Oireachtas Joint and Select Committees

Wednesday, 25 September 2013

Joint Oireachtas Committee on Finance, Public Expenditure and Reform

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

3:20 pm

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

Okay. I only have a couple of minutes left. In September 2011 and again in 2012, the Governor came in here to talk about the issue of mortgage arrears with his arms swinging, saying the banks were not doing enough and were not being aggressive enough and that the Central Bank was breathing down their necks, but the arrears crisis has got worse. I put it to him, as I have done before, that he is the top dog. He is the person who can actually force the banks to do stuff.

The Minister for Finance said yesterday on the Dáil record: "Letters threatening repossession or legal action could not in my opinion be considered as a sustainable solution under the mortgage arrears targets". He went on to say that repossession should only ever be considered as a last option. He is very clearly saying that it is not in the targets. It is not allowed to be included in the targets. We know that AIB has issued something like 6,000 letters. We had representatives from the Bank of Ireland saying that the letters AIB issued are not the same as the letters they issued because they actually go to the court and it is the start of a process. Why has the Governor been silent on this? Can the Governor not say to the committee that letters threatening repossession or legal action are not, in his opinion, considered a sustainable solution? That is the first point. The second is the fact that the banks are running rings around the Central Bank. The spirit of the targets was about reaching conclusions and finding solutions for people who were in genuine mortgage distress. Forgetting the 16,000 legal letters of repossession, it is pathetic what the banks have done in terms of real solutions. The last time the Governor was before this committee he mentioned that if the Central Bank set targets, the targets would be reached but not in the appropriate way. Why is the Central Bank not doing more? We have had to wait six months after the targets were given to the Central Bank to find out if it would okay them. Then last week the Central Bank came out with a statement to the effect that one year on from setting the targets, it was satisfied that 75% of those in mortgage distress will still not have a concluded agreement with the four banks. We have had representatives from the four banks before this committee who were unable to agree on whether interest-only mortgages or split mortgages, with the residual debt hanging, were acceptable to the Central Bank. There are only four or five banks involved. How come, six months into this process, there is so much vagueness that the CEOs of the four main banks still do not know what the Central Bank means by long-term solutions to mortgage distress?

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