Tom Fleming (Kerry South, Independent) | Oireachtas source

Ms Fiona Muldoon, head of the Central Bank's banking supervision section, addressed a bankers' conference on 16 October 2012. She put her finger on the pulse when she bluntly asked them to address the mortgage mess that they created. She warned of a lack of leadership in the sector and revealed that 167,000 residential and buy-to-let loans, amounting to €135 million, were in arrears at the time.

One of the immediate actions required to rectify the banking economy is a realistic approach to the chronic arrears issue, with some debt written off, long-term solutions for others and an acceptance of the reality of arrears. The problems of negative equity and personal insolvency are having a devastating effect on consumer confidence. Spending, job creation and tax returns are spiralling downwards. Today's news that AIB is planning a new increase in variable rates will undoubtedly be followed by all lenders in the market in a short time.

The property tax is being introduced at the worst possible time for householders. There is an immediate need to put it on hold at a minimum. Those who bought between 2001 and 2008 should receive stamp duty rebates until normal lending levels have been restored to the market. This would minimise negative equity, repair households' balance sheets, minimise the risk of personal insolvency and get a sizable number of people spending again.

I will quote Ms Muldoon, who was dealing with the real situation:

Meanwhile the misery of personal indebtedness, that is unsustainable for so many people, must be meaningfully dealt with. This is the size of the task and the enormous difficulty of it. This is the needle to thread over the coming years.


And if this is what we all face then I also want to tell you what I have found since I came to Irish banking: my experience is not necessarily of an industry 'humbled' ... Success is about finding solutions. Why the need to still talk of ‘being humbled’ four years on? Does it strike anyone else as a bit of ‘sack cloth and ashes’? A little penitential? Is it that we still require ... I am not sure. I am not sure. In any event, when I deal with the banks, I have not found humility. If the industry is grieving for the death of the economy, the mistakes of the past, I know which stage of grief it looks like to me!

See this speech in context