Shane Ross (Dublin South, Independent)

I was deeply disappointed by the Minister's contribution. It appears that in respect of this problem all the Government has to offer is concern and sympathy. That really is not good enough for those who are affected by negative equity and by the extraordinary debts they have incurred as a result of the mortgages they took on. If the Minister is not taking the figures seriously, then he should begin to do so. As Deputy Boyd Barrett stated, the scale of this problem symbolises what the banks have done to this country.

Is the Minister aware that the ESRI has indicated that by the end of this year some 200,000 households will be in negative equity? There are at least 40,000 people who are already in arrears on their mortgage repayments. The average person in negative equity owes almost €40,000 on his or her house at this stage. With property prices continuing to fall, the problem is going to become greater.

A previous speaker referred to the knock-on effects of mortgage debt. People in negative equity do not spend money, rather they save it because they feel insecure. The knock-on effect of this on consumer spending is enormous. This is a monumental problem which the Government has failed to recognise. The amendment it has tabled is a kind of sticking plaster affair that refers to mortgage schemes and the provision of a few subsidies here and a few supplements there. What the Government envisages will not resolve the problem of the massive number of people who are trapped in their homes as a result of negative equity. These individuals cannot move upwards or downwards on the property ladder and the entire market freezes as a result.

What are we going to do about mortgage debt? There are those who have stated that we, the proposers of this motion, have not put forward any solutions. I suggest that we are thinking exactly the wrong way about what is happening. Why do we not adopt the mantra that the lender must take at least equal responsibility in respect of mortgages as that taken by borrowers? It is as simple as that. If one says that the bank, building society or institution which is lending the money has a responsibility, all one is doing is extending the thinking that has been applied to those overseas who lent money to Anglo Irish Bank and stating that the lender has a responsibility in this regard because the lender has been lending recklessly. If one accepts that the banks have responsibility in this regard, one must then state that this responsibility must be shared. How can it be shared?

I do not know if the Minister has ever considered the idea of a debt for equity swap between the bankers and the lenders. This concept has been extended in the corporate world. It has also been suggested in respect of the foreign banks, Anglo Irish Bank, AIB and Bank of Ireland. It is a simple idea which involves the swapping of debt for equity. What happens is that instead of not receiving any payments because the borrower is not in a position to repay, the bank which lends the money receives equity. In this way, the bank must accept responsibility for the decision it took when it lent the money in the first instance. Such a bank would have taken a decision to lend on a security which is devaluing. At present, banks are not facing any risks and enjoy all the legal protections one could possibly envisage. In other words, the lenders are taking no risk and the borrowers are taking all of it.

See this speech in context