Billy Kelleher (Cork North Central, Fianna Fail) | Oireachtas source

-----the banks but also by the Central Bank, which has approved such a course of action. This was clearly stated in the hearings of the finance committee. I find it completely unacceptable that banks are sending threatening letters in order to meet the targets that have been laid down by the Government and the Central Bank, and that they see this as the way to address the issue.

We cannot have a situation in the coming years in which there is continual drift just because there is a fear that if proper solutions are put in place the banks might need further capital. Let us be quite clear. That is one of the main reasons the Government has been very soft in addressing the issue with regard to AIB in particular. That is, it is very concerned that AIB might need a further injection of capital. The question that arises, as referred to by Deputies Mathews and Smith, is where that capital will come from. Will it come from European funds or will the State be left to pick up the tab again? I believe the Government has taken that decision.

It is adopting a softly softly approach because it does not want to upset the banks' move towards profitability and the State's return to the markets. That approach, however, is at the expense of the 150,000 people who are experiencing huge difficulties in meeting their mortgage payments.

The issue is finding sustainable solutions and the concept of sustainability must be defined by an external independent agency. Let us be clear about this. The Central Bank is not as independent as we would like it to be. After all, it is the licensing authority for banks in the State and oversaw the lending practices of those institutions in the past. We must have an independent oversight entity which can ensure these issues are addressed in a fair way.

The vast majority of people want to pay their mortgage. There is an unknown number of strategic defaulters, with the banks claiming this cohort makes up 20% of all those in arrears. There must be an independent analysis of that claim. It seems clear that the banks are intentionally putting out that figure in order to drive a wedge between various groups in society, including those who are meeting their mortgages payments, those who are unable to do so and those who refuse to do so. The claim that the latter make up 20% of all defaulters must be independently assessed and verified. I am not confident that the Central Bank or the banks are capable of independent and unbiased oversight in this regard.

A mortgage resolution office as proposed by Deputy Michael McGrath is the obvious course of action. However, the Government, with the support of others, has decided that the easiest way to address the issue is to allow the banks the whip hand. These institutions are already compiling a profile of properties in the State which, although the owners are in arrears, have some equity. In other words, the banks have concluded that the best way to address their impaired balance sheet is to go after homes with equity but where the mortgage is in distress. They are profiling as we speak, focusing on areas where property prices are holding up reasonably well. Threatening letters will be sent to many families in distress in certain parts of this city because their homes are worth something. We must have independent oversight to address these problems, but we will not get it from the Central Bank or the banks.

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