Thomas Pringle (Donegal South West, Independent) | Oireachtas source

The Technical Group raised the mortgage crisis during Private Members' time in April 2011. In the past two years, the problem has just got worse. Some 94,000 mortgages are in arrears of over 90 days, yet the Government has still to deal with the problem comprehensively. The problem will not get any better while the Government continues to allow the banks to maintain a veto on any solution to the problems or the personal insolvency of citizens. If the banks' veto is maintained, the problem will never be solved.

People suffering from mortgage distress should have 35% of their disposable income put towards their mortgages to pay off whatever capital that will pay off, and the rest should be written off. Writing down the debt is the only solution that will solve the crisis comprehensively. This is the only approach that will allow people to get out of the stranglehold of mortgages that are crippling them. The mortgages are not only crippling them but also the domestic economy. Consumers have no spending power and confidence, thereby leading to another vicious cycle whereby an increasing number of people are getting into distress and losing their jobs. The cycle just continues and the Government is not dealing with it or making any serious effort to do so. The Government needs to act and ensure the banks write off the capital. We will probably have to recapitalise the banks yet again because they were not capitalised sufficiently on foot of the stress testing in the past year or two to ensure that they managed and wrote off enough of the mortgage debt that needed to be written off.

There is no moral hazard associated with dealing with mortgage debt in they way I propose or with dealing with the debt of citizens and allowing them to be active again in the economy and society. The moral hazard is associated with doing nothing and continuing to allow the banks to call the shots and maintain their veto. The Government needs to act and ensure debt is written down for everybody in distress.

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