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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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Deputy Paul Murphy: Information on Paul Murphy Zoom on Paul Murphy This issue says something about the culture of light touch regulation pursued by this Government and previous Governments. The deficiency in the law identified and rectified by Deputy Doherty's Bill effectively allowed senior management in finance companies to lie, evade the truth, peddle mistruths and incomplete information to the Central Bank of Ireland and avoid personal criminal responsibility. If one were to be generous, one could perhaps forgive this Government and previous Governments if they had not been aware of this issue and this was an unforeseen loophole. However, the matter was flagged by the Governor of the Central Bank in 2015 and the Government did nothing about it. This approach has allowed scandals with tracker mortgages and insurance to drag on. At every turn, we have been given figures on the number of people involved which were grossly underestimated. We were consistently told the matter would be resolved quickly and all those affected would be given redress within months. In autumn 2016, for example, we were told, like soldiers on their way to the First World War, that everything would be done by Christmas. It is clear the banks hid the full truth, deliberately evaded proper scrutiny and dragged their feet at all stages.

  These matters have consequences. How many people have been forced to pay thousands or tens of thousands of euro in additional mortgage repayments or insurance as a result of these scandals? How many lost their homes? What has been the impact on families across the country? How many more financial scandals have not been unearthed because of the culture of secrecy and evasion?

  Tom Wolfe, in his novel The Bonfire of the Vanities, described financiers on Wall Street in the 1980s as regarding themselves as masters of the universe. It seems those at the top of the finance industry in this country took a similar view of themselves and adopted the same contemptuous approach to customers, those who found themselves in financial difficulty and members of the public at large with a sense of complete impunity. Over the years, we saw glimpses of this rotten culture in the DIRT scandal, the Ansbacher accounts, the scandal of Anglo Irish Bank's hidden loans, the Anglo tapes, Irish Nationwide Building Society, Quinn Insurance, Setanta Insurance, the culture of misselling financial products and the tracker mortgages scandal. For as long as banks continue to be run as they are now, this list will continue to grow. The Bill is to be welcomed, therefore, as it will make it more difficult for banks to behave in this way and impose individual responsibility on senior managers who lie to the Central Bank of Ireland.

  Speaking some months ago at the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach the Governor of the Central Bank, Professor Philip Lane, made an unintentionally striking comment on the culture of the banks, which has been the subject of much discussion. Professor Lane spoke about the problem with the culture of the banks and went a little further in explaining it by describing it as a culture of seeking profitability to the detriment of the banks' customers. I concur with Professor Lane on that point but that is capitalism. Banks are run on the basis of capitalism and to maximise profits. Even when they were nationalised, they continued to be run on a for-profit basis, despite Deputies on this side and others arguing they should be run differently. The solution is to have a completely different model of banking, a democratically controlled public banking utility to run banks and use them in the service of society and the economy at large, as opposed to doing what we currently do, namely, run society and the economy in the interests of the banks and those at their head.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett I commend Sinn Féin on introducing the Bill. I fully agree with the proposed measure to establish that it would be a criminal offence for banks to lie or give misleading information to the Central Bank of Ireland and to impose sanctions of up to €250,000 in fines and-or five-year prison sentences. This is welcome legislation because people are fed up to the back teeth of there being one law for the bankers and the rich and another for the rest of us. The utter failure and unwillingness of the political establishment to rein in the greed of the banks, their mistreatment of customers and their reckless behaviour, which crashed the entire economy as they financed a wild speculative bubble that presaged the economic crisis and resulted in the imposition of a decade of austerity and misery.

  We must go much further than the measures proposed in the Bill. As Deputy Paul Murphy stated, not only is the State unwilling to control the greed of the banks but there is no way of doing so, as was evident in the years leading up to the economic collapse and has been evident in the years since. Even when the then Government was forced to nationalise the banks, it refused to exercise any control over their behaviour, including how they treated people in mortgage distress. The tracker scandal is the most recent example of this behaviour. Everything this Government and its predecessors did was focused on nursing the banks back to their position prior to the crisis. The disgraceful decision to privatise them again and allow them to flog off mortgages to vulture funds freed them to do it all over again. Today, The Irish Times reports that further mortgages with a value of €11 billion are to be flogged off to vulture funds by Allied Irish Banks, Permanent TSB and Lloyds Bank. The decision of the National Asset Management Agency to flog to the vulture funds loans valued at €40 billion led directly to the current housing emergency. There has been no willingness on the part of the Government to exercise control over the banks. Instead, it has chosen to nurse them back to health to do what they did all over again.

  In the few moments remaining to me, I will highlight one issue about which I asked Deputy Doherty. While the Bill refers to section 33AT of the Central Bank and Financial Services Authority of Ireland Act, it does not amend or delete the section. The section establishes in legislation that there is one law for the bankers and another for the rest of us. It states as follows:

If the Regulatory Authority imposes a monetary penalty in accordance with section 33AQ or 33AR and the prescribed contravention in respect of which the sanction is imposed is an offence under a law of the State, the financial service provider or other person concerned is not liable to be prosecuted or punished for the offence under that law.

This express provision means that if a small fine is imposed on bankers for misbehaviour, they cannot be prosecuted. The bankers have avoided going to jail because we have, written in the relevant Act, a different law for bankers who engage in criminal activity from the law that applies to other citizens.

Deputy Mick Wallace: Information on Mick Wallace Zoom on Mick Wallace I, too, welcome the Bill introduced by Deputy Pearse Doherty and Sinn Féin, which proposes to provide powers to the Central Bank of Ireland to conduct inquiries into the suspected provision to it of false or misleading information and to provide that sanctions may be imposed by the Central Bank on bodies that provide false information. While I agree with the spirit of the Bill and understand what Deputy Doherty is trying to do, I have concerns that the additional powers provided would not be put to use as the Central Bank would not be under any obligation to use them.

The Bill is directly linked to the tracker mortgage scandal. It has taken the Central Bank a long time to get a handle on this issue and there are other areas in which it has also let down consumers. For example, its response to Ulster Bank and the Global Restructuring Group, GRG, has been highly disappointing. As Deputies are aware, Bank of Scotland in the United Kingdom and Ulster Bank in Ireland purposely drove small and medium business owners out of business in order that the banks could take over the companies. The Financial Conduct Authority, FCA, in the UK conducted a review of Bank of Scotland and the GRG but has, to date, refused to release the unredacted version of its report. Thankfully, an unredacted version was leaked on Monday last and it makes for frightening reading. The FCA has been correctly pilloried for not publishing the unredacted version. However, if we compare its response with that of the Central Bank of Ireland, we find that the matter has not even been investigated in this country. I wrote to the Central Bank of Ireland about its response to the GRG last summer and it informed me that it was engaging with Ulster Bank on the matter and would continue to monitor the matter and oversee complaints received by Ulster Bank for any issues arising, particularly in the context of compliance with the code.

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