Stephen Donnelly (Wicklow, Independent) | Oireachtas source

My problem with the voluntary arrangements is that, in the case of many of the banks, over 90% of the so-called sustainable restructures actually end up in higher payments being made over the lifetime of the debt. We have the figures from the banks. For example, I have seen the figure from Bank of Ireland and it amounts to well over 90%. Term extensions increase total payments, interest-only arrangements increase total payments, recapitalisation of arrears increases total payments, and so on. Furthermore, we have Bank of Ireland's pretend split mortgage, which actually charges the full amount on the shelved portion. To me, that is not a sustainable solution to a debt crisis; rather, it is an extend-and-pretend solution to a debt crisis.

Here is my major concern. I have no doubt that Mr. O'Connor and his team are doing their best, but let us consider all mortgages in arrears, of which there are 176,000 in total. This includes buy-to-let and owner-occupier arrears. Now, let us consider Mr. O'Connor's figure of 4,000. This means a little over 2%, or approximately one in 50, of the mortgages that are in arrears will come through what I believe is a good process. The Government target is essentially for the arrears figure to go to zero by the end of this year. The banks are ahead of these targets because they will be financially penalised by the Central Bank otherwise.

The legislation is probably not bad legislation, notwithstanding some things I would change, for a business-as-usual economy. However, I believe it is utterly flawed. Therefore, the important task Mr. O'Connor has in terms of dealing with the crisis - not in a business-as-usual situation - for the next ten or 20 years is impossible because by the end of the year the banks will have forced through many voluntary arrangements which are not remotely sustainable. The banks are allowed to define what "sustainable" is and the Central Bank is utterly complicit in allowing the banks to do so. Therefore, they will get away with it, and approximately one in 50 of the restructures will come through the Insolvency Service of Ireland. From a national debt recovery perspective, this is useless, although it is great for the 2% because they will have superior solutions to those the banks are voluntarily offering, not in all cases but in many cases. In that context, does Mr. O'Connor believe anything can be done now or this year to increase the 2% to a far greater level?