Dáil approves two-year bank guarantee scheme

The Dáil today approved a two-year bank guarantee scheme to protect financial institutions.

Under the deal, the pay and bonuses of banking chiefs will be overseen by a three-person independent committee appointed by Finance Minister Brian Lenihan.

The scheme will be monitored closely by the Financial Regulator and the Central Bank and Mr Lenihan will review its functioning every six months.

The Credit Institutions (Financial Support) Scheme 2008 was passed by the Dáil after a four-hour debate during which Opposition parties called for a higher charge than the current €1bn amount being levied on the banks.

Sinn Féin claimed that bankers should be fined or imprisoned if they defaulted on the €480bn arrangement.

The scheme, which has European Commission backing, was introduced in the Dáil by Mr Lenihan.

“I have tried at all times to strike an appropriate balance between the various and sometimes competing objectives of the scheme to seek and deliver the best possible outcome for the county at large, both for now and over the longer term,” he said.

Labour’s finance spokeswoman Joan Burton accused Mr Lenihan of being a “cheerleader” for the banking sector.

The Government’s scheme, which was hastily constructed on September 30 amid international banking turmoil, covers Irish-owned institutions: Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent and permanent tsb, Irish Nationwide Building Society and the Educational Building Society.

Other banks later added to the scheme included Ulster Bank, First Active, Halifax Bank of Scotland, IIB Bank and Postbank, a joint venture between An Post and Fortis Bank.

Fine Gael’s deputy leader Richard Bruton welcomed the scheme’s provisions for public oversight and remuneration controls.

But he added: I think the Minister has to recognise that he’s asking the House to make an act of faith in the capacity of himself as Minister and the regulators to implement these schemes effectively.“

He told TDs: “We want to see, and we’ve said this from the outset, the maximum protection for the taxpayer in the implementation of this scheme.”

Sinn Féin TD Arthur Morgan said the scheme should include fines and imprisonment terms for bankers if they don’t comply with the terms and conditions fully.