Council to advise President on bailout and bank laws

The Council of State will meet today to advise the President on controversial new laws covering the multibillion-euro international bailout and the banks.

The President is convening the body, made up of the country's most senior serving and former office-holders, to discuss the Credit Institutions (Stabilisation) Bill 2010 rather than simply signing it into law.

But the president alone will make the decision on whether to refer the legislation to the Supreme Court to test its constitutionality after the meeting at Áras an Uachtarain.

The Bill details new laws to oversee the controversial €85bn bailout from Europe and the International Monetary Fund.

The Government plans to draw down €10bn initially to pay into banks, with another €25bn set aside as a contingency fund.

The radical rules will impose so-called burden-sharing on global money markets, with some subordinated lenders forced to take a hit on loans made to Irish banks.

The Department of Finance said the legislation allows the minister to issue directions or prevent actions in order to support the Government's banking strategy and to transfer assets and liabilities to facilitate restructuring.

It will also set in stone how the Government can make subordinated liabilities orders, on a case-by-case basis and under particular conditions, to achieve burden-sharing with international lenders.

Finance ministers will be given the power to parachute special managers into banks to oversee reforms.

The Bill will also underpin Mr Lenihan's pledge that much-needed money will only be given to Allied Irish Banks if the controversial €40m bankers' bonuses are scrapped.

The Dáil passed the legislation last Wednesday by 78 votes to 71, despite being rejected by the Opposition. It passed the Seanad on Thursday.

The Labour Party said there were strong grounds for having the Bill referred to the Supreme Court.

Finance Spokeswoman Joan Burton said the legislation will give too much power to a Finance Minister.

"The Bill seems to us to have one essential purpose - to provide for the power to amend the law by Ministerial order," Ms Burton said.

"We are confident the President will give due weight to these and all other relevant considerations prior to her deciding whether to sign this Bill into law."

President McAleese signed the Criminal Justice (Amendment) Bill 2009 and the Defamation Bill 2006 into law last year after referring them to the Council of State.

Bills must be signed by the President after going through both the Dail and Seanad before they become law.

Members of the Council of State include Taoiseach Brian Cowen, Tanaiste Mary Coughlan, Chief Justice John L Murray, President of the High Court Mr Justice Nicholas Kearns, Dail Ceann Comhairle Seamus Kirk, Seanad Cathaoirleach Senator Pat Moylan and Attorney General Paul Gallagher.

Former President Mary Robinson, former Taoisigh Garret FitzGerald, Liam Cosgrave, John Bruton, Bertie Ahern and Albert Reynolds are also members.