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Leaders' Questions

Wednesday, 3 July 2013

Dáil Éireann Debate
Vol. 809 No. 3

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Leaders' Questions

Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin Last night Ulster Bank confirmed that it would close 40 more branches and lay off additional staff. In that bank alone we are looking at the loss of between 1,400 and 1,800 jobs, which is a staggering blow to those employees and their families. In a presentation to investors, the chief risk officer went further and said that the bank is anxious to break even by 2014 and to make a profit again in three years’ time. In that context, he very worryingly said that the bank would target distressed mortgage holders in arrears. In an extraordinary statement, he said that it was his view that up to 35% of those in arrears were strategic and that the bank was going after them. He blamed the Dunne judgment in the context of the Land and Conveyancing Law Reform Act.

It is interesting that the Government’s response to the mindset and mood revealed in the presentation to investors yesterday was essentially to capitulate to the bank’s agenda. It is clear that the banks are targeting those in arrears and the Government has facilitated this, first, by simply changing the legislation, bringing it through this House, to make it easier for banks to repossess family homes and, second, by unravelling the existing protections and code of conduct that existed for mortgage holders and those in arrears. The new code of conduct represents a significant rebalancing of powers towards the lender as against the borrower. What we saw yesterday was a revealing insight into the thinking within the bank boardrooms and the bank management across the board. It is their belief that it is legitimate to use legal action to go after people in arrears on the basis that they are all strategic defaulters anyway. It seems to me that what we are witnessing, which explains why the Government has created a situation that coincides with the agenda of the banks, is a dilution of protections that existed for people in mortgage arrears and a change in legislation without any conditionality to protect those in arrears.

Does the Minister share the view of Ulster Bank that up to 35% of mortgage defaulters are strategic? Is that the Government’s view as well? Given the mindset, as revealed by the bank, will the Government reconsider intervening on behalf of those in arrears and put in place independent oversight to arbitrate between the banks and those in arrears to ensure that those in mortgage arrears in this country get a fair hearing and genuinely sustainable resolutions to the predicament in which they find themselves?

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): Information on Richard Bruton Zoom on Richard Bruton It is difficult to take lectures from the Deputy opposite about capitulation to banks given the history of what we have been through.

Deputy Bernard J. Durkan: Information on Bernard Durkan Zoom on Bernard Durkan Hear, hear.

Deputy Billy Kelleher: Information on Billy Kelleher Zoom on Billy Kelleher The Minister wanted to guarantee Ulster Bank.

Deputy Barry Cowen: Information on Barry Cowen Zoom on Barry Cowen Would an answer be out of the question?

Deputy Brendan Howlin: Information on Brendan Howlin Zoom on Brendan Howlin Deputy Cowen to the rescue.

Deputy Richard Bruton: Information on Richard Bruton Zoom on Richard Bruton All of us in this House will express sympathy with those who have lost their jobs in Ulster Bank, which is the initial question raised by the Deputy. I am very much aware that this is an economy in transition.

Deputy Billy Kelleher: Information on Billy Kelleher Zoom on Billy Kelleher In recession.

Deputy Richard Bruton: Information on Richard Bruton Zoom on Richard Bruton While we feel for the people who are losing their jobs, we also recognise that we are making real progress. We are seeing parts of the economy that grew too big, which unfortunately included banking and property, adjust to a new reality. We are creating employment in other sectors that are long term and sustainable. That is part of an ongoing transition that is taking place.

The Deputy also raised the issue of people who are in mortgage distress. The Government has taken enormous pains to provide a framework within which such people can be protected.

Deputy Brendan Howlin: Information on Brendan Howlin Zoom on Brendan Howlin Hear, hear.

Deputy Richard Bruton: Information on Richard Bruton Zoom on Richard Bruton There is a mortgage arrears relief programme which sets out the code that must be followed. In addition, we have made it very clear that the money we the taxpayer have put into the banks to recapitalise and make provision for the losses in their loan books must be used systematically to deal with people who are genuinely unable to meet their mortgages. Targets have been set for the banks to have workable restructuring programmes developed for each mortgage holder, with a 50% target by the year end. We are moving to deal with what has dogged many other countries that have had banking crises of this nature, namely, a failure of banks to face up to the situation and to allow people to get on with their lives. That is what we are putting in place.

In addition to the programme I outlined we have also put in place personal insolvency legislation. That provides people who have failed to reach an agreement at the end of negotiation with the banks to go to the personal insolvency service and have their case dealt with independently.

Deputy Ruairí Quinn: Information on Ruairí Quinn Zoom on Ruairí Quinn Exactly.

Deputy Richard Bruton: Information on Richard Bruton Zoom on Richard Bruton We are putting in place a number of protection mechanisms to allow people to work through problems in a systematic way. Our objective is to move the economy on to allow people who genuinely cannot pay to reach a resolution so that they can restart their lives and to insist that banks use the money that has been put in at enormous cost to taxpayers to resolve the issues for individuals and businesses.

Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin The Minister referred to expressing sympathy. People need more than that at this stage. I asked him a basic question, whether he shared the Ulster Bank’s view that up to 35% of those in arrears were due to strategic considerations. I do not share the view. That is an extraordinary figure. Anybody who has called to people’s houses or talked to those in arrears knows how much they have tried to engage with banks.

Deputy Arthur Spring: Information on Arthur Spring Zoom on Arthur Spring The Deputy made a big mess of the economy.

Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin Since the Keane report, out of 144,000 people in mortgage arrears, we have only had 144 split mortgages. That is an indication of the lack of engagement to date by the banks with people on the basis of meaningful, sustainable ideas that were proposed two and a half years ago.


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