Professor Patrick Honohan:

The Deputy made a lot of remarks there and I am not going to challenge every one of them, obviously. I have never said that I am satisfied with the situation. I am satisfied that our approach is the correct one and not an incorrect one. There are people who would say we should not be interfering with what the banks are doing. I am not in that space. The banks will complain that we are pushing them around while Deputy Doherty will say that they are running rings around us. The net result is that the banks have not had the capacity and, to some extent, the willingness to reach sustainable solutions. That is why we brought in the term "sustainable" because they have been willing to let this situation run and letting it run has contributed to a rise in the arrears because nobody can see the clear end to this process that should be evident. We are not satisfied.

Did other countries do it better? A bit better, yes. They started earlier. At the time when the banks were struggling for survival here - which is not an excuse but probably the explanation - and not doing anything on the mortgages, banks in Iceland, which had been swept away and re-started, started to get to grips with it. It has taken them three or four years but now they are well ahead of the Irish banks. It is a question of process and effectiveness. We have seen one of the banks, with perhaps a simpler book, with a much more effective process. It is not soft on the borrowers but is disciplined and organised. It has got results. The other banks are looking around and seeing that they could and should be doing that. As I said in my introductory statement, which I put together in a way that tries to clarify that, it is a question of failures of process and failures of policy, as well as differences of policy between us and the banks. Banks are not going to get away with those differences. In the first wave they could rely on the legal letters because they only had to reach 25%. The next wave will be harder.