Billy Kelleher (Cork North Central, Fianna Fail) | Oireachtas source

I commend Deputy Michael McGrath on the Bill and thank the Government for taking it on board and ensuring that it will become law without delay. The current situation is that our banking sector has been repaired to a large extent and the real issue now is dealing with the fallout from previous times in the form of distressed loans. We must bear in mind that when we talk about distressed loans we are also talking about stressed families and individuals. We are talking about people who see no hope. The idea that we would just cut them adrift and leave them to the mercy of unregulated vulture funds beggars belief. I was always very concerned when I saw the large-scale sale of loans to these funds because they were unregulated, meaning that we were unable to guarantee that they would at least comply with the code of conduct on mortgage arrears. That in itself put enormous pressure on individuals.

It is hard to explain to an individual why his or her loan can be sold for a knock-down price to a vulture fund but the same individual cannot engage with the lender directly to restructure the loan and write off a certain amount. What we have effectively done is allowed vulture funds to profiteer on both the individual and the collective. Vulture funds are just a quick fix solution. The banks have impaired balance sheets and do not want to have to retain certain ratios of capital for bad loans. They want to move such loans off their balance sheets as quickly as possible and that is what is going on. The notion that the banks will trawl through the files and assess every individual loan case by case is fanciful. The banks put large swathes of loans into a single book and then sell it off. That is a major issue which must be addressed.

When Mr. Mario Draghi appeared before the finance committee he said quite clearly that we are operating in a quasi-monopoly situation here when it comes to banking.

In other words, if a customer has a problem with one bank, he or she cannot go to another. One cannot put one's file under one's arm and walk down The Mall in Cork, or some other financial street anywhere in Ireland, and go to another bank. Customers are enslaved to the banks they are with. It is difficult for people to access credit if there is any hint of their being in distress. They are slaves to their particular banks. This is a major issue that has to be addressed in order to try and alleviate the burden on individuals.

The Minister and the Government often say that, because there are so many distressed loans on the balance sheets of the pillar banks, mortgage rates are higher here than in the rest of the eurozone. The fact is that interest rates are twice what they are in the remainder of the eurozone and the reason for that is simply because our banks are gouging the Irish economy. That is what they are doing. Day in, day out, they are gouging out of the pockets of mortgage holders and small and medium-sized businesses. Interest rates of 3.3% or 3.4% apply to mortgages in Ireland. In the eurozone, that figure would be 1.7% or 1.72%. That is the reality. The idea that the banks are doing us a favour in how they conduct their affairs simply does not stack up when it is analysed. The President of the European Central Bank, Mario Draghi, said it in the most diplomatic way possible - we are operating a quasi-monopoly in this country when it comes to banking. We saved AIB and we threw a lifeline to Bank of Ireland through the guarantee and the injection of a massive amount of capital. This is what we get in return.

Now that the banks have been stabilised and there is no direct threat to them - and therefore no direct threat to the economy - it is time that they accepted their responsibilities to provide reasonable credit at reasonable rates in respect of mortgages and for small and medium-sized businesses. Any analysis, even by the credit review group that sits in the Department of Business, Enterprise and Innovation, will show that the banks are still pretending that they are lending. They are pretending to the Minister and the rest of us. All they are doing is restructuring loans and pretending that it is new lending. That, simply, is not helping the Irish economy at a time when it needs credit for small and medium-sized businesses to grow and continue to grow.

A lot of work needs to be done. Deputy Michael McGrath's proposals, and the Bill when enacted, will address the issue of compliance and regulation of same. The broader issue of banking in this country must be addressed and our pillar banks owe it to the people and this Parliament to ensure that there are fair lending practices and that they are not operating a monopoly and gouging the Irish economy and borrowers.

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