Mr. Padraic Kissane:

The common answer in all the previous presentations by the banks is that they do not do debt forgiveness. It is the greatest joke of all time. Every one of them has said it in this room. I have listened to them all. They do not want to put it that they do debt forgiveness in case the other 90% of their customers will stop paying their mortgages, which is a complete fallacy. One of the difficulties with a vulture fund, which is now only becoming known, is that if all the loans are sold, the customer cannot borrow, build an extension or improve his home. This means the economy for all the small builders who would get those jobs is gone because he cannot borrow a cent extra until the mortgage is paid off in full, irrespective of the arrangement. Until he pays that mortgage off he is stuck, especially if it is on a tracker rate because then he cannot move at all. In the two examples I gave, these loans were put in to sweeten the deal for whoever was purchasing the loan because the people never missed a payment. I heard the same bank tell this committee that no performing home loans were sold to vulture funds. That is factually incorrect and I have two clear examples that can prove it.

The second issue in what the Senator says is that there is so much confusion put about that it is almost deliberately done to create confusion. The banks have decided, as they are about to embark on this new culture shift, to move the problem to somebody else. They say that if somebody is to be brought to court, let it not be the banks taking the case because their reputations are damaged to such an extent that they will not bring cases to court or seek repossession. It is the bad vulture fund that will do it because it does not care, having bought the loan for 20%, 30% or 40% of the original value. That is the vulture funds' game in any event. It is second nature to them to go before the courts because asset disposal is part of what they do. It is also extremely difficult to get repossessions and so forth. That contributes to the difficulty with getting repossession from actual strategic defaulters.

The lenders are the ones who describe what is a strategic defaulter. The fact, as David Hall will say, is that a strategic defaulter, according to the bank, is one who is not paying the full loan mortgage to his lender and may be paying something to his credit union or other personal loans or his overdraft facility. He is classified as a strategic defaulter by the domestic home loan banks. The definitions for everything we are discussing here are also coming from the same banks. We believed them before when it came to a banking bailout and here we are starting to believe them a second time.