Timmy Dooley (Clare, Fianna Fail) | Oireachtas source

I wish to share time with Deputy Calleary.

I welcome the opportunity to contribute to the debate. I thank my colleague, Deputy Michael McGrath, for the efforts he has made to frame legislation that deals with this important issue. It speaks volumes about the approach of my party in opposition. For too long, Opposition parties were critical of everything the Government did and they were relatively shy, quite and hamstrung when it came to offering solutions. This issue is a perfect example of a gap in the Government parties' thinking, notwithstanding the platitudes with which they have lauded themselves in resolving various crises, some within and some outside their grasp. Unfortunately, this issue was within their gift to deal with and they failed to do so.

I commend the approach of my party's finance team and, in particular, our spokesperson, Deputy McGrath, to frame legislation that deals with a potential crisis. It has the potential to be a serious crisis for many reasons, but, principally because home ownership in Ireland is among the highest in the OECD. It was the highest at one stage but recent trends, including the lack of availability of mortgages, have changed the statistics. Notwithstanding that, there is a huge cultural attachment in this country to home ownership. Some of this is historic. In other countries that were more industrialised, people had a more secure form of income by way of pensions, etc. and they could plan to rent for the rest of their days without concern. The Irish mentality is much different because it is based on being able to earn on income while one can work and surviving for the rest of one's days in retirement with little or no income. That has been the case for many people and, therefore, the ownership of a home with the mortgage cleared before retirement formed a central plank in their planning.

I am disappointed by Members who criticised Deputy McGrath and said he was playing politics. Deputy Twomey stated that he is an accountant and he should know better. However, Deputy Twomey is a doctor and he should be well aware of the mental strain that many people are experiencing in the current climate regardless of the apportionment of responsibility for how they got there. In many cases, they have a crisis on their hands and they need to see the Government, or at least the Parliament, responding in a way that gives them some security. I thank Deputies Creed, Mulherin and others who genuinely recognise the potential benefit of the legislation for a number of reasons.

It is fine for potential buyers of the loan book to assert that they will sign up to a code of conduct but that is voluntary. They can change their minds about that next week or the week after, next month or the month after and the State will have no capacity to force them to live up to their voluntary acceptance of the code. This is hugely important because many of the venture capital funds involved in this process, as Deputy Creed and others indicated, clearly have a relatively short-term interest in what they see as a product. They will buy the loan book, strip the assets out and sell the better quality loans at a higher price and the lower quality loans at a lesser price. Nobody knows where these mortgages could end up within a relatively short period.

One has only to trace back to what happened in the US with the collapse of Fannie Mae and Freddie Mac. Some would argue that this is where the whole world crisis developed from. It was about house mortgages and people who, under a certain code at the time, were able to gain access to mortgages even without having the basic capacity to repay them. The products were packaged and repackaged and sold around the world. They sat on the balance sheets of financial institutions that did not know what reserves sat behind the loans that had been extended. That is the concern here. While the initial bidders may, with the best possible intentions, sign up to a code of conduct, albeit voluntarily, there is no way that can be passed on to the next unbundling and rebundling that will happen with these mortgages. That is why a couple of the speakers have been rightly concerned at the Government's approach.

The Government has promised legislation in 2015 to deal with the sale of mortgages to unregulated entities. That is too late and some of the Minister's colleagues have identified that. It is too late because at best one might be able somewhat retrospectively to force the people who have already indicated they will sign up in a voluntary capacity to the code of conduct. However, any unbundling or further manipulation of the asset will be well outside the scope of any future legislation. That is why I thought it would have been a far more sensible solution to take the legislation Deputy Michael McGrath has prepared and, if the Minister wishes, strengthen it.

A number of speakers have said this legislation does not cover every eventuality. With the best will in the world, even where Government Departments are behind the scripting and publication of legislation, it is regularly necessary to amend it through Committee Stage and Report Stage. I hoped the Government would find it within its grasp to take this Bill as the principal foundation on which to deal with this crisis and let the parliamentary draftspeople study it and see where it is deficient. Deputy Michael McGrath would not be overly upset or concerned if the Government brought forward a series of amendments that would strengthen or tighten the provisions of the legislation. This needs to happen and the support is there on the Government benches.

The Government's refusal to enact legislation in the short term to protect the IBRC mortgage holders whose mortgages are being sold leaves the mortgage holders extremely vulnerable and having to rely on the kindness of strangers. That is a very dangerous precedent to set. A number of speakers sought to look back and try to ascertain why we are in this crisis. One speaker traced the root of the problem back to when Mr. Ajai Chopra had to come here. That may be the case, but this legislation seeks to create a level of equity for all mortgage holders. The people who in the first instance took a mortgage with the Irish Nationwide Building Society did so in the full knowledge that it was regulated by the Central Bank, like AIB and Bank of Ireland. As a result of the Government's decision to liquidate IBRC we find ourselves in a situation where those people who started out equivalent to their neighbours who happened to have mortgages with Bank of Ireland or AIB find themselves in a potentially perilous state, depending on the goodwill and kindness of strangers. That should be within the grip and capacity of the Irish Government to regulate. We are assisting in providing it with the capacity to do that.

We welcome the fact the Government supports the Bill here on Second Stage, however it is deeply disappointing that the Government will not legislate on the issue until 2015, which is too late for the 13,000 IBRC mortgage holders and, possibly, thousands of others whose banks may decide to sell their loan books. I welcome the fact that in the past two days both Bank of Ireland and AIB have posted much more favourable results. While both have posted losses for the current cycle, they are considerably reduced and the banks seem to be dealing with the crisis that has enveloped them. Notwithstanding that, asset disposal and reduction is an integral part of their plan for the future and becoming leaner and fitter for purpose. That may see the disposal of mortgages into an unregulated environment.

We need the legislation and I hope the Government, having taken the views of some of their backbenchers on board will bring forward amendments to the legislation, which remains on the Order Paper and provides the appropriate vehicle to deal with the issue. The Minister should clarify if it is the Government's intention to provide time for a Committee Stage debate on the subject before the summer recess or if we will have to wait for it to publish its own Bill to address this serious issue. It is all very well to say it is not opposing an Opposition Bill but if it does not allow this to proceed it has the same effect as voting it down. It is very clear that many of the Minister's colleagues on the backbenches want legislation to be enacted. We are not playing politics. If the Government decides to bring forward a Bill within the next week or two we will stand back, let the Government's Bill proceed, support it and work with the Government to try to ensure it meets the concerns of all.

The Minister of State, Deputy O'Dowd, in his speech last night gave considerable detail on the consideration that must be taken into account when legislating to protect borrowers. The Government's representative who closes the debate tonight may be able to clarify a point as to whether the 5,000 mortgage holders at Bank of Scotland and GE Capital as well as the 12,000 IBRC mortgage holders whose loans are being sold will benefit from any future legislation or will be left in limbo. This is a complex issue but this is the same Government that had no problem passing emergency legislation overnight to appoint a liquidator to a bank with assets worth €12 billion. We know the negative impact of the appointment of that liquidator in the way it happened. It has put local authorities which retained bonds on behalf of developers in a very serious situation. The council with which I am most familiar has approximately €8 million worth of bonds that are now useless and it will not be able to draw down the kind of moneys necessary to bring some of the uncompleted housing estates up to the standard one would expect, particularly for those homeowners who are left having to pay the property tax.

It was politically motivated at the time to get rid of the legacy Anglo Irish Bank was creating and which was causing a problem for the Government. It has created some unintended consequences which have a negative effect on so many. We all know this is a complex issue but, as I said, this is the same Government that had no problem passing that legislation overnight to appoint that liquidator. Fianna Fáil does not believe it is beyond the capacity of the Legislature to deal with the plight mortgage holders face. The sad truth is that the political will is not there on the part of the Government to deal with this. It seems to be taking a rather lethargic approach in seeking to get the maximum return for the assets of IBRC to help shore up the notion that the Government took the right decision to liquidate at the time while ignoring the plight of private citizens and individuals who will be impacted so negatively.

In deciding not to address this issue before the sale of the mortgage book by the special liquidators, the Government has completely abandoned the IBRC mortgage holders. Once the sale of the mortgage book is finalised in the coming weeks, the mortgage holders will stand alone against a multi-billion dollar US fund which is answerable to nobody. From what the special liquidator told us last week we know there will not even be an agreement written down. Borrowers will be left with little more than a gentlemen's understanding which will have no legal standing in the event of a dispute, not having any means of enforcement. While I do not suggest for one minute that any of the people involved in these venture funds are anything other than gentlemen, they are driven by greed and profit.

I would be greatly concerned at the capacity for these agreements to be enforced voluntarily in the event the products are packaged and sold on to new owners. We have only to see the approach of the people who came in and bought Bank of Ireland shares at rock bottom level - the Wilbur Ross group - to see it is now selling those shares because there is a profit to be made. The nature of the activity of these companies is to turn over the asset and sell them on relatively quickly. I am deeply concerned and hope the Minister will be able to give some solace to these mortgage holders and to mortgage holders in other financial institutions who expect their loans will be sold on at a future date. I hope the Minister is prepared to bring forward legislation quickly, or if not that he will assure us the provision will be applicable retrospectively.

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