Mr. Jerry Beades:

On behalf of Friends of Banking Ireland, I thank the Chairman and the committee members for their kind invitation to update the committee. My name is Jerry Beades, Chairman of Friends of Banking Ireland. I have worked all my life in construction, engineering and property. Currently, I am chief executive officer, CEO, of JMCI QATAR, an engineering and specialist construction firm operating in Doha, Qatar, on rail and stadium projects for the 2022 World Cup.

I am joined by Brian Reilly, an associate of Friends of Banking Ireland and someone who has suffered financially as the owner of a small and medium enterprise, SME, and as a customer of certain financial institutions. Mr. Reilly is an experienced company director with a background in printing and logistics, including the not-for-profit provision of social housing projects in north County Dublin in the 1970s. Mr. Reilly co-founded Right2Homes in 2016 to provide a fundraising and advocacy platform for a constitutional challenge to the Land and Conveyancing Law Reform Act 2013, the so-called eviction Bill, which retrospectively gives banks the weaponry they need to seek repossession of family homes via summary proceedings in the courts.

Friends of Banking Ireland was established in July 2006 to highlight the abject failures in the Irish banking system and the corresponding failure of regulatory oversight. This has already been covered in detail by the banking inquiry and we do not propose to examine the same area covered by that inquiry.

This is the third time Friends of Banking Ireland have come before an Oireachtas committee. As a result of the initial campaigning work, Friends of Banking Ireland presented to the Joint Committee on Economic Regulatory Affairs on 13 May 2008. We returned on 16 September 2009 at which we discussed the meltdown in the financial services sector. Issues covered centred on the light touch approach by the Financial Regulator and supervisory agencies here in Ireland. In the past year, I began to see the exact same patterns emerge in the European and international financial system, as existed prior to the global financial and property market collapse to which I will return. In the period since 2006, Friends of Banking Ireland have worked with a huge number of Oireachtas Members on cases that they felt they could not process through the Central Bank or the Financial Regulator.

With regard to the devastating impact of reckless lending and the failure to regulate,in the summer of 2006, I was the first person in Ireland to publicly and explicitly call for the resignation of the former Financial Regulator, Mr. Patrick Neary. I referred to him as "the dog that didn’t bark". There was nothing personal in that comment. I made it on the basis of his abject failure to question or query the criminally reckless activities of some of the financial institutions his office was meant to regulate.

With regard to family home and familyfarm evictions, over the weekend, the Free Legal Advice Centre, FLAC, warned that 2017 may be the year of housing repossessions unless dramatic action is taken to assist mortgage borrowers who are in distress. When added to the scale of the repossessions planned for family farms and small businesses, we are not in a position to "Keep the Recovery Going"; instead, we are facing a humanitarian crisis. With others, I was active in challenging auctions of family homes and farms where there were disputes ongoing with financial institutions. Today, I am pleased to say that a code of conduct now exists to ensure that no home or farm will go for auction if there is a dispute ongoing.

What has happened since 2006 is like something from a horror movie. In 2008, at the height of the financial crisis, in documents that can now be viewed online, proposals were put by the late Brian Lenihan, then Minister for Finance, to have a 30% to 50% haircut on mortgage debt. This was to be in parallel with the bank bailout. That did not happen, and I have those documents with me today. Officials got in its way, and it was not even countenanced.

Fast forward almost ten years and we now know that the former Secretary General of the Department of Finance, John Moran, was thrilled to welcome in the vulture funds, as outlined in the excellent RTE documentary, "The Great Irish Sell Off". Those vulture funds have picked up over €200 billion worth of loans, secured against underlying assets at 5% to 20% of the market price. Again, the State is losing out. As the assets are not for sale - only the loans - there is no stamp duty and no gain for the Irish State. The whole set-up is a scam.

In terms of what follows next, the vulture funds call in the loans seeking to take charge of the asset which has been used as security. They then send in the security men who smash doors and change locks, usually under the cover of darkness. Meanwhile, SME type builders who want to get back to work are being crippled with funding costs of up to 15% and more. We wonder why very few homes are being built. The banks are laughing at us because politicians are slapping them on the wrist for ripping off people with tracker mortgages when the bigger financial scandals are being glossed over.

With regard to the potential conflict of interest for the Judiciary,any citizen is able to visit the Oireachtas website and read the register of interests of Members of the Oireachtas, as set out in the Ethics in Public Office Acts 1995 and 2001. That also applies to elected councillors and MEPs. The Irish Judiciary make decisions every day about NAMA, banks, receiverships and liquidations, home repossessions and evictions, yet the view from the Four Courts is that citizens have no right to know if a judge has a potential commercial or personal conflict of interest. Questions have arisen with regard to such conflicts. I believe the scale of the repossession orders and judgments that are currently favourable to the larger banks and financial institutions is a matter that will be the subject of a public inquiry in the coming years. It is in the interest of the Judiciary also to ensure that, just like politicians, they have a transparent and ethical public declaration of their interests.

Traditional banking in Ireland is dead.The current model of banking is broken, and not just in Ireland. If it were not for private equity, venture capital, peer to peer lending and the credit unions, day to day commerce for hundreds of thousands of small businesses would have effectively ceased. We know the committee has had engagement with Mr. Gerry Mallon, the CEO of Ulster Bank Ireland, Mr. Bernard Byrne, the CEO of Allied Irish Banks, Mr. Jeremy Masding, the CEO of permanent tsb, and Mr. Richie Boucher, the CEO of Bank of Ireland. The members have also heard presentations from Professor Philip Lane, Governor of the Central Bank, and Mr. Derek Moran, Secretary General of the Department of Finance. Their respective presentations were really nothing more than a polite box ticking exercise to say that they had engaged with the Oireachtas. It was not a meaningful engagement.

The Governor of the Central Bank was at pains to tell this committee before Christmas that it did not need to be concerned. He stated: "...the banks are more resilient and the supervisory regime much more robust compared with the pre-2008 period. Nonetheless, the Central Bank needs to maintain its vigilance." He went on to state: "Compared with the pre-crisis situation, the domestic banking sector is now slimmed down." If there was ever an award for understatement of the year, he should get it.

With regard to being unaccountable and unelected, inApril 2013, President Michael D. Higgins addressed the European Parliament in Strasbourg. He stated: "...European citizens are suffering the consequences of actions and opinions of bodies such as rating agencies, which, unlike parliaments, are unaccountable." If we substitute the words "rating agencies" from that quote and insert "financial institutions and central banks", it would now read: "European citizens are suffering the consequences of actions and opinions of bodies such as financial institutions and central banks, which, unlike Parliaments, are accountable."

Every member of this committee has been elected through elections to Dáil and Seanad Éireann, and I know they are very conscious of how accountable they are to their electorate. It is always a political or publicity stunt to take a cheap shot at our elected parliamentarians, and there are enough people who never miss an opportunity to kick our elected politicians, rather than engage with them to try to influence change. To lay the blame at politicians only lets those unelected and unaccountable organisations off the hook. There is, however, a deep malaise in the way these institutions operate and it appears to us, as an advocacy group, that those whom we pay to regulate them do not aggressively pursue these financial institutions properly.

With regard to the absence of regulation at Central Bank and European Central Bank level,I have circulated a copy of a very detailed letter sent to the Minister for Finance, Deputy Michael Noonan, last year, a copy of which was sent to every Member of the Oireachtas.

It related to legal proceedings initiated in the High Court in Dublin to ensure the European Central Bank and national central bank governors actually regulate the risky lending associated with the oil industry. In the letter, I wrote:

Replace the words property market with the word oil and we are watching an exact replica of the global financial crisis that collapsed banks, bankrupted countries, destroyed families and in many cases, ended lives.

What is happening is an exact replica of the Subprime debacle that started in the United States and eventually engulfed the European banking system. In order to keep lending off their balance sheets, US institutions relied extensively on a lending process called the ‘originate-to-distribute model’, which fueled the subprime mortgage crisis.

The interaction by the committee with the Governor of the Central Bank before Christmas was almost like a slapstick comedy. Members, including the Chairman, effectively forced the Governor and his officials to admit to the scale of the scandal of the tracker mortgages issue. It was clear from responses to questions as to whether anything had been learned in the past decade that the regulators and those we pay to supervise financial institutions are still unwilling and perhaps unable to sanction and regulate the banking and financial services sector. We are staring into a humanitarian crisis involving repossessions and homelessness caused by the abuse of policy.

I wanted to address many issues but I had to keep my statement short. Friends of Banking Ireland has had a high profile since it was established 11 years ago. I will be pleased to answer questions on any issue.