Sean Barrett (Independent)
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I welcome my former colleague from Trinity College. When we started out, were letters ever intended to be part of resolution? The reason I ask that question is that when the banks were before the committee they said that this was a really good trick and that they invented the idea of the letters so as to postpone matters. There was almost a smirk on the faces of the bankers.

A letter costs 60 cent or something and does nothing but allow them to meet in a fictional way the targets the Central Bank has set. I refer to a second concern that arose recently. As Professor Honohan is aware, I introduced a Bill in the Seanad to separate utility banks, zombie banks and so on and had some discussions with the Department of Finance. There was an EU deadline with regard to submissions on structural reform and while I submitted my Bill, nothing else came in from Ireland. We are approaching the fifth anniversary of the guarantee next Saturday, 28 September and the Department of Finance has indicated it will take up this issue in Council. However, while the Central Bank may have done so, as far as I am aware, the Department of Finance did not send in anything. There is that frustration that we are not getting to grips with the problem.

My third question pertains to the case-by-case approach. I believe we will get nowhere with 98,000 accounts in arrears on a case by case basis. Do we have loan-to-value or debt-to-income rules in force? Deputies Higgins and Boyd Barrett may recall the precise numbers but in one case, a guy who owed AIB €340,000 had an income of €34,000. I believe members asked whether the person who gave that loan is still working for the bank. If one uses simple rules like an 80% loan-to-value ratio or a loan limit of two and a half times one's income, probably three quarters of that loan was reckless. This will come back to haunt us in respect of the €64 billion we gave to the banks but let us do it and stop the sending of letters and meddling around. Professor Honohan mentioned the Oireachtas has not passed legislation on reckless lending but that case involved a debt-to-income ratio of 10:1. While I am sure Professor Honohan already has access to it back at the bank, the Royal Institution of Chartered Surveyors has published a lot of stuff recently and as other countries work on these micro-prudential rules by changing the ratios I mentioned, are we doing this? While members did ask some of the banks with what loan-to-value ratios they were working at present, one could still be waiting as one would not get an answer out of them. This raises the question as to whether we really have got this sector under control, given the immense damage it did to the country. Is there anything to be done about the education of bankers? Alternatively, are they simply guys with smirks on their faces who have been getting away with it for five years now and who are stringing people along? They are in fact keeping up the price of property or all around the place because they will not move towards resolution, as the Governor wishes them to do. Moreover, resolution does not include writing letters.

A final point is that in the Governor's opening statement, he noted "Others, especially buy-to-lets, may involve a surrender of the property to the bank". I have been trying to make the point that this property could be a person's principal private residence, which has been rented, as are the majority of properties in places like Switzerland and Germany. As the tenant is paying and it is the landlord who is bankrupt, can one really countenance a surrender of property to the bank because it is a buy-to-let? I cannot and must state that whoever takes that on has bought a piece of paper, that one collect rents from time to time and must pursue the landlord. This kind of eviction appears to infringe all our ideas that a family home should be protected. Regardless of whether it is owned with a mortgage or rented, it is a principal private residence and there is considerable concern that buy-to-let resolutions are pursuing tenants. It is not they, but the landlords who are doing the defaulting. I will conclude by noting Professor Honohan is very welcome.