Mr. Angel Gurría:

I would say they should be reduced using all of the options simply because they are techniques. There is a recognised new lower value than the nominal value to the mortgages that are on the books. We should remember how the crisis started. Millions of mortgages were placed in very nice boxes tied with a ribbon and a triple A sign was attached by the rating agencies which sold the goods as triple A goods. However, they were not triple A goods and when non-payment started, they unravelled and the crisis unfolded. The first thing to do is to recognise that these are substandard loans. From the point of view exclusively of the banks and bank regulators - those checking whether the banks are stable - they do not want to pay for another bank crisis. Ireland paid a harsh price for the bank crisis. They also want to ensure the banking system is stable, transparent and reporting correctly.

Second, they want the judicial system to be able to process cases quickly whenever a borrower is not paying and the lender wants to take action. Again, judges should not be asked to formulate social policy. It is not for them to do this work. Third, if in its collective wisdom Irish society wishes to take the political decision to support some of the mortgage holders who may be unable to continue to pay their mortgages for whatever reason, not because it wants to salvage the banks or make the vultures better off but because it wants to help such people because they are especially vulnerable or a small group, it should do so transparently. The system and the banks should be made to cleanse their balance sheets. The judges should be made to adjudicate and move quickly. Then, for those whom society really wants to help, this support should be made transparent through the budget. It would be a line item of expenditure that the Government should choose. The Government should let those affected know it is doing this but also let all taxpayers know because they would actually be helping those whom the Government chooses to help. They would be contributing to help them, so the way it is done should be transparent.