Enda Kenny (Mayo, Fine Gael)

It is not Joe's fault. The fact is that the Government owns 15% of the Bank of Ireland. I am very disappointed that the Bank of Ireland has not passed on this interest rate reduction in accordance with ECB policy. The regulator's job is to look at every bank to see that there is fair play across the field. I respect that effort from the regulator. His letter states that "the power to exercise close regulatory control over retail interest rates is not, however, being sought by the Central Bank at this time". However, he also states the following:

The Central Bank has two concerns. First, the standard variable rate contract has operated for decades, during which the reasonable assumption has been established that it would generally attract the cost of funds to the bank. The exercise of the currently heightened market power by some banks in increasing rates for existing SVR borrowers would be an abuse contrary to public policy. Second, from the point of view of prudential and consumer regulation, it is possible that the deleterious effect on the mortgage arrears situation, arising from large increases in the SVR, could result in a net worsening of the banks' prospective profitability, while at the same time adding to the financial difficulty of hard-pressed home owners.

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