Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

In November 2011, when the ECB cut its interest rate, the Minister, the Taoiseach and the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, brought the banks in and told them clearly that they must cut their rates. Initially, they refused, but as a result of the pressure the Government brought to bear, eventually, they did so. The Taoiseach said at the time that, if necessary, the Government would legislate to make the banks cut their rates. In the intervening period, we have seen mortgage arrears spiral out of control while bankers have been taking excessive pay. The banks have only responded on those two issues when appropriate pressure has been placed on them.

In the past, the Government showed some desire to fight the banks on these issues, but that desire has clearly waned among Ministers. Recent figures from the Central Bank show that while the ECB's main re-finance rate stood steady at 0.75%, the applicable Irish rate increased by 14 basis points. Those figures are from the period before the recent ECB cut of 25 basis points. In 2013, the same banks that refused to cut rates in 2011 are now refusing to pass on the ECB's interest rate cut yet there is not a whimper from the Minister, his party, Fine Gael, or the Labour Party. I note that while the Minister says he has no statutory powers in this area, he did not have them in November 2011 either when the Minister of State at the Department of Finance, Deputy Brian Hayes, said he was very disappointed and that it was pathetic that banks bailed out by the taxpayer should decide not to pass on the rate cut. In the aftermath of the meeting to which the Government summoned the bankers, the Minister said that the ECB had lowered interest rates to avoid recession and it was difficult to see why Irish banks should not follow suit.

The Minister is well aware that in the next two weeks tens of thousands of customers of AIB will see an increase in their variable mortgage rates. Will he repeat his 2011 comments and say that it is unacceptable and, as his Minister of State stated, pathetic that banks bailed out by the State are refusing to pass on interest rate cuts and, instead, are increasing their variable rates?

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