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

Tá mé buíoch go bhfuil deis agam labhairt ar an mBille seo, a thug mé féin chun tosaigh ar son Pháirtí Sinn Féin.

Our party has a long record in this Dáil of bringing forward legislation that aims to protect borrowers from unscrupulous lending by financial institutions. In 2011, when I challenged the Government on its failure to stand up to the banks to pass on a European Central Bank rate decrease, the then Tánaiste, Deputy Eamon Gilmore, told me: "Deputy Pearse Doherty need be in no doubt that this Government will act decisively, forcefully and effectively with the banks.”

It would be almost laughable in retrospect if it was not so serious. That was during Leaders' Questions in 2011. In 2012, I introduced a Bill to cap the interest charged by moneylenders, which was debated in the House. To this day moneylenders are allowed to charge rates of more than 187%. In 2013, I introduced the Interest Rate Approval Bill, which would have given the Central Bank the power to veto any mortgage rate increase at the covered institutions. This was at a time when AIB had in the previous weeks increased its variable mortgage rate by 0.04%, the third interest rate hike in 12 months. The situation has escalated to the point where we know from the Central Bank's report the banks are simply ripping off their customers in the State, and because one lives in Ireland and borrows from a financial institution in the State one is likely to pay more than any of one's counterparts in the European Union. People have painted the picture in our national newspapers that it amounts to approximately €4,000 in hard cash for the ordinary borrower. The Bill seeks to address this and end the rip-off of customers by the financial institutions. I thank Deputy Michael McGrath of Fianna Fáil, Independent Deputies and those Deputies representing smaller parties for their support in principle for the Bill. The Bill is a genuine reaction to a serious crisis we have the State. It is about a specific time-limited intervention for the public good. It is more than justified on social and economic grounds.

Section 2 of the Bill outlines the criteria the Central Bank must use to decide whether it will set a cap and issue a direction. These criteria include the current rate, any input from the banks concerned, the ECB rate, the profitability and viability of the bank, its mortgage exposure and, crucially, the impact of the current rate on the actual mortgage holders. This is a balanced approach weighing up the social and economic needs of the State and empowering the Central Bank to act accordingly.

Section 3 permits the Central Bank to set a maximum rate for standard variable rates at the covered institutions. In her speech the Minister of State raised as an issue that it would only apply to the covered institutions. The reason we did this was because we want the Government's genuine support for the legislation. If the Government believes it should apply to all financial institutions we are willing to accept this amendment on Committee Stage. Under the section, the Central Bank must give the bank a report outlining why it has set a cap, and if it decides not to set a cap it must report to the Minister its reasons for not doing so. Any cap placed will lapse after 12 months unless renewed. After six months any financial institution can ask for a review based on the criteria in section 2. This will hardly send a chill through international capitalists in Ireland or the European Union. Rather, it is an appropriate response to a market which is simply not working.

Further elements in the Bill protect the need for competition and diversity in the banking sector. The remaining sections of the Bill set out the practicalities and make it an offence for a person or bank to ignore a direction from the Central Bank. The Government instead threatens levies. Let us be honest, in most cases a levy on the banks is a levy on the customers. The Government's big stick to the banks is to threaten them with a levy that can be passed on to the very same customers paying their extortionate rates. In her response, the Minister of State cherry picked her arguments and ignored the fact this is a temporary measure for extraordinary times. There is no recognition in the Government's response to the fact the market has failed. The Minister of State's answer is to carry on as normal and pretend this is a normal society which has not suffered a disastrous economic and social spell of austerity. There was no consideration in her response of the social imperative behind the Bill. She simply trotted out the same tired old arguments that are doubtful at the best of times and not far from completely irrelevant in times like these, when more than 100,000 families cannot pay their mortgages.

Listening to other Government spokespersons I was weeping inside. I heard comments from Fine Gael about leaving it to the markets and not interfering with regulation. If I closed my eyes I would have believed I was back in the Seanad in 2007 listening to Fianna Fáil and the PDs argue for non-intervention by the Financial Regulator in the financial system at the time. The same mantra was echoed by some of the Government backbenchers today. The Chairman of the Joint Oireachtas Committee on Finance, Public Expenditure and Reform seemed to have taken leave of absence from his facilities during his speech because he simply does not understand what the Bill is about. He asked about the 85% of mortgage holders on standard variable rates who are paying their mortgages. Does he not understand this applies to every standard variable rate mortgage holder in the covered institutions? He spoke about the fact this is not a solution. Did he not read the Central Bank's report which outlined three reasons, which I have read? He, along with other backbenchers, fails to understand the Government committed in its opening speech to examine the very issue addressed by the Bill, which is to empower the Central Bank to regulate interest rates. He fails to understand the Minister is calling in his buddies in the banks and asking them on bended knees please to reduce their variable interest rates because the Government is coming under severe pressure from the Opposition, campaigners outside and elements in the media. The State-owned bank responded with a pathetic 25% basis points reduction and Bank of Ireland simply gave the Minister the two fingers, stating it would reduce its fixed rate but standard variable rates would not go anywhere. The Minister says the Government is still considering introducing regulation and empowering the Governor of the Central Bank to do this but it will wait until closer to the budget and the time when it must go to the electorate. It is continuing to pretend it will do something about this, just like back in the days of March 2011 when the Government came to office.

Why would anybody believe the Government? The mortgage arrears crisis has got worse and worse and has now reached a point whereby four-----

See this speech in context