Mr. Cormac Butler:

As Mr. Kavanagh said, we lodged complaints with the Office of the Director of Corporate Enforcement and the Central Bank. Neither took an interest in it. The issue is serious since, as Mr. Kavanagh explained, he signed contracts on the basis that EBS would provide mortgages. At the time, when he signed the contracts, EBS was aware that it was in financial difficulty and could not really honour those contracts. Therefore Mr. Kavanagh and his group have a legitimate claim against EBS, because these contracts should not have been signed. We have tried to raise this matter with many people but there does not seem to be any concern about the fact that some banks are not complying with company law. Compliance with company law requires showing financial positions correctly. That means that banks must show that they have enough capital to withstand losses.

Prior to the banking crisis in 2008, the banks went through a reckless period where they loaned money without any regard as to whether they would get the money back. The aim was to constantly expand. They were able to record short-term profits even though they were entering into loss-making transactions. This should all have been exposed in 2008 but the attitude at the time was to cover up the fact that the banks were not complying with the law and to pretend that they had complied. There was a pretence that they were all solvent, then they were given money to keep things going. Banks at that time had many hidden losses and they had to generate profits to cover up the black holes.

They adopted a few policies, one of which was to increase interest rates as much as possible. This is why people like Mr. Lawlor are affected. The European Central Bank said that it would reduce interest rates to protect people like Mr. Lawlor but the banks did not pass on those interest rate reductions. Instead, they appear to have increased the interest rates. The view seems to be taken that when borrowers are vulnerable, they are good for profits. We therefore have a situation where people like Mr. Lawlor were paying excessive interest rates to the point that they were pushed into default. That did not seem to worry the banks, which said that short-term profitability had increased and nothing else mattered.

It got to the stage where people like Mr. Lawlor were classified as having defaulted, and many loans, although not Mr. Lawlor's, were sold to vulture funds at extremely high discounts. Anyone with a half-hearted knowledge of economics will say that that is a disastrous thing to do. Why sell loans to a vulture fund at a significant discount when it is possible to negotiate with a customer directly? The consequence of selling loans to vulture funds at significant discounts is that the capital of the banks was depleted because they lost money when they sold to vulture funds. Their capital decreased. This is why we have a situation, together with the fact that banks are not producing proper accounts, where it is difficult for banks to borrow money on the open market. The result is that Irish mortgage borrowers are suffering. I am not just talking about Mr. Lawlor, although his case is severe.

I am talking about young people who are paying in rent double what a mortgage for a similar property would require, yet they are denied a mortgage. What Mr. Lawlor has exposed is quite important but it is not confined to a few people in mortgage arrears. There is a large group in their 20s, 30s and 40s who will be rent captives for life. They will be paying high rents to consumer funds for the rest of their lives. Mr. Kavanagh has pointed out that the Office of the Director of Corporate Enforcement and the Central Bank of Ireland have no interest in the matter. If those two entities have no interest in it, we can rest assured that the courts will not have any interest in it. It would be very difficult for Mr. Lawlor to say there are problems with the Central Bank and that it is not doing its job properly. We can guess how the judges would react to that.

There is a very serious problem and Mr. Lawlor has explained it very well. Mr. Kavanagh has explained, on behalf of a group of EBS agents, the difficulties they are going through and the fact that very few have any interest in what is going on.