Peter Mathews (Dublin South, Independent) | Oireachtas source

I will stay with the mortgage question. I have gone down a long way down the road in about five cases pro bono, where I really rolled up my sleeves, and I can truthfully say with hand on heart that the banks are operationally out of control. The point Deputy Tóibín made is absolutely valid. There are different people all over the place and there is no coherence. There is also a reluctance and an objection to meeting with people at a senior level in the banks, and that is not on. It is just not on when the Government owns almost 15% of Bank of Ireland and most of AIB. It is not acceptable. As Professor Honohan rightly says, families are distressed. Roughly speaking, there are about 100,000 families in mortgage distress at the moment. That equates to 350,000 human souls, on average - four times the capacity of Croke Park. That is not acceptable in a civilised society. The Tánaiste, Deputy Burton, had the horrible experience of being trapped in a car for two hours. Three hundred and fifty thousand people are trapped in their homes for the foreseeable future - for the rest of their lives - and that is just wrong. We will park that for a moment.
In respect of property values, even in Dublin, it is not right that the newspaper headlines scream "23% uplift in the last year". It is irresponsible reporting. Why? It is because the volume of those transactions that report sale prices is only perhaps at one third the normalised level of transactions in a city of 1.25 million people with the demographics we have? That is wrong, but it is comfortable for the banks to hold that idea in people's minds. Why? It is because they can then manage the provisions they have on their loan books and not write off loans they should be writing off through split mortgages, which involves putting part of the loan on an annuity basis within the lives of the borrowers and parking the rest. This is clocking up capitalised interest to be pounced upon at some day in the future with this false notion that property values in Dublin have risen by 23%. It is wrong. I hope Professor Honohan agrees with me, because these are questions and statements in one. The value of a modest three- or four-bedroom suburban house in Dublin that may be rented on a normalised basis for €2,000 per month is about €360,000, no matter what any clipboard estate agent tells one. This is because €2,000 per month is €24,000, and if one multiplies that by 15, which equates to a 7% residential property gross yield, one gets €360,000.

We know houses are changing hands at €500,000 in that category and, therefore, they are economically overvalued from the point of view of sustainability. Why are prices rising? There are a few factors involved. There is the amount of savings on which a return on deposit cannot be got because there is nil interest, so investors chase the few houses that are on the market. If we add to that the arrival of American equity funds - we are told by Frank Daly and Brendan McDonagh that 98% of NAMA sales are to originally dollar-based funds that buy euro to buy the investments - the issue is compounded. There are all sorts of foggy and shadowy movements taking place that are not being explained by the people who could explain them in Ann-and-Barry terms for the benefit of the million and a half people whose lives have been ripped apart by the credit pyramid Ponzi scheme that was built up between 2001 and 2008, when the domestic banking economy grew from three times to five and a half times our national income. The banks are measurably culpable for that pyramid Ponzi scheme. How dare they insist, through law, on the collection of all the loans they advanced, with the reckless funding models they had, to create that asset price bubble. That is wrong. Professor Honohan is in a position, being hugely experienced academically and through modelling and all the rest, of being able to tell that story and to get the message across to the European Central Bank in Frankfurt, saying, for instance, that the €25 billion----