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Central Bank (Amendment) Bill 2018: Second Stage [Private Members] (Continued)

Wednesday, 14 February 2018

Dáil Éireann Debate
Vol. 965 No. 5

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(Speaker Continuing)

[Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath]  We read last month about the proposals made by the Central Bank in response to the Law Reform Commission's consultation paper. It begs the question whether the proposals from the Central Bank come as a surprise to the Government. The Government has always said that if the Central Bank wants more powers, it would give it more powers. The Central Bank has now called for more powers. It made a formal submission to the Law Reform Commission seeking more powers and published its submission to the consultation phase. The call came on foot of what the Central Bank termed the egregious recklessness by heads of banks, insurers and other financial firms and for that to become a criminal offence in the event of a company's failure. Was that news to the Government?

I will hand over to my colleagues now. The response of the Minister of State, Deputy D'Arcy, refers to quarter 3, quarter 4 and the fact that legislative proposals will come. It does not fill me with any confidence that there will be actual, tangible action to deal with these issues. This is a priority. The public, rightly, does not believe that white-collar crime is dealt with in the same way as other forms of crime. That needs to change. The Minister of State will find support from my party in respect of changes that are brought forward and we will support this Bill right the way through to enactment.

Deputy Jackie Cahill: Information on Jackie Cahill Zoom on Jackie Cahill As Deputy McGrath said, we support the Bill. He has been at the forefront of defending the rights of mortgage holders in this country. He introduced a Mortgage Resolution Bill, which is before the Dáil, that will go a long way towards trying to right some of the wrongs that have been done.

Deputy McGrath referred to the sale by Permanent TSB of €4.5 billion worth of loans, €3 billion of which involve mortgages for family homes. We have had enough of that. It cannot be allowed to happen again. When Deputy Noonan was Minister for Finance, he said that vulture funds picking over the carcass of a recession was the natural order of things. We are fed up with the vulture funds picking on and intimidating ordinary individuals and mortgage holders. That must stop. People must be helped to stay in their family homes either by writing off a portion of their mortgage or extending the term of their loan, as has been proposed in the Mortgage Resolution Bill. That must be done and the banks should be given no choice in the matter. People who are making a reasonable attempt to pay their mortgage must be protected and evictions and repossessions must stop.

Comments were made by the Central Bank last week to the effect that people purposely went into arrears because they saw an opportunity to stop paying their mortgage. Such comments from an official in the Central Bank were foolhardy at best and it was very sinister. It was done to try to change public opinion. The banks want to offload those loans because they do not want to be associated with further wholesale repossessions. They do not want their already tarnished image further diminished. By abandoning their customers to the vulture funds and comments such as we have heard from the Central Bank, the hope is that public opinion can be turned against mortgage holders. The banks believe they will be free in one leap from their bad loan book. When one views the entirety of the current position of mortgage arrears, it puts the comments of the Central Bank into context. The impact of what was said was to try to turn public opinion against mortgage holders who are in arrears. It would have the effect of a neighbour feeling resentment towards another neighbour if there were a perception that someone was being let off the hook with his or her mortgage arrears. The banks are not happy that they are being held to account for their role in the mortgage arrears crisis. They are not happy that public opinion is against them because their actions have been less than energetic in resolving this problem.

The scandal of tracker mortgages is further evidence of the callous attitude of the banks to their customers. As has been said, thousands of people are still not on the correct rate. Many people managed to pay their mortgages even though they were not on the correct rate, but their families suffered hardship and financial pressure. One could never put an economic value on that. I believe the banks are very happy to see the Central Bank lecture the mortgage holder and take the light away from where the real problem lies, that is, with the banks. Therefore, I believe the Central Bank should clarify its position and apportion blame where it firmly belongs, namely, with the banks.

Fianna Fáil's Mortgage Resolution Bill requires a money message from the Government to proceed. It is a fair Bill that can be a final solution to the mortgage arrears crisis. It will ensure that a fair and reasonable deal will be put in place for all parties. The banks will get their money and, most important, families will stay in their homes. The State will not have the future cost of providing housing for those thrown out of their homes. Therefore, there is an urgency in getting the Government to give a money message so that families in search of a resolution can finally have peace of mind and security of tenure in their family home. Imposing fines on the banks is not enough. We want a resolution and the family home must be protected.

Deputy Jack Chambers: Information on Jack Chambers Zoom on Jack Chambers I welcome Deputy Doherty's Bill. I also recognise the great work my colleague, Deputy McGrath, has done as finance spokesperson but also on the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach with my colleagues in the Dáil.

  At the heart of the issue is the thread of lies over the past ten years. We have had a decade of lies from banks from when they initially had what they referred to as a liquidity crisis, which turned out to be a solvency crisis. The banks lied at every turn to Government, officials, and the Central Bank, and that has been repeated over and over again. Both the Honohan and Nyberg reports referred to accountability and a degree of responsibility. While we have restructured the Central Bank in terms of the split between the Financial Regulator and the Central Bank and empowered staff in a greater way, we still have the same cultural issues in banks. While there might not be the same solvency issues as was the case previously, the State took control of the banks at a huge loss to the citizens of this country. The flip side of that has been State-owned banks robbing people of their homes, as Deputy Doherty said. Thousands of people have been harassed and have suffered serious mental health difficulties as a result of the conduct of officials and senior members of banks. One could ask what the outcome has been for them. It has probably been bonuses and share options in the banks. Where is the accountability from the State looking back at the thread of lies we have seen in the past decade?

  It is shameful that the Oireachtas has allowed this to occur. We seem to have a contradictory State policy. While we have words of sympathy from the Government and Ministers, at the same time there is a clear policy, whether in regard to NAMA or the pillar banks, to extract each value added element out of the banks. At one level we are talking about potential value for privatisation and sales while the flip side of that is the Government expressing sympathy for the people who have lost their homes, illegally, and who have been taken off tracker mortgages, illegally. There was a clear decision among senior members of the banks to do that en masse. As Deputy McGrath said, we must put an accountability framework in place.

  One could ask what has changed from what was highlighted in the various reports, for example, the soft touch approach that was mentioned in the Nyberg report. The banks have not had solvency issues because of the European regulatory framework, but there has been a soft touch from the Central Bank in addressing the banks. That goes for the Governor and all the senior members of the Central Bank. They have allowed the banks to operate as they wish and they have taken a soft touch, slow, snail-like pace in terms of flipping the balance in favour of vulnerable people with mortgages who in many cases have had their homes taken from them. That is a terrible state of affairs when one looks at the thread of lies we have seen in recent years.

  The Nyberg report referred to the development of herding and groupthink which led to widespread risk. It said there was a willingness indirectly to let other banks dictate their actions. When one looks at what happened here, it is evident that we have had a cultural phenomenon of most banks driving customers from their tracker mortgages and illegally taking them off mortgages with little or no accountability.


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