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

I will deal with the cornflakes question first. This deserves a comment at least. From my point of view and from the customer's point of view, the answer to would be that I would not ask the owner of shop what they had paid for the box of cornflakes before they sold it to me. If I thought there was a fairly good chance of them having got it for 10% of the value, I certainly would ask. I would also reserve the right to ask on every occasion. This is one of the glib answers they give when they want to justify what they are doing to people and what they are going to do.

Like everybody else here, for the past ten years at least I have been involved in dealing the cases we are discussing. In recent times, I have noted an impervious ruthlessness on the part of those involved to realising their assets and liquidating the debt as quickly as possible and selling it on to somebody else by whatever means necessary. In order to comment on that, I must also comment on the manner by means of which we have arrived where we are. Whether it was with the approval of the Central Bank, by means of a nod and wink on the part of the Central Bank or whatever, people got into debt that they should not have got into.

They were subprime loans on the day they were offered. They were outside the market and could not be funded anywhere without causing serious damage to the economy in general. There are still some cases of that.

I will briefly comment on those that are outstanding and how to resolve them. I believe that the customer counts to some extent and that the banking sector in general does not want to talk about customers any more. It wants to talk about the end result insofar as it is concerned. A typical example is the fact that ATMs were removed in many places, including here in the Houses of Parliament. Decisions were taken that suited the banks but there was no reference to customers. They could not give a sugar about the customers. They did not exist and still do not exist.

There were some who took an interest in all the banks. Much depended on who a person was dealing with. If people were dealing with the wrong person on the other side of the counter, it was hard and there would be no change or movement. Others made an effort, to be fair to them, and went to great trouble to try to work out a means by which the customer could survive. Some provided resources for alternative banking and made various arrangements to facilitate the customer. There were some who did not and could not think of anything but realising the value of what they saw as their investment in the customer as quickly as possible, by way of selling on the loan, repossessing the property, or whatever the case may be.

The other issue that I have noticed is that there is a tendency at this stage to change tactics. My colleague mentioned that a previous Government introduced vulture funds. We forget quickly that there was very little financial movement in the system in this country for a long time, at a very serious time, so the obvious thing to do was to introduce some sort of movement by encouraging somebody who had the ability to produce that sort of fluidity in the system when the country needed it. I saw that first-hand. I was out of the country at one stage, in another EU country where the ATMs had dried up and had nothing in them. That country had a similar situation to ours but it was worse. There was no money circulating in the system. When no money is circulating in the system, things get rough quickly.

The other thing I noticed is that the measures used to repossess by all organisations, including pillar banks and everybody else, had scant regard for the fact that they had loaned the money to the customers in circumstances where it should not have been loaned at all. There was no basis for doing it and no long-term ability on the part of the borrower to continue to make payments. In those circumstances, I think the lending institutions should have been automatically penalised by legislation. That still remains an issue.

Another issue is competition. The introduction of some of the competition we had in this country was not a help to the system at all. Insurance companies and lending institutions came into this economy, undercut the existing market to a considerable extent, pretended to offer terms that were not available locally, then pulled the plug and ran away. That is a fact of life. There was almost irreparable damage done to the economy and system, and to public confidence in the system in this country. Proof of that is the fact that banks have changed their attitudes. They have almost gone underground and disappeared from the main street. One can no longer walk into a bank and talk to a bank manager as used to be the case. The bank manager used to be the official financial adviser to the community and general public. That does not exist any longer.

On the price the vulture funds paid for the debts, I am conscious of the oft-quoted concern that if the public knew their next-door neighbour had a write-down or reduced liability, the prospect of moral hazard arose. That in itself created a difficulty and I understand that. However, there has to be a way, since it is just a business, where one acquires at the lowest possible cost and sells at the highest. It is not that way in banking. That is not the way it should be, particularly when banking covers the entire community in one way or another. Like everybody else here, I have dealt with those with small loans and those with larger loans. It gets worse with the larger loans because the systematic isolating of the customer was such that early acquisition, early foreclosing and the selling off of a property that was useless at the height of the recession all happened. The property suddenly acquired a much greater value. We do not know to whom the property was sold. We know it could have been sold to an entity in which the original borrower had an interest or relationship. There are many things we do not know.

I mentioned the continued importance of customers but I am not sure we are getting to the stage where we can relax. However, at this stage, I think we have to rebuild public confidence in the system. I am not certain that is being done or that the measures being taken are sufficient. I do not feel the case-by-case resolution that we have had in operation to try to resolve indebtedness of individuals has been as successful as it should be. It could have been done by way of primary legislation on the basis of a template or formula. It would have achieved far greater results at a lower cost to the State and the customer.

I want to mention something else the witnesses may not be too happy about. In recent times, I have read in the media that some customer has had a massive write-down and now every customer wants a massive write-down. That is the simple fact of the matter. All of the customers I am dealing with want this write-down from the banks too. They read about it in the newspapers. They do not realise that the customer got no write-down at all except in cases where there was nothing to write down. They were mythical debts that could never be collected from the time of the crash until now. We can write that down as much as we like and call it a write-down, but it does not make a whit of difference to anybody because that financial bundle is gone, finished and kaput. I have had the experience where, having done considerable work and secured an agreement with lending institutions, I have then found out that the customer has suddenly seen that a particular management fund or service has achieved something that nobody could achieve, in my book. The customers will obviously then say that they would like to have some of that, so they then equivocate. In some cases, they end up on the wrong side of the track by getting a lesser deal than they thought they saw in the newspapers.

There are many pitfalls that we still have to deal with. As far as I am concerned, we have gone through the whole gambit, including the situations of people who were allegedly not engaging. I assure people that all of the customers I dealt with engaged. We did not always achieve the result we wanted and we did not get a result in some quarters. There are still many ongoing cases and much hardship being created by the activities of the lending institutions in pulling back from where they were and demanding that people vacate their property, only to sell it from over their heads, including selling it online with the minimum of information.

It is all very fine to say to the spouses and children of individuals that they knew this would happen because they were not paying, but that fails to recognise that they were in full employment when they were first expected to pay this amount of money and, perhaps after a family member passed on, they were suddenly unable to handle the debt. It is not that they were refusing to pay. Rather, they could not. It is in this instance that the lending institutions have to live up to their responsibilities and deal humanely with the people concerned. I am not suggesting for a moment that everyone has the right to walk away. Everyone has a duty to do something to address the debts he or she incurred, even though it was not his or fault in the first place and he or she had received bad advice.