Shane Ross (Dublin South, Independent) | Oireachtas source

We are again back in that situation and must accept that this Bill is the final piece in the jigsaw which gives the banks those particular powers. It is traumatic and final but it could have been done and approached in a very different way.

The immediate problem is that some mortgagors, as they are so delicately called but meaning bankers, had in the Dunne case no right to repossess houses in certain circumstances. One must ask whether we should give bankers who have given such reckless loans the rights to repossess in any circumstances or whether any situation should be cleared by an independent body after consultation with the banks and after reviewing the cases in point. After all, these are the very people and institutions that made the reckless decision in the first place. I continue to be surprised by the willingness of the Government, which has ownership of most of the banks in this country, to give the same banks such independence in their operations on issues where they have culpability. This Bill does that. It tells the banks they can repossess at will and as they wish, in spite of their behaviour in the past. As the House will know, there is a provision for two months' adjournment for people who go back to the personal insolvency legislation and ask for their case to be looked at again. That is only a sop to those individuals, however, because the same result will happen two months later.

For some time there was a freeze on repossessions in this country, partly as a result of the Dunne judgment. That has obviously led to a build-up and a difficulty but, as Deputy Durkan noted, there will be plenty of lending institutions that will move quickly. Some of them are waiting to move quickly. The reassurances that this will simply be a last resort measure are entirely unconvincing. For the Government to state this will only be a measure of last resort implies that somewhere, somehow, there will be a check on the banks when they are given this power to repossess; that it will be able to intervene to order the banks not to do so in certain cases, to hold back on the numbers. That is not going to happen. If the measure is going to be used as the last resort it will not be used in that way by the banks - that is now how they behave. Banks behave ruthlessly, in the interest of their balance sheets and how these will look, and possibly in the interest of their shareholders but certainly not in the interests of either the nation or the borrowers. Let us not believe this will be a last resort measure. It will be a sword of Damocles that will be held up at the first point of negotiation. When banks go in to negotiate with any borrowers under the Personal Insolvency Act they will hold the repossession card in their hands as the measure of first resort. It may be the last weapon to be used but it will be the first threat. That will be apparent; that will be what will happen.

There was an alternative, in both the personal insolvency legislation and in this Bill. I wonder why the Money Advice and Budgeting Service, MABS, was not included in any of the structures that were set up to provide solutions for personal insolvency. I wonder why, given it was well debated in House, there was no independent body other than bankers included that would decide on the final solution to a mortgage arrears problem. Repossessions are going to multiply.

They are going to explode. I wonder why it is being left to the bankers to decide when and where repossession take place. Why is it not proposed to establish an independent body to decide whether repossessions can or should take place? There will be malingerers and people who can pay their debts but refuse to do so. Some people are exploiting the freeze on repossessions but they are few in number. An independent body could judge them and syphon them out. However, there will be no checks on the bankers when they decide who is to be repossessed or evicted. That is the main flaw in this Bill.

The build-up of repossessions and the reluctance of the Government to produce this Bill, which is late and produced under pressure, are due to a stand-off on this difficult problem but the delays have made it much worse. Neither the banking sector nor the Government relish the idea of repossessions. The Government does not like repossessions because it is political disadvantageous, unpopular, morally wrong and can lead to awful accidents. The bankers do not want to repossess because they prefer to kick the problem down the road. The troika has refused to allow the problem to continue not for accounting or even debt reasons but because it recognises that the continuing fall in house prices is reflected in a misleading way in banks' balance sheets.

The reality is that the banks are still bust and will need recapitalisation. Government denials of that will be proved wrong. The primary reason they will need recapitalisation is mortgage arrears. The banks' balance sheets contain one large hole which is deliberate, utterly misleading, connived at by auditors and ignored by the Government, that is, the provisioning for mortgage arrears and bad debts. Every honest commentator who recognises the necessity of recapitalisation also recognises the fantasy in the banks' books when it comes to their provisions for bad debts and mortgage arrears. The price of the underlying collateral is not reflected in the books but sooner or later they will be recognised, by repossessions or other means, and the banks will be exposed as needing more capital. As neither they nor the Government want to be exposed in that way, the big lie continues to occupy the mortgage books of the major banks while they pretend they can sell assets at prices that are much too high. That is why the problem was allowed to fester for so many years and it will not be sorted out by repossessions or the Bill which the House passed some time ago.

There was a strong case for putting MABS in the centre of the picture, as a body which could represent borrowers, and for putting the borrowers in a position that was at least equally powerful to that of the bankers. That did not happen, however. There is also a strong case for giving an independent body, such as MABS, the power to decide whether it is fair to repossess in certain circumstances. The judgment of the lenders is flawed and should not be trusted under any circumstances. It is depressing to read that MABS has in recent times been downgraded. In recent weeks various newspapers have reported a sinister development whereby MABS has been threatened with restrictions on its funding if it does not sign certain agreements. If there is a move to downgrade this body, it will mean that many citizens will suffer and it will transfer the power and weight in negotiations away from those in mortgage arrears and back into the hands of the banks. I have no other evidence than from undenied media reports that MABS may have to close many of its branches if these restrictions are imposed. It is being asked to sign service level agreements which it does not consider acceptable. It is a pity that a body of this sort should be threatened and it would be a pity if it is taken off the pitch on mortgage arrears or reduced in stature and power. It would also indicate that the banks have won yet another battle.

I am doubtful about what are described as sustainable solutions. Apparently a sustainable solution must be agreed between borrower and lender before a deal can proceed. This sounds good but who decides whether a solution is sustainable? Once again the power is being moved from the vulnerable side to the powerful one. Sustainability will be decided by the lender. This Bill is a sad recognition of the power of the troika, the appalling delay and refusal to recognise the problem and the need for a real solution, namely, further recapitalisation of the banks.

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