Mr. Brendan McDonagh:

As does a clear legislative mandate around that agency, along with clear objectives as to what is to be achieved. The issue here is whether something is capable of resolution within a certain period of time. What sort of solutions do we want? Do we leave people in their homes for a certain period, for example? Do they then agree to sell after that period, when the kids grow up or when they are ready to downsize or whatever the case may be?

A further difficult aspect to this is the scenario where somebody may have been doing very well in the mid-2000s and took out a mortgage of €2 million to buy a house. Today that house might only be worth €1 million and the person in question cannot pay off the €2 million mortgage because their earnings have dropped. Should that person be treated the same as the person earning €40,000 a year who borrowed €200,000 and then could not repay it because he or she lost their job for a period? Do I personally think that somebody should stay in a house that cost €2 million? No, I do not. Do I think that that person should have a home? Yes, I do. Solutions have to be found requiring people to downsize in these kinds of situations.

Things are different when it comes to what we might call ordinary people with mortgage debt due to unfortunate circumstances. Somebody might have lost his or her job and been left unable to pay, for example, so they get into arrears. They may unfortunately have paid €400,000 for a house now only worth €250,000, and they are left unable to pay the €400,000 mortgage. In these circumstances the resolution has to provide for some kind of resizing of that debt, if the person could pay a €250,000 mortgage, for example. In our experience, this is very simple. We look at the person's tax returns, earnings and P60s and we can see from that how much he or she can put up. If a person cannot support a €400,000 mortgage we are never going to get €400,000 back for it anyway.

There might be a view in the banking system that the house will, in time, go back up to €400,000, and while the bank might be forced by the regulator to take a provision for €150,000, if the economy improves in five years time and prices rise they might be able to write back that €150,000 and the profits will look great. This does not deal with the problem, however.

In response to the Deputy's comment, I have engaged a good deal with the European Central Bank with regard to both NAMA and other matters. All the ECB wants is that the foreign loans come off the banks' balance sheets and that the banks focus on what they should be doing. A huge amount of energy, however, is being devoted to dealing with a problem that has been around for a long time now. It is not getting any better. Generally speaking, in fact, it is probably getting worse.