I very much welcome this Bill. It is part and parcel of an overhaul of the financial system in the country. We are following on from a part of an EU framework, which comprises of three parts, namely, preparatory and preventative, early supervision-intervention and also resolution tools and powers. We are now discussing the resolution tools and powers associated with it.

Sadly, this legislation is at least five years too late. If this legislation had been in place in 2005, we would not be in the same financial crisis that we are now. I welcome the legislation as I can see what the Minister is trying to do in parts of it, particularly when the Governor of the Central Bank will be appointing someone who will be suitably qualified to take on the role of manager of a failed financial institution. However, I have some concerns.

I compliment the late Deputy Brian Lenihan for his initiative in appointing Professor Honohan as Governor of the Central Bank. It was the first time in more than 60 years that a non-civil servant was appointed as Governor. That must be welcomed as the head of the Civil Service should not necessarily be appointed to the office of Governor of the Central Bank.

There are a number of issues that are of concern to me in the legislation. The intervention conditions are very vague. The Minister has indicated that there will be a certain number of amendments but the whole problem with intervention is that the information must flow from the financial institution. We have had problems in the past where that type of information did not flow from the financial institution to the Central Bank. The problem was that banks refused to pass on the information that was crucial for decisions to be made up the lines. When the banks came to the Government in November 2008 they failed to correctly inform it of their overall debts. It was not until two years later that we got some sort of indication of how serious the problem was.

The next link in the chain concerns the role of auditors. The auditors failed the Irish financial system and the Irish people.

In the past 15 years, auditors have consolidated internationally and that has reflected badly on world economic affairs. There were at least eight auditors 15 years ago but now there are four internationally recognised auditors, with each of them directly or indirectly involved in auditing the four main banks. There were five auditors ten years ago but Arthur Andersen virtually collapsed as a result of the Enron affair, leaving only four globally recognised auditing firms. In the last ten years, there were only two changes in bank auditors in the Irish financial system. Ernst & Young were replaced by Deloitte & Touche in Anglo Irish Bank and KPMG replaced PricewaterhouseCoopers after the Rusnak affair, which cost AIB just €690 million.

Auditors had a responsibility to report to the bank and to the Financial Regulator. There were two options if they had done their work properly. The soft option was to inform the credit institution and the audit committee, along with the Financial Regulator, of the serious problems associated with the bank’s balance sheet. If there was no response to that, the auditors could have resigned in the midst of doing an audit, which might have led to serious problems for the bank with a potential run on assets and cash. During the entire period of the financial crisis, however, no bank auditor resigned.

The third step up the ladder before the information reaches the Governor of the Central Bank is the regulator. Many celebrity economists would recognise the maxim that regulatory bodies, like those who comprise them, have a marked life cycle: in youth, they are vigorous, aggressive, evangelistic and even intolerant; later they mellow and in old age, after ten or 15 years, they become, with some exceptions, either an arm of the industry they are regulating or senile. That was the problem with the regulators here, they became an arm of the industry or senile. This was written in 1954 about the crash in 1929 and it is as relevant today as it was then.

While I welcome the Bill, I am interested in seeing the amendments on intervention. I hope the conditions put down for the Governor of the Central Bank intervening in financial institutions that are experiencing difficulties will be made clear and the reporting of this will give an indication to the Governor of the Central Bank that he can step in as necessary.