Peter Mathews (Dublin South, Independent) | Oireachtas source

Thank you, Chairman.

I thank Mr. Brown for coming. I have a certain amount of sympathy for him, as I do for all his peers in the other banks, in this regard only, that he is the meat in the sandwich. Where are the banks' boards of directors? They direct the banks and the financial sector. They are the guys who signed off on the behavioural policies and strategies of the banks leading up to 2008. They are the guys who were the architects of and designed the balance sheets that led to weighted average loans-to-deposit ratios of 170%. Royal Bank of Scotland, RBS, was steady, at a figure between 135% and 140%, for several years. A credit bubble is what causes an asset price bubble and it is the houses priced in markets that people live in. The cumulative derogation by the boards of banks during that six year period meant a cumulative turbo-charged rise in asset prices and when they collapsed, 100% of the loans was still in place. That is what is shocking and unjust. There is nothing personal in this, but I wish the directors were here. They are getting big fees and telling these guys what to do. They are telling Mr. Brown and his colleagues to try to fight with limited ammunition and their hands tied behind their backs because they have not stood up and matched their responsibilities.

There was a lethal cocktail. Mr. Brown's bank offered tracker mortgages. Bank of Ireland has whinged that more than half of its mortgages are tracker mortgages and that they are loss-making. Whose big idea was it to give them, if they were going to be loss-making? Was it a way to get market share for three years and then switch everybody to variable rate loans and was it a case that asset prices would remain high? That could never have happened in the ponzi scheme they had created. Now citizens are financial galley slaves, including Deputy Spring and his generation. I am lucky. My youngest is 22 years old and one of mine is in Australia. That is why Mr. Brown has an anomaly whereby he is wondering as the arrears are rising at a time when unemployment is falling. There is emigration. Those who are stuck here are unemployed and the ones who are getting deeper into debt. The lethal cocktail of tracker mortgages, loss-making products which all of the banks like lemmings raced over the cliff to provide, is still in place.

The banks have a problem and it is a capital problem. This morning Bank of Ireland told me that the provisions of AIB, at 18.5% of its total loan book of €89 billion, were different from those of Bank of Ireland and that Bank of Ireland was not comparable to AIB because it had a different spread of risk and portfolio. I do not believe that because Bank of Ireland stated, in the original listing in September 2009, in the PwC list of runners and riders for NAMA, that it had gross loans of €16 billion to go into NAMA. In three months it changed and, suddenly, the bank's portfolio had improved and gross loans of only €12 billion went into NAMA. My suspicion is that Bank of Ireland wanted to stay out of majority State control. That is what all of the banks were trying to do at the time because they did not understand the ponzi scheme of credit. There was this wall of asset prices that was going to collapse and leave the loans with families and businesses to be crushed, distressed and demoralised. My heart goes out to the individual families affected, to the bread winners and those who are receiving less income.