Michelle Mulherin (Mayo, Fine Gael) | Oireachtas source

I welcome this Private Members' Bill that Fianna Fáil has brought before the House. It is important that we never lose focus on what is happening with the banks, the interest rates they are charging and the impact that is having on mortgage holders with standard variable interest rates. When it comes to banking in general whether it be one's business or one's credit card, we know that all these interest rates are very high and impact on people, whether it be on their daily lives, their families or their businesses.

I note that Professor Pat Honohan during a recent attendance at the Oireachtas finance committee said: "Since the crisis banks' standard variable interest rates have moved higher than previously, relative to their cost of funds and, arguably, higher than a fair-minded customer might have reasonably expected." However, he said he did not agree that regulation was the way to go.

The reality is that the standard variable interest rate for our mortgage holders is, on average, double the European standard. The other reality is that unless banks are prepared to do something, this is a very serious conversation and debate we must have. The Government is doing everything it can to restore the benefits of our economic recovery to the people of this country, in particular the workers. We increased income tax thresholds and reduced income tax rates, but for every percentage gain made for people the banks have taken it back with the other hand. They are undermining the good work of the Government. The banks may be getting back to normal, and we want a normal functioning banking system with which we do not have to interfere. We are an open market economy. We must acknowledge certain realities of business and banking, but it cannot be business as usual in this country. We have a substantial number of people in mortgage arrears who have not been sorted out yet. We have businesses that are doing the very best they can to keep their head above water and interest rates make a big difference to them. We also have the standard variable rate mortgage holders who are under a great deal of pressure. Notwithstanding all the good news about job creation, much of that has yet to bite. The impact and the benefit of all of that good news story has yet to play out so we are not back to normal. We all know about financial emergency measures that have been taken in regard to public sector. Many people have endured financial emergency measures package legislation. We would be perfectly justified, even for a window in terms of time, to impose such measures upon banks, in effect, to regulate them if they do not do what banks should do.

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If they do not step up to the plate, we will not get a properly functioning economy that will allow people to have room to breath, to spend and to raise their families and that will allow businesses to operate properly. It will not be in their interests either, so we need to go the full hog, so to speak. We are not living in normal times. The proposal in this legislation has merit for consideration if the banks do not do the right thing in this regard.

Until everything is normal in economic terms, and all our citizens know that, we would be justified in intervening with regard to the banks. I understand the argument that we want to encourage that by way of competition. Clearly, the prevailing competition is leading to this situation, and it is not sufficient.

I welcome the fact that the Minister engaged with the six main mortgage lenders in May. A plan of action was agreed that they would consider providing more options to people on standard variable interest rate mortgages in terms of how they might reduce their monthly payments, whether by signing up to a lower fixed interest rate, changing or whatever. I have confidence in the Minister, and we should allow this process to continue. The banks have until the end of July, but we have to apply a litmus test. If it is not working for people, we should not entertain the banks any longer. We have to take a very hard line.

I welcome the Minister's statement that we will either get the banks through a penal banking levy in the budget or, through powers of the Central Bank, regulate interest rates. We are living in extraordinary times. The people we are trying to help are feeling the pain. The banks were bailed out on the backs of taxpayers. Working people in this country have paid a substantial price, and they will continue to pay for years to come. They saved our banking system, which will allow us to get back to normal. The banks owe it to them to give them a break. Instead of lining their shareholders' pockets, they should take a step back from this, and if this is the course of action the Minister has to take in due course, I will be supportive of it. We have been waiting a long time for the banks to do the right thing and if they are not shown to do the right thing when it is tested, we must take action. That is the course of action I envisage.

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