Oireachtas Joint and Select Committees

Wednesday, 16 January 2013

Joint Oireachtas Committee on Finance, Public Expenditure and Reform

Matters Relating to the Economy: Discussion with Governor of Central Bank

3:00 pm

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I will move on to mortgages as we are running out of time. We have had engagements with public interest directors and we have heard from bank CEOs, some of whom have been on the media speaking about the Personal Insolvency Bill, most notably Mr. Richie Boucher who stated categorically that there would be no write-down of debt. Public interest directors have made the same argument. I expect that there will be only limited engagement with the Personal Insolvency Bill.

To return to what Deputy O'Donnell asked previously, what will the Central Bank do on the issue? I looked at the statement the Governor made before the committee in September 2011. I agree with what he said then that resolving the problem with arrears would require a case-by-case action by the banks and that the banks must ramp up their effort. He also said that the Central Bank must ensure that progress is made.

Since the time when the Governor delivered that statement to the committee 62,000 people were in arrears for more than 90 days. In September 2012 there were 86,000 people in arrears – an increase of 24,000. The number of mortgages that have been restructured has increased from 67,000 to 81,000. I agree with the Central Bank, Fiona Muldoon and what the Governor and Matthew Elderfield have said before the committee. The banks have not done enough. They have not been aggressive enough.

However, the Central Bank has not done enough. Is it powerless in terms of enforcing the banks to do that? It cannot just sit back and say what has been said, which is helpful. An enforcement mechanism is required that would force the banks to deal with the issue, which they have not done to date. We have had evidence provided to committees such as from Bank of Ireland, for example, showing that there have been 13 applications for the buy-to-let scheme. The banks are simply not doing what is needed. I do not know what powers the Central Bank has. Professor Honohan said that the Central Bank has set deliverables and they have been delivered. What were the deliverables that were achieved in the past year? It is clear that the mortgage crisis got out of control. One in four people with private domestic dwellings is now in mortgage distress.

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