Enda Kenny (Mayo, Fine Gael) | Oireachtas source

The first thing the Government had to do was to consider the number of banks and their dysfunctionality, and the situation with regard to lending policy and the distress people were experiencing with mortgages. The Government downsized the banks to two pillar banks, Bank of Ireland and Allied Irish Banks, both of which are deemed to be banks for the future. Clearly the Government is not in a position to direct that interest rates should not be passed on. We have made that point to the banks following reductions in interest rates by the European Central Bank on a number of occasions. This is a commercial decision by Allied Irish Banks. I acknowledge it is difficult and challenging for people who are on variable rate mortgages but it is necessary that the banks get back to profitability. If that is not to be the case, the State will have to continue to recapitalise them.

In so far as dealing with mortgage distress and difficulties is concerned, Deputy Martin is aware that the banks have attended a number of meetings of the Economic Management Council to discuss their forbearance strategies in respect of mortgages, negative equity and those who are in mortgage distress. The Government has pointed out the need to respect the code's provisions that people's houses should not be taken away from them and that a solution should be worked out in each individual case, requiring the banks, in some cases, to train personnel to deal with those whose mortgages are in arrears or distress. The Government has set out the position in the Personal Insolvency Bill 2012, which is proceeding through the House and will, we hope, be fully enacted by the end of this year with an effective date for implementation early in the new year. The director of the new agency takes up duties on 22 October.

The Government is acutely aware of these issues. We interact on a constant basis with people who have difficulties with mortgages and constantly remind banks of their requirements and responsibilities for dealing with mortgage holders in implementing a range of options. I intend to expand the remit of the Cabinet committee dealing with mortgages and arrears so that it can also deal with banking issues in general, because a number of major decisions will have to be faced in the coming period.

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