Pearse Doherty (Donegal South West, Sinn Fein)

As I noted in my remarks during the debate on the Keane report earlier, Sinn Féin believes there is an urgent need for the Government to act and put in place a comprehensive mechanism for addressing the root causes of mortgage distress. Everyone within this Chamber and further afield is aware of the 100,000 homeowners in serious mortgage distress and of the many more who are at risk of distress. The costs of inaction will be devastating for the economy, for society and for those ordinary citizens. Of course we have not just learnt about this mortgage crisis today, yesterday, last month or when the Keane commission was set up two months ago. We have known it has been spiralling out of control for some time, as far back as 2009. It is part of an unravelling of the housing bubble generated by that toxic mix of Fianna Fáil policy that incentivised reckless bankers and greedy developers to feed a housing bubble, irrespective of the social, economic or environmental costs. Moreover, as is so often the case with Fianna Fáil policy while in office during the previous Administration, the ordinary men and women are those who suffer.

Each day, tens of thousands of families are faced with a stark choice of whether to pay their mortgage or feed their children, which is a choice foisted on them by a bad Fianna Fáil Government. This mortgage crisis is one of the many toxic legacies of the previous Government. I recall sitting in the Seanad Chamber at the height of the property boom, when the then Leader of that Chamber, former Senator Donie Cassidy, a long-standing member of the Fianna Fáil Parliamentary Party, stared the cameras in the face and imparted his wisdom to the young generation of Ireland by telling them to go out and buy houses. These are the people who may have followed the advice of Donie Cassidy and other Ministers to buy, at a time when the Taoiseach stated there would be a soft landing. They are now being penalised. Members today are trying to pick up the pieces in this regard.

In response to the growing crisis the previous Government convened an expert group on mortgage arrears and personal debt. The group produced two reports in July and November 2010 that included a total of 62 recommendations, many of which would provide short-term relief to those in mortgage distress. However the expert group fell far short of providing a comprehensive solution to the underlying problems of unsustainable debt and falling incomes. In the main, its recommendations were focused on better regulating the relationship between the mortgage provider and lender and providing short-term forbearance measures such as a deferred interest scheme. Moreover, despite the production of the aforementioned interim and final reports, the previous Administration brought forward no legislation in 2010. It basically ignored the recommendations, which subsequently had no impact.

It is ironic that having created the mortgage crisis during the boom and then having stood idly by as tens of thousands of home owners fell into mortgage distress in 2009 and 2010, Fianna Fáil now stands before Members offering solutions to its own mess. It is also interesting to see how the policy has evolved.

In common with my colleague who preceded me, I welcome the proposal before Members. In July, Fianna Fáil published the Family Home Bill and proposals for the reform of mortgage interest supplement. These proposals were little more than a repeat of elements of the expert group's recommendations and focused on short-term measures. Significantly, the Fianna Fáil Family Home Bill only dealt with those cases in which the mortgage provider is seeking repossession which, as indicated by the figures from the Financial Regulator, is a tiny fraction of those currently in mortgage distress. Importantly the mechanism for dealing with these cases was the courts - that was the mechanism proposed.

At the time Sinn Féin strongly argued for a radical approach to address this growing problem. We consistently made the case for targeted debt restructuring, focusing on the use of debt-for-equity swaps, backed up by an independent distressed mortgage resolution board. I welcome that Deputy Michael McGrath's Bill, into which he has obviously put considerable time, has included those recommendations, including an independent board with debt for equity as one of the solutions.

In addition to a strengthened distressed mortgage resolution process and statutory code of conduct for mortgage lenders, Sinn Féin argued than the independent board must have the legal powers to enforce resolution orders and penalise lenders for failing to act in an appropriate manner. So I am pleased to see that finally Fianna Fáil has accepted the strength of those arguments. However the 100,000 distressed mortgage holders across the country will today rightly ask why Fianna Fáil did not adopt these policies when in government. Meanwhile Fine Gael and Labour, in what can only be described as a surreal role reversal, are now adopting from the Government benches the minimalist approach of their Fianna Fáil predecessors. Having promised so much when in opposition, they are now doing little about it.

We have consistently argued for a comprehensive solution to this crisis. Four key principles underlie our proposals: maintaining the family home, providing appropriate alternatives ensuring debt sustainability and sharing the burden fairly. These four principles provide the basis for a solution to the causes of the mortgage crisis that is fair and sustainable for borrowers, lenders and the taxpayer. Underpinning these principles must be the objective of debt sustainability. The ability of the mortgage holder to service any new mortgage arrangement must be clearly demonstrated. Crucially mortgage lenders must absorb a significant portion of the losses on the value of the mortgage. This can best be achieved through targeted debt restructuring to reduce the debt burden on the household. In exchange lenders would receive an equity share in the property.

We do not believe the taxpayer should foot the bill for the mortgage crisis, nor do we believe in blanket debt forgiveness. However, a solution cannot be found that does not involve banks shouldering their share of the burden. There is sufficient capital in the banks to absorb a significant proportion of these losses. On the day the PCAR results were announced, I stood in this Chamber and said the Government had addressed the issue of the banks by shoving money into them and filling the black hole, but it then needed to deal with the issue of the mortgage holders. However, that crisis was not given the same urgency by the Government as was the issue of resolving the bank crisis. It is unfortunate that we give greater value to financial institutions than the financial, economic and social well being of our citizens.

It is time to act collectively. We need articulate here why so many people got into this position. Anger is being vented across communities in different forms. When one goes up the long lanes to visit the elderly woman or the young couple, they show their anger at how the previous Government led them into this situation.

I welcome the Bill before us and I agree with many of its underlying sentiments, with respect to its general debt settlement and mortgage resolution proposals. It is clear that there is a growing consensus emerging for a more comprehensive solution to the mortgage crisis than that contained in the Keane report. No one party has all the solutions but we must all play our part in resolving this crisis.

On that basis Sinn Féin will support the Debt Settlement and Mortgage Resolution Office Bill. We urgently need legislation to be passed in this House offering a comprehensive solution to the 100,000 families in mortgage distress. The time for pushing this problem down the road in the hope that something will turn up is over. Addressing the mortgage crisis demands debt restructuring. This can only be enforced by a strong independent distressed mortgage resolution process, empowered with a range of solutions including debt-for-equity swaps which will force the banks to absorb their fair share of the losses. This is the position Sinn Féin has continually argued throughout this period. It is the position I put to the Financial Regulator, Mr. Matthew Elderfield, and the Governor of the Central Bank, Professor Patrick Honohan. It is the position we continually put to Government. I am glad to see it forms a central part of Deputy Michael McGrath's Bill. I am aware that the Government will not obstruct the passage of the Bill. More importantly we need to stop playing clever games; we need to get it into Committee to tease out its details, strengthen it where it needs to be strengthened, delete the bits that need to be deleted and get it passed. The Government should not just allow the Bill to pass Second Stage and then park it in some committee. Let us deal with the problem together. Sinn Féin, Labour, Fine Gael, Fianna Fáil and the Independents should work collectively to get this problem solved. There is a great demand to get this resolved from the many people in mortgage distress and those other people who are creeping into mortgage distress every day.

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