Bernard Durkan (Kildare North, Fine Gael) | Oireachtas source

I thank the Chairman. I want to raise a number of questions as one who, like the Chairman, has been involved in discussions with lending institutions for at least ten years, during which time I have seen the whole face of business, small businesses and home mortgage holders change completely, and not to their advantage. I have been in and out of courts at all levels during that period and I have seen people who were solid business people or solid homeowners borrow on the advice given to them by their lenders at the time, and I have seen grown men and women cry their eyes out when faced with the prospect of losing their homes for which they worked extremely hard. How closely has the Central Bank monitored the activity of the pillar banks and the funds to which mortgages were sold? I know what the answer will be but I may not necessary concur with it.

I want to ask a question about the funds that bought the distressed loans from commercial banks at an undisclosed sum, which then may have had an impact on the extent to which an agreement was possible thereafter. In other words, it became a self-fulfilling prophecy that there was only one outcome, which was they would lose everything. It should be borne in mind that in most of these cases, I, like the Chairman, have had the experience over many years of helping to process local authority loans, and we would know fairly accurately whether a borrower was capable of repaying a particular loan. It would not take any more than ten minutes to work that one out. In the course of the past ten years, I have seen the most appalling examples of lending to people who had no chance whatsoever under the criteria prevailing at the time of making the repayments other than they were based on continuing inflation and a belief that everything would be all right eventually. They were simply based on there being no ability on their part ever, but when they went to remonstrate with their lenders, they found that the original staff had gone and had been moved on. They are still looking for them everywhere and have failed to find anybody with whom they had discussions in the first place. I have dealt with countless cases, as has the Chairman, where the banks, subsequent to determining that a loan was unsustainable, decided to enter into an arrangement with one of the borrowers to the detriment of the other, and without necessarily informing the other of the intention, leaving the remaining borrower with the full responsibility for repaying the loan and no attempt being made whatsoever to recover anything from the erring and errant borrower.

We have the continuing situation where the variable interest rates charged on loans and mortgages at present, where there is negative equity or the loan has been sold to equity funds by one of the lending banks or one of the existing funds, have never been reduced, incredibly, and the variable interest rate ranges from 4.3% to 4.5%. There is no facility to reduce the interest rates at all.

Over a ten-year period I have dealt, as has the Chairman, with arrears of mortgages, where if there had been even the slightest willingness on the part of lending institutions to enter into an arrangement over a longer period, it would have been possible to salvage the properties. That never happened and there was never any intention to do so. I am not a negative person but I have always advised borrowers to make the payments that they could afford. The Taoiseach advised the borrowers to make the payments that they could afford. Now, in hindsight, I would hazard to say that I may have given the wrong advice and maybe, if they had not paid anything at all, they might have been better off, in which case I am disappointed.

To what extent has the Central Bank descended down to the courts, for example, to gain first-hand experience of the way that people are treated? I do not blame the courts for this. It is the way that the lending institutions have treated the people, dragged them into court and forced them to liquidate their properties, thus leaving them homeless.

The code of conduct means nothing to the borrower but everything to the lender because it is drawn up by the lender and the lender tells the borrower that he or she does not meet the terms required under the code of conduct. Who created the code of conduct? The bank.

The last issue concerns raiders from outside of the country. I do not necessarily agree with the point made by my colleague here. We did have a problem in that insurance companies and banks came into this country and freely offered cut-price rates to Irish consumers. However, when the bubble burst, these entities ran from this jurisdiction and left the public hanging by their fingernails. There was never any attempt made to compensate or recognise what was done. The public in this country had to bail out the banks and the erring banks went away and left the damage behind them.

I will accept written answers to my questions, as the Chairman sees fit - I do not mind - but I need answers.