Mick Wallace (Wexford, Independent) | Oireachtas source

I thank the Minister of State, and Deputies Jonathan O'Brien, O'Callaghan and Clare Daly for their contributions. The Law Reform Commission thought we should address this problem six years ago. I would argue that we need it now more than ever. Ireland is a different place now than it was then. We borrowed over €60 billion to bail out the banks. We made the ordinary people foot the bill. People thought the banks would be very helpful to those who were in trouble with them because of the banking crisis and the collapse in the value of assets. However, many people are still in a very difficult place with them.

Many of the banks' assets that they could not sell went into NAMA. Some of them were sold by the banks at a fraction of what it cost to build them. They have been bought mainly by US vulture funds. These vulture funds have had a massive impact on Ireland, including companies such as Lone Star, Blackstone, Oaktree, Starwood, Carval, Deutsche Bank and Cerberus. They were facilitated by the then Fine Gael-Labour Party Government along with the banks and NAMA in acquiring a huge amount of property at fire-sale prices. They may have moved against some of the bigger developers at an early stage, but an awful lot of stuff has now ended up in the hands of vulture funds which have small and medium-sized businesses and families with mortgages at their mercy. These people are merciless; they do not care about people. They do not think in those terms.

The Central Bank stated in December 2016, that vulture funds now own 45,678 residential mortgages and 38% of these mortgages are more than 720 days in arrears. It is hard to imagine what will happen to these people. The Central Bank does not maintain a record of the number of commercial loans sold on by the original underwriter to these vulture funds. We have been contacted by many small business owners who are being put under serious pressure by vulture funds. It is amazing that the Central Bank does not have data on it. Many people in small businesses must be really worried about what is coming down the tracks for them.

Research by the accountancy firm Baker Tilly Hughes Blake has shown a rise in Irish companies entering examinership in the first quarter of 2017. It attributes this to vulture funds which have bought up the debt of small businesses and are now pressurising debtors with more challenging repayment deadlines and interest rates. It points out that the majority of these vulture funds bought the debt during the recession, but did not begin to move on it until recently. This is an example of why we should move the limit from six years to two years.

Occasionally vulture funds or banks will move as quickly as possible because it suits them, but sometimes it suits them to wait. They will wait four or five years until it suits them better. It might suit the individual debtor they are going after. Not only do they have six years to go for a judgment against the debtor, but when they get the judgment, they can actually wait 12 more years before calling in that judgment. In other words if they get a judgment against people in the courts but realise they do not have a bob and there is no point in going after them for the moment, they can wait up to 12 years before going after them. What sort of life will such people live for those 12 years?

A vulture fund might get a judgment against a builder and decide to wait until the builder makes a few bob. What are the chances of that builder, who has the potential to contribute to the economy, going back into business and being a successful businessman again while there is a sword hanging over his head for another 12 years? The vulture fund will just pick its time to go after its carcass. It does not stack up and we should address it.

I admit there are huge problems with the Bill, but let us look at it and fix it. I am prepared to listen to everyone's point of view on it. I realise that we did not draft the Bill as well as we should have, but this topic needs to be addressed.

Deputy O'Callaghan said that something could happen and we might not find out about it until it is too late. It might take three years to find out that something happened. The Bill states that the action, "shall not be brought after the expiration of two years from the date on which the cause of action accrued or became known...". It has to become known to the creditor and the clock only starts then. It does not start from when it happened, but from when it becomes known to the creditor.

I am aware of a case where AIB recently threatened a family of four with judgment unless they sell their primary private residence. The father is a professional in his late 50s working not too far from here. Such a judgment would mean the father would lose his job because of the effect it would have on his career position. In this case AIB hopes to receive €100,000 or €150,000 from the equity - which is minimal against a net debt of €1.5 million already written off but much more than it would receive in an ISI scenario and causing personal havoc for the family.

Very often negotiations go on between individuals, banks and vulture funds, which is not going down on paper. They would not like to have a record that could allow someone to say, "Look what they said to me." I know of many cases where the banks are refusing to put these discussions and arguments on paper and are moving against people in a very aggressive fashion. I am sure it affects Government figures if it does not have clear black-and-white evidence of what these people are doing.

The current blight within the legislative system is totally inequitable from the perspective that no matter how big or how small the actual debt happens to be, the sentence is the same 12 years in purgatory - something that certainly has to be questioned in our modern age.

Members of the public have gotten into trouble, and bankruptcy could spell the end of their career, so they are left facing the barrel of the gun from the bank on one side or public humiliation on the other. Not everybody likes the idea of bankruptcy to escape the wrath of these vulture funds. There is a stigma associated with bankruptcy in Ireland. It would be treated differently in America, but we are where we are. I did not go into it voluntarily; Cerberus put me into it for exposing the fact that it paid a bribe to get Project Eagle across the line in Northern Ireland. That is my problem now.

The banks are well aware that many of these people do not see bankruptcy as an option for themselves because the humiliation can be difficult for them.

7 o’clock

The banks are well aware of the predicament for thousands of their distressed clients, in particular those who are close to retirement. The banks are letting their debtors know that they, the banks, can take their retirement lump sum at any time within the six years or 12 years, if they wait, before they impose the judgment. Imagine such a scenario. It is scary. People are trapped in employment and, worse still, cannot retire for fear the banks will take their retirement lump sum. The two years instead of six would certainly put manners on the banks and the vulture funds. I plead with the Government to consider this now. It is a long time since 2011.

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