trying to block such an inquiry.

Suggestions by the Taoiseach and other Fianna Fail ministers that we might have an inquiry at some distant time in the future are simply not acceptable. If we are to restore public confidence in the banking system, it is essential that we find out exactly what when wrong and then take appropriate steps to ensure that it can never happen again. This will be crucial to restoring public confidence in the Irish banking system at home and abroad.

Accordingly when the Dail resumes next week, the Deputy Leader of the Labour Party and Spokesperson on Finance, Joan Burton TD, will be tabling a motion calling for an inquiry into the banking crisis. The motion, which will be taken in Labour Party Private Members time, will be published later this week.