John McGuinness (Carlow-Kilkenny, Fianna Fail) | Oireachtas source

The witnesses have given an answer which is neither here nor there. I prefer the answer that was given by the representatives from the European Central Bank when they came before the committee recently to discuss the SSM. Danièle Nouy said it is not yet the right time to consider changing the current salary or bonus rules in place for Irish banks. That is pretty clear. I certainly agree with the message and think the Irish public would like to hear from the Central Bank about it. The banks and the Government operate in a manner where they say they will look at something and compile a report. Such a report will come up with the same reply the witnesses have given, namely, that it is one thing, on the one hand, and something else, on the other. In my opinion, the reply is that they have enough. Banks being profitable to the tune of €1 billion a year while stripping people of their dignity is just not acceptable.

I return to the NPLs and the 5%. Let us consider a situation where a main bank provides a loan. There may be difficulty with repayments, as was the case with the banks themselves. That loan is then restructured and the customer lives within the new terms. Despite this, the bank sells the loan to a vulture fund. Professor Lane indicated how one can perhaps do a deal with a vulture fund because it bought the loan for less. Once one gets to that point of having a loan owned by the vulture fund, one's credit rating with the Irish Credit Bureau, ICB, is affected, so one has no hope of getting a loan from anyone except the same vulture fund at a rate of 10%, 15% or 18%. As a result, one can never buy oneself out of the loan. That is an issue, especially for business people who find themselves in this situation and are attempting to rebuild. It is also the same for homeowners. The option of a credit union, which was there for generations, where one could get a loan from it if one got into debt, is not there because one is listed by the ICB, which is a difficulty.

In addition, the Central Bank continues to say that the protection travels with the loan. Mr. Sibley indicated that there is not a great deal of evidence of the opposite happening. I keep repeating myself by stating that there is ample evidence of people being crucified by vulture funds as they attempt to rebuild portfolios, homes, businesses or whatever. I have dealt directly with them, a point I have repeated to Professor Lane at previous meetings. For me, the experience as been hugely negative. I pity the people who must deal with the vulture funds. I ask Professor Lane to address the following situation. A bank states that it is required by regulators to reduce the percentage of loans which are classified as non-performing. That is probably accurate. It is selecting its words quite well and blaming the regulators. In a second paragraph, the homeowner - or the loan owner - will read that for regulatory purposes, the bank generally describes a loan that is or has been in arrears as one that is in default or can be sold. I would like the Central Bank to comment on what I have just said and what I have cited from this letter and to tell me why the banks cannot be instructed to drill down into their bad loan books and bring about individual resolutions. Yes, there will be those who will not pay and, therefore, their loans can be sold. However, why can the Central Bank not force the banks to do as I have outlined and make it an option for them to drill down and solve the loan crisis? They are flogging off the loans in any event and at massive discounts, the profits are going out of the country because the vulture funds take them and we have outlined here before the damage done to society. Why can the Central Bank not emphasise this other option to them?