Joan Burton (Dublin West, Labour) | Oireachtas source

I was not the recipient of a Jesuit education. I do not know whether some of the people on the bank's board and so on were. I did not have the benefit of that particular form of education but moral hazard is something that the Jesuits, as an order, have spoken about over a long period.

I will set out what I am trying to understand. If this is a moral hazard in Mr. Masding's construct, he has acknowledged there is a social dimension to what we are talking about in terms of impacts on society and obviously there are impacts, as he described, on the households of Customers A and B. Again, taking the broad moral hazard construct, does Mr. Masding think that the issues around the housing crisis and, for example, the consequences for people who are forced to vacate a home, constitute another type of moral hazard for Irish society? Certainly, in my constituency of Dublin West at present, where the bank has quite a lot of customers and an active banking presence, no replacement properties are available for many of the families who, in the ultimate workout, may be people affected by the bank's moral hazard construct. In a Jesuitical sense, is there also a social construct, which says that a level of debt forgiveness may be reasonable in the context of how the situation arose? Is this also the case because of the consequence for people for whom the working out of this particular doctrine may be extremely difficult, particularly if small children are involved in the family, and who have experienced a great deal of stress? I do not advocate anybody not paying their mortgage. A lot of people seated around this table have struggled to pay their mortgages and we have paid them in full. I am sure that the people on Mr. Masding's side of the table have the same framework and approach. I think that is a shared view it is likely we all have.

With regard to the level of the crash, I stood in queues at one stage because I had bank accounts with Permanent TSB in Blanchardstown, as indeed I still have. Ten years ago, people were queueing up to arrange and finalise deposits on properties that their children were purchasing. These parents were doing their best. People were not advised by Permanent TSB or other banks about what they were taking on. That is their own problem, in a certain sense. I would say the banking system created quite a bit of the moral hazard, in the sense that it popped loan offers in the door, out the door or anywhere to tell people they could get loans regardless of how limited their incomes might have been. That is what happened in the past.

I understand all the economic arguments in favour of the decision to offload all of this. In light of Mr. Masding's really strong statement about "a real moral hazard", and his implication that this is really bad for the bank, for people and for society, I am interested to know whether this means that his bank, in a moral hazard context, is under an obligation to seek to assist people. I put it to Mr. Masding that this has not happened, as my colleague has said and as I know myself. I know that many Permanent TSB staff members are distressed about this as well. People who made arrangements and agreements with the bank are in jobs and, in many cases, have faithfully worked their backs off and faced intense mental stress at various times. It is possible that this has partly contributed to family illnesses. They could be working in public service jobs, which means that continuing payments are pretty much assured as long as their health holds up. It may be the case that things have to be worked out over a longer period of time. I do not understand why the bank cannot show some compassion to those people. I understand that they are not perfect borrowers, but the crash was not a perfect crash. It crashed on top of people who may have lacked foresight or an economic education. As I have suggested, the bank threw money at them. I realise that Mr. Masding came into the bank some time afterwards.

I do not understand a moral hazard which does not have a wider social construct around it. I know this is an ethical question. I am aware of Permanent TSB's corporate and social responsibility statements. I think it seeks to have an ethical framework. What would be wrong with the bank continuing the workouts? As Mr. Masding said earlier, it is giving a discount of 38% or so to the mortgage company that it is selling on to, and ultimately to Lone Star. That is a really big discount. We can ask members of the committee to speak about the cases with which they are familiar, but in many of the cases with which I am familiar, even half of that 38% discount would obliterate the problem. In cases in which people have been really trying and are in work, why is this not possible given that the bank can see that an income is going to be coming in? Someone aged 45 has at least another 15 working years, and maybe a bit longer. A crystal ball is not needed to see that such a family is committed and is trying. Why is this not possible? Is the moral hazard argument preventing Permanent TSB from holding on to such a family? Has Permanent TSB ever written to the European Central Bank to say it cannot deal with people who never pay and make no effort and it wants to hand them on? Like others, I am talking about people who have really tried. Now they seem to have been found guilty of this real moral hazard in the bank's court of opinion. I ask Mr. Masding to enlighten us about how we should deal with such cases. How should we address them?