Ireland Financial News – Mortgages & Banking

The Seanad has passed emergency legislation giving effect to the €400bn Government guarantee to a range of financial institutions by 39 votes to 5.

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

There were some amendments to the Bill in the Seanad, so it now has to return for final approval in the Dáil when it resumes at 10.30am.

The Bill is expected to be signed into law by President McAleese around lunchtime.

The most important change 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, the latest sitting in three decades, to debate the legislation, finally backing it by 124 votes to 18, with only Labour opposed.

In the course of the debate, Finance Minister Brian Lenihan confirmed representatives of the public interest will be appointed to the boards of institutions accepting the support. He said the State was gettng 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.

The legislation is being amended in the Seanad, so it will have to go back to the Dáil later this morning for final approval.

It is expected to be signed into law by President McAleese around lunchtime.

News from RTE >>

The Dáil has completed the initial stage of the emergency legislation giving effect to the €400bn guarantee the Government is offering to a range of financial institutions.

Minister for Finance Brian Lenihan said it was not a bail-out; the Opposition questioned aspects of the measure in a debate that will continue today.

Brian Lenihan opened the emergency debate by insisting that the measure was not aimed at protecting banks but at safeguarding the Irish economy.

It was not a bail out of the financial institutions concerned but was subject to terms and conditions, he said.

Mr Lenihan maintained that the exchequer was not exposed by the €400bn guarantee as in the final analysis the assets of the banks were worth €80bn more than that.

Fine Gael’s Richard Bruton said his party was supporting the bill because it prevented a potential run on the banks.

But it should provide for the Regulator appointing officers to sit on the banks credit committees so they did not take advantage of the guarantees.

He also questioned the criteria by which the six institutions concerned were chosen.

Labour’s Joan Burton suggested the pay of bank bosses who took advantage of the scheme should be capped at the level of the Taoiseach or Finance Minister.

Her colleague Pat Rabbitte said the bill might fall foul of competition law because of its exclusion of other institutions.

Fine Gaels Leo Varadkar said this was the only Tallaght strategy his party would extend to the government and woe betide ministers if a bank failed.

News from RTE >>