Sean Barrett (Independent) | Oireachtas source

Bearing in mind that when Mark Carney moved to the Bank of England from Canada, where he had a good performance record in macro-economics, his first act was to persuade the British Government to pull out property based investments of the kind that worried Deputy Boyd Barrett. Do the witnesses see us moving towards maximum loan-to-value and loan-to-income ratios? Banks used to loan up to 80% of value and 2.5 times income. A representative from AIB recently told the committee about a customer who had a debt of €340,000 and an income of €60,000. One of the questions we asked was whether the AIB employee who gave out the loan still worked there. How can we protect the economy from that kind of practice? Denmark has introduced strict rules and a number of countries changed the ratios for geographical areas. For example, higher ratios would be required in the south east of England if one believed a property bubble is emerging there. This will form an essential part of macro-economic management given what the sector did previously. Bankers definitely should have been regulated to prevent the behaviour that obtained under the previous system. We have a Bill on the Seanad Order Paper to provide those powers. The Governor of the Central Bank, Professor Honohan, stated to the committee on a recent visit that he does not possess the powers to prevent reckless banking. It was not meant to be a provocative statement.