Peter Mathews (Dublin South, Independent) | Oireachtas source

I realise the time has now run down. I have been here all afternoon and the irony is that six years ago, as Mr. Maguire is aware, I busied myself with a deep analysis of the Irish owned banks in this regard. I am now being asked to mow the Phoenix Park with a scissors. It is pathetic. I thank Ms Sadlier for giving us a good idea of what it is like at the grassroots level. The witnesses are great people but I would like them to challenge the banks' boards. They caused the bust. I will give the witnesses copies of a paper I produced four and a half years ago. Mr. Maguire has seen this paper, which shows unassailably that the banks caused the credit bubble which led to the asset price bubble and the bust over a cumulative period of at least six years. Their loan to deposit ratios moved from the correct level of 90%, which is the keel for any bank balance sheet, to a weighted average of 173% over six Irish banks. I ask that we challenge the banks' boards and get them in here because they have caused this crisis. The difference between 90% and 173%, or 83%, is the proportion of the collapse in asset prices that is the responsibility of the banks. How dare the banks seek to collect 100% of the loans they advanced to an asset price Ponzi bubble? My logic in this regard is unassailable.

I know of one house which was bought for €700,000, based on a loan of €600,000 and a supporting level of income.

The asset price has collapsed to €225,000, which is a loss in asset value of €475,000, and the loan remains at €600,000. I know this because it is my area. There is negative equity of €375,000 and the asset price collapse is from €700,000 to €225,000. This bank ignored the principles of fractional reserving at a level of 75% culpability, which means that of the negative equity the bank should immediately write off €356,000. Case by case, across the country, that exercise should be done by the bank. The bank is like any business. The people behind the counter should know what they are doing and, as Ms Sadlier said, we are now trying to deal with call centres, first names and an impossibility of correspondence. I have had first-hand experience of it.