Brian Stanley (Laois-Offaly, Sinn Fein)
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Last night, I mentioned that four out of ten local authority loans are 90 days or more in arrears. I urge the Government to take action on this; it has it within its power to do something about it. Some of the loans are shared ownership. One thing the Government could do would be to freeze the rent on the fraction that has been bought. Instead, the rent is increasing by 4% per year, including last year.

However, in the remaining time available to me I wish to focus my attention on a constituent of mine, Lee Wellstead, who was evicted today. It is the first eviction in the townland of Knockanina, in which he lives, since 1848. In 2003, he bought four acres and a house for €180,000. He made a down payment of €100,000 and got a mortgage from Ulster Bank for €80,000 which he subsequently topped up by €30,000 in the same year. In June 2006, following the breakdown of his relationship, he ran into difficulty with his mortgage. The balance at that time was €92,000. It should be borne in mind that this is a substantial house with four acres of land. Ulster Bank called in the full loan on 19 July 2006. It has since refused payment from him despite him making several written offers including a lump sum or weekly payments, or both.

I believe the bank is in breach of the statutory code introduced by the previous Government, whereby the banks are obliged to negotiate and reach an accommodation with the borrower. This did not happen in this case at all. The banks and the State are behaving like 19th century landlords, evicting this man this morning. Gardaí arrived with the bailiff and locked the gates of the house with a chain. It is terrible that this is happening. The banks have a free hand. It is a pity that no Minister or even Government Deputy is in the House to hear this. We are being told we have the personal insolvency Bill and the Keane report. While that is happening, Mr. Wellstead and his family have been evicted from their house. As the Government has been in power for more than a year, I am appealing to it to take action on this soon.

Peter Mathews (Dublin South, Fine Gael)
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I call Deputy Martin Ferris, who is sharing time with Deputy Colreavy.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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Before I start, I draw attention to the fact that no Minister is in the Chamber, which is absolutely disgraceful. Nor is there any Government Deputy. It is an absolute disgrace when we are debating such an important issue.

Mattie McGrath (Tipperary South, Independent)
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Disgraceful. They have all gone to America.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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I wish to raise a number of issues in regard to the manner in which mortgage companies deal with their customers. I was almost tempted to use the word "victims" regarding some of the cases with which I am familiar. In one case, involving a constituent, the lending company, which would be one of the better known pursuers of repossessions through the courts, appeared to be unwilling to come to an agreement regarding payments. This is despite the fact that the person in question only got into difficulties after losing her job and after years of never missing a payment. Her income has since increased and she can now begin repayments. However, the company appears to be unwilling to restructure her repayments even though the loan was relatively small - well under €100,000 - and she has paid back a third of the original loan. This appears to be a common issue with this company, which despite putting on a show of being reasonable and open to renegotiations in the striking of interest only repayments with somebody who is in difficulty following a drastic drop in income, actually behaves in the opposite manner. It has attempted to intimidate that woman and telephones her at her place of work and at home. It sends texts to her mobile telephone. When she changed her mobile telephone number, it was able to get the new number. That is the disgraceful conduct of a so-called lending company.

The other issue I wish to raise is even more sinister and involves the Wise Mortgage Company, which I mentioned in the House several years ago regarding what can only be described as extortionate rates of interest being charged to people taking out loans with the company. In some cases Wise is refusing to meet the people concerned who are making reasonable offers, including in one case where the borrower is prepared to pay back the original loan. However, through taking court actions, Wise seems intent on securing possession of the lands involved rather than recovering its loans. Apart from its manner in doing business, the company's owner, Mr. Ron Weisz, has several convictions for financial offences. In 1995, he was convicted in New York of fraudulently acquiring a bank loan. He also has a list of judgments against him in the US for unpaid debts. He also has a District Court conviction here from 1995 related to his advertising for people to deposit money with him. In a current court action which he is taking against a farmer, who, I believe, has made a reasonable offer, legal opinion is that Wise is in breach of 16 Central Bank guidelines.

How is he able to get a licence in this jurisdiction? In fairness, in 1999 the then Tánaiste, Ms Mary Harney, with whom I clashed several times, attempted to close some of the loopholes. However, despite that and despite the warning to farmers by the IFA and others, this company continues to operate, offering exorbitant interest rates, and continues to pursue repossessions aggressively, which would tend to suggest that in many cases the attraction of the deals it makes is that it senses the opportunity to get its hands on property.

While I welcome and commend the motion as a basis for debating the area of mortgages, I stress the need for legislation to deal with sub-prime lenders and also the need for the regulatory authorities to take steps to force certain companies to deal more sensibly with people in genuine difficulties, rather than pursuing them in the manner they do. I have seen evidence that a solicitor acting on behalf or Mr. Ron Weisz and on behalf of the person applying for the loan was a director of his company. I cannot understand how any regulator would allow that man to continue to do what he is doing to unfortunate people who took out loans. In one case a 9% interest rate was being charged and because of one repayment being late, it was doubled to 18%. Such people are vultures and we need legislation to deal with them.

Shane Ross (Dublin South, Independent)
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On a point of order, may I move the suspension of the Dáil until we get a Minister in the House?

Catherine Byrne (Dublin South Central, Fine Gael)
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I cannot accept that motion now.

Shane Ross (Dublin South, Independent)
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Why not? There is nobody from the Government and no Labour Party Deputies. There is no representative of the Government - neither a Minister nor a Member. Can we not suspend until they turn up? We have been sitting here now for ten minutes.

Michael McGrath (Cork South Central, Fianna Fail)
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The longer they are not there, I will-----

Catherine Byrne (Dublin South Central, Fine Gael)
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Speakers are offering to debate.

Shane Ross (Dublin South, Independent)
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No debate is going on. How can we have a debate without a Minister?

Catherine Byrne (Dublin South Central, Fine Gael)
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Speakers are offering to speak on their time.

Stephen Donnelly (Wicklow, Independent)
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Who is offering?

Catherine Byrne (Dublin South Central, Fine Gael)
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The next speaker is Deputy Colreavy and he has five minutes.

Shane Ross (Dublin South, Independent)
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Is it in order?

Catherine Byrne (Dublin South Central, Fine Gael)
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He has four minutes and 15 seconds.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I will withhold my contribution until there is a Minister or at least a Government Deputy on the benches opposite.

Michael McGrath (Cork South Central, Fianna Fail)
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I call a quorum of the House.

Catherine Byrne (Dublin South Central, Fine Gael)
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I have been advised by the Clerk that under Standing Orders, a Deputy may not call a quorum in this debate - during Private Members' time.

Mattie McGrath (Tipperary South, Independent)
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We will all go home now.

Shane Ross (Dublin South, Independent)
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How can we enforce having a Minister or a Government Member come to the House?

Michael McGrath (Cork South Central, Fianna Fail)
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On a point of order, this is an absolutely outrageous scenario. It is a measure of the Government's abandonment not just of the customers of Permanent TSB, but of all distressed mortgage holders. It is an absolute disgrace that the Government does not have the courtesy to bring forward a Minister to sit, to listen to the debate and to respond. There must be some mechanism within Standing Orders to bring this charade to a halt. It is an absolute disgrace.

Catherine Byrne (Dublin South Central, Fine Gael)
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I wish to intervene for one second. I have been asked to chair the meeting for the next 15 minutes.

Mattie McGrath (Tipperary South, Independent)
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We appreciate that.

Catherine Byrne (Dublin South Central, Fine Gael)
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Something urgent has come up but I am unsure what it is.

Deputies:

Is the Government after falling?

Catherine Byrne (Dublin South Central, Fine Gael)
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Please, Deputy McGrath. I have been advised by the Clerk that I cannot call for the Dáil to suspend. I am unsure where the Ministers are and I cannot answer that question. Therefore, I must continue with the speakers in the order in which they are on the sheet before me.

Mattie McGrath (Tipperary South, Independent)
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I suggest we walk out because this is farcical.

Catherine Byrne (Dublin South Central, Fine Gael)
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That is your choice.

Mattie McGrath (Tipperary South, Independent)
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I am walking out of here.

Catherine Byrne (Dublin South Central, Fine Gael)
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Okay. The next speaker is Deputy Michael Colreavy.

Shane Ross (Dublin South, Independent)
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We are going.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I will not contribute to a debate where there is no debate. There is no Minister or Government Member on the benches opposite. It is a farce to call this a debate. It is no such thing.

Catherine Byrne (Dublin South Central, Fine Gael)
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All I can do is rule as the Chair and as I have been advised by the Clerk of the Dáil. The next speaker is Deputy Michael Colreavy. If that is not possible then I can go to the next speaker in turn, Deputy Joan Collins.

Shane Ross (Dublin South, Independent)
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Can we wait for a Minister?

Catherine Byrne (Dublin South Central, Fine Gael)
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I assure you that the speaking time will lapse in the meantime.

Shane Ross (Dublin South, Independent)
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Is it in order for a debate to go ahead without a Minister?

Catherine Byrne (Dublin South Central, Fine Gael)
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Yes it is.

Shane Ross (Dublin South, Independent)
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Can we wait for a Minister, please?

Catherine Byrne (Dublin South Central, Fine Gael)
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If you wait you will use up your time and some other people will not get the opportunity to speak.

Stephen Donnelly (Wicklow, Independent)
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It is an absolute disgrace.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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There is now a Government Member in the Chamber. Therefore, I will proceed under protest. A Minister should be listening to the debate.

Catherine Byrne (Dublin South Central, Fine Gael)
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I appreciate your comments. I thank your for continuing. You have three minutes.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I have five minutes. Yesterday, I read with horror a story in The Irish Times of an order for repossession of a home made against a man who had suffered a stroke. According to the report the gentleman in question made sincere efforts to come to an agreement with his creditors. This may be an exceptional case in that not every person in mortgage arrears suffers the same debilitating medical condition as this homeowner. However, if lending institutions seek to pursue a man who has suffered a stroke, what hope do others have?

Those struggling from day to day perhaps due to loss of or reduction of income face the possibility of losing their homes. Figures released last month from the Central Bank indicate that the numbers of people falling behind on mortgage repayments had increased in the final three months of 2011. The figures reveal almost 71,000 residential mortgages, 9.2% of the total number of mortgages, were more than 90 days behind with repayments. In excess of 53,000 of these were more than 180 days behind and the arrears amount to more than €1 billion.

The Government can assist these people. It is within the Government's power to do so because it is the controlling shareholder in Irish Life & Permanent. Permanent TSB has the highest standard variable interest rate in the market at 5.19%. The variable rate at Allied Irish Banks, AIB, is 3.04% and the high interest rate that Permanent TSB is forcing on its customers is crippling. A family on a variable rate mortgage of €300,000 pays €300 more per month than a family with the same size loan on a tracker mortgage. In these times, €300 is the difference between whether a family can afford to eat, whether a son or daughter can go to college or whether one can sleep at night.

The Government is the major shareholder in Permanent TSB and it should be concerned at the business prudence of having such a high interest rate. If the Government is propping up banks with the money of its citizens, the least people ask is that the Government runs the bank using acceptable business practices. Surely such a high interest rate is not a smart business move. A bank, the sole objective of which appears to be to build up its cash reserves, is not a functioning bank working for the benefit of our people.

Certain financial institutions in Ireland and further afield are not keen to see successful public ownership of a financial institution and would be pleased if any such publically owned institutions were to fail because they were unable to attract new customers. A basic understanding of economics would suggest that an essential part of getting any economy moving again is to get money circulating. The economy needs stimulus not cutbacks. The purpose of the Government should be to help to get money flowing and it has the power to do so in the case of Permanent TSB. It is time to give the people power over the banks instead of giving the banks more power over the people. The Government has the chance to make a real change in people's lives and to offer them some glimmer of hope. There have been far too many stories of repossessions in Ireland in recent years. It is time to help to alleviate this problem.

I will finish with this thought: in any republic worth its name a banking system is either contributing to or a parasite on the back of society. Which description most accurately describes our banking system?

It is good to see Ministers, at last, turn up to hear the debate.

Shane Ross (Dublin South, Independent)
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Hear, hear.

Joan Collins (Dublin South Central, People Before Profit Alliance)
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I wish to share time with Deputies Mattie McGrath, Stephen Donnelly, Clare Daly, Mick Wallace and Shane Ross. I wish to follow from Deputy Stanley's contribution and I support the motion. I refer to the incident which took place this morning in Mountrath, County Laois. I stood with Mr. Lee Wellstead and 30 other people at his gate not long ago when the deputy county registrar appeared at his home. At that point the deputy county registrar walked away. However, this morning a reasonably large force of Garda arrived there and sealed off a country lane leading to the home of Mr. Lee Wellstead and his young daughter. Fortunately, Mr. Wellstead and his daughter were not there when this occurred. According to neighbours, gardaí kicked in the front door, forcefully gaining entry to the property. Mr. Wellstead and his daughter were evicted - let us not use dishonest phrases such as "repossession" - from their family home this morning by the county registrar and the Garda on behalf of Ulster Bank, a subsidiary of the Royal Bank of Scotland Group, RBS, owned, in turn, by the British State. Where has the nation come to when the Garda acts as eviction bailiff for a British State-owned bank? Have those involved forgotten our history, our people and our past? Why were the Garda present? Was some threat posed to the deputy county registrar? Is it the job of the Garda to act as bailiffs' assistants just as the Royal Irish Constabulary did during the Land League agitation? Furthermore, has any banker had his front door kicked in by the Garda in this county? No, yet this man and his family have been subjected to this treatment this morning. It is outrageous that this could occur in this day and age.

Senior staff at Ulster Bank agreed to meet me and Deputy Clare Daly this week in response to a letter we wrote on the case of Mr. Wellstead. We were in the process of arranging the meeting when this outrageous action took place this morning. Would it not have been a matter of courtesy and respect on the part of the bank towards two elected Members of Parliament to have stayed its hand until the meeting took place?

Serious legal questions arise. In this case the repossession order was granted not by a judge but by a county registrar. A case is due before the High Court in April challenging the right of sheriffs, county registrars and courts below the High Court to grant repossession orders. My understanding is that property valued above €36,000 should not be dealt with in this way by county registrars.

Once this man missed his first repayment within 18 days Ulster Bank foreclosed on his home. Although he made an attempt to pay moneys to the bank, it refused to accept the move. Where are we living? Why is this occurring? We should be outraged and horrified and we should stand up and bang our fists on this issue. This should not happen again and it should not have occurred this morning.

I demand that the Government move swiftly to try to introduce insolvency legislation. I do not believe that legislation goes far enough and my colleagues and I will try to intervene to attempt to tighten it up. The key issue is the write-down of debt in this country. The country will face economic strangulation over the next period and this is a key issue that must be addressed.

Mattie McGrath (Tipperary South, Independent)
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I thank Deputy Michael McGrath for putting forward this motion. I welcome the people in the Visitors Gallery this evening, some of whom are suffering due to this State robbery. We cannot call it anything other than State robbery - the fact that 80,000 mortgage holders with Permanent TSB, a State owned bank, are being charged a rate of at least 2% more than are those with mortgages with AIB. Is this what the country has come to? I am appalled there was nobody on the Government side of the House earlier tonight. I do not know where the ladies and gentlemen who are there now were but I heard they were at parliamentary party meetings having rows over airline tickets and over who would be flying to the best parts of the world on junkets for St. Patrick's Day. I heard they had to pull the names out of a hat.

The Members on the Government side have a Taoiseach leading them who will not stand up to the Europeans nor to the bankers. When gardaí in Bray wanted Seán Fitzpatrick, he was telephoned to come down by appointment but they kicked in the door today of somebody's house in an eviction. They did the same in my county. Deputy McEntee was here when they came to my county and took machinery in the middle of the night. Thankfully, those machines were returned today, as a result of much hard work.

This is the type of thing over which the Government is presiding. It promised the people it would deal with everybody and would burn the bondholders and that hellfire would not be as hot but it has done nothing. It has been sitting on its hands and is a disgrace. The Government Members did not even have the manners to show respect for this motion and for the thousands of people in negative equity by coming into the House this evening to listen to the debate. I have never seen the beat of this.

I apologise to Deputy Catherine Byrne, who did her best in the Chair. It was not her fault that not one Member of the Government had the manners or respect for the people of Ireland to come into the House. The people are waiting in the long grass and will not be waiting too long, judging by the kind of scraps I hear the Members on the Government side are having, where they cannot decide who will get the plum positions or who will get the best Waterford crystal to present abroad. What they are doing is a farce. They said they would cut out the junkets, but they are junket happy and junket hungry. They are a disgrace and some of them should never come home. The country would be better off if they stayed away.

Shane McEntee (Meath East, Fine Gael)
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On a point of order, I would like to apologise for what happened. I sincerely mean this.

Mattie McGrath (Tipperary South, Independent)
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The Minister of State should apologise to the people in the Visitors' Gallery.

Shane McEntee (Meath East, Fine Gael)
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I am making a genuine apology.

Stephen Donnelly (Wicklow, Independent)
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I strongly support the motion before the House. What Permanent TSB is doing is straightforward rent seeking. Its variable rates are several percentage points higher than those of the other State owned banks. The variable rate mortgage holders are being squeezed again and again to pay the losses of professional investors, the bondholders. The Taoiseach said in Davos that what happened here was that people simply went mad borrowing. The late Brian Lenihan said, "Let us be fair, we all partied". These people did not go mad borrowing. They did not party. They worked hard, saved their money and bought small properties in which to raise their families. The Government and the banks said at the time this was sensible.

This is the negative equity generation. These are the people in Ireland in their 30s and 40s. They hold nearly 90% of the negative equity in this country. They have growing families, but they cannot move to more suitable homes. If they lose their jobs or they want to seek more productive employment, they cannot do so, because they cannot move out of their homes. They have used up their savings to try to stay out of arrears. We now know that one in ten of these mortgage holders have arrears of more than 90 days. If we continue to move at the current rate, we will reach one in four in less than two years. These people are experiencing deprivation. In the past five years, deprivation in Ireland has doubled. This group of people accounts for 91% of that increase. The unemployment rate for this group of people has gone from 5% to 15%. It has trebled in the same time.

The Irish people own this bank. It is not enough for the Government to say that it will not or cannot act to help these people.

Michael McGrath (Cork South Central, Fianna Fail)
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Hear, hear.

Stephen Donnelly (Wicklow, Independent)
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These people need help now. They are losing their homes now and we must act now.

Clare Daly (Dublin North, Socialist Party)
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The time for shrugging its shoulders on this issue has passed and the Government must take responsibility and intervene now. We have a situation where the banks are supposedly owned on our behalf and it is time for the Government to show them who is master. Reading the papers, one would have to wonder who is calling the shots when we see the banks lamenting the fact that the Central Bank code of practice, which has only been in place for two months, is too stringent for them. They are weeping and wailing that they do not have enough harassment powers. They are limited to three opportunities a month to deal with and hound people in this situation. The idea that this would be acceptable behaviour to citizens experiencing severe distress with crisis mortgages is reprehensible and shows how far removed those running the banks are from the real lives of ordinary citizens. This is the same type of attitude which has Permanent TSB implementing such exorbitant interest rates. These further impoverish people and drive them into a mortgage arrears situation for no fault of their own but that they are with the wrong lender.

Meanwhile, banks like the Ulster Bank, which was mentioned with regard to the eviction alluded to earlier, have been awarding their officials millions in sterling in bonuses. This is a joke. We have a real crisis here of a publicly owned banking system being run privately. This does not benefit homeowners and small businesses. It is up to the Government to deal with this. Today in the constituency of the Minister who was here for a minute and then legged it, I dealt with a small and viable business which had to close because it could not get access to funding. This is a story we hear throughout the country. Those on the Government side cannot continue to talk out of both sides of their mouths. The banks must free up finance to keep small businesses going.

Mick Wallace (Wexford, Independent)
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I thought I heard it said here a few months ago that no people would be thrown out of their houses, but perhaps I misheard that. There is no funding available for small and medium-sized businesses. I do not understand how this is. We heard so much about a strategic investment bank, but there is still no sign of it. Patrick Honohan said this month: "A key societal function of banks and other financiers is the gathering and processing of the information necessary to make good loan decisions and to continue monitoring the performance of borrowers, intervening promptly where necessary to protect the sums advanced". It is clear this did not happen in the boom times and it is clear it is not happening now either. The effectiveness of any financial system relates to how it caters for firms when they are in need and is best evidenced by its capacity to service small firms.

There is no logic behind what is going on. It was interesting to hear the suggestion of the British politician Vince Cable this week. He suggested the RBS should be used as a new British investment bank, with a clean balance sheet and a mandate to lend to sound businesses. That would be a great idea here, would it not? We are prepared to use taxpayers' money to throw at the banks lock, stock and barrel, but we cannot tell them what to do. They tell us they are meeting their lending criteria and guidelines but we know that is not true. Since when did the banks tell us the truth? Most of the banks only moved towards restructuring, not new loans. If people need money from a bank in this country, it is hard to get it but it is easy get it if one does not need it.

Shane Ross (Dublin South, Independent)
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I would like to respond to some of the comments made by the Minister of State, Deputy Brian Hayes, last night. The Government seems to rely on its amendment in defence, on the credit being given to small businesses and on the Credit Review Office. I do not know whether anybody in the House knows anything about the Credit Review Office but we should put it under scrutiny before we accept what the Government has to say. The Credit Review Office receives virtually no appeals because of the process through which any small business must go. The first kangaroo court is a kind of internal banking appeal system and then the appeal goes to the Credit Review Office. The Credit Review Office is headed by a man called John Trethowan who, while he may be a good person, is a former big banker with National Irish Bank. There are 12 assistant reviewers at the Credit Review Office to whom small businesses must go and appeal one by one. The first nine of these I counted are all former bankers. Why, in the name of God, would a small business refused a loan by his bank manager, by the bank's internal review system, go to the Credit Review Office, which is full of former bankers?

It is a nice little number for ex-bankers who are retired to do their business and go away again. They are deeply embedded in the banking culture. They have three people on what I think they call a non-banking panel. I do not know much about these people because the office is very reluctant to identify the individuals who are on the panel. It is a kind of secret society. The only one I can identify is an ex-career banker. He has a different job now but he spent a large part of his career in J.P. Morgan. We are dealing with a bogus appeals system. Do not let the Government come to me and say the Credit Review Office works. It does not work. It does not work because it has ex-bankers on the board. If we want a real appeals system we should have consumers and people who have suffered in this crisis and who are more sympathetic.

Michael Kitt (Galway East, Fianna Fail)
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I call Deputy Derek Nolan, who is sharing time with nine other Deputies.

Derek Nolan (Galway West, Labour)
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I am delighted to have the opportunity to speak on this evening's motion. When I was elected to the House a year ago, there was profound uncertainty in the economy and among people and commentators about the state and likely survival of our banking sector. Let us not underestimate how far we have come in a year, to a point where the viability of our two pillar banks is no longer in question. They are now considered to be stable and working forward.

I acknowledge the severe financial stress being experienced by constituents of mine, and of every Deputy in the House. Last Monday, a gentleman came to my constituency clinic in Galway. He is involved in an insurance business but the work has gone through the floor. The pressure to repay the loan on an investment property he bought at the height of the boom is crippling him. The stress of trying to keep a business afloat and to pay mortgages, which are interest only mortgages at this point, is immense. We cannot leave the real life stories of our constituents out of this discussion.

The Government has made significant progress on this issue through the interdepartmental report, the Keane report, and through the strategies it has put in place. However, progress is not happening fast enough and I call on the Government to increase the speed with which it is implementing the Keane report in order that people have a timetable for when certain steps will be implemented. I do not take away from the complexity of the issue or from the cross-departmental problems to do with the Departments of Finance, Justice and Equality, with regard to legislation, and others, but this needs to happen faster.

In all our discussions in the House, the main issue is that the economy has gone through the floor and people are out of work. The solution to so many of the country's problems is to get people back to work so they have money in their pockets, can afford to pay their bills and have some financial security.

The first part of the Fianna Fáil motion notes the issues. The three elements the motion calling on the Government to use its influence on Permanent TSB, to measure the new lending performance of the banks and to set out an implementation strategy seem very sensible. While I will support the Government amendment, I call on the Government to take into account those three actions and to act on them. They are not unreasonable or counterproductive and they have merit.

Catherine Byrne (Dublin South Central, Fine Gael)
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Thank you, a Leas-Cheann Comhairle, for giving me the opportunity to speak on tonight's motion. I believe the Government is acting on the mortgage crisis and taking huge steps towards addressing the country's legacy of reckless spending. I welcome the publication of the heads of the personal insolvency Bill and the fact that the Bill is due to come to the House at the end of April.

One of the reasons we are here this evening is that people spent because developers built apartments and houses that were completely over-priced. In my own area, the price of a corporation house, like the one in which I live, increased fourfold. The price of those houses has now gone back to a more realistic level. Deputies can talk about crystal balls and planes but the reality is clear. A huge number of young people are trying to keep their heads above water and to keep their homes.

I draw the Minister' attention to the young people who bought into mortgage debt and negative equity and have been caught in a catch-22 situation. I refer to the young people who entered into shared ownership with local authorities. Many of these houses are worth a quarter of what their owners paid for them. For many of these people, meeting their mortgage payments has become a huge crisis. That is why I hope the personal insolvency Bill will give them the opportunity, through their local authority, to stay in their properties, keep a roof over their heads and not be put out on the street. It serves no one to put people out of their homes and back onto a local authority housing list.

Everyone in the Chamber is speaking this evening with much heart and understanding of the crisis of mortgage debt and related matters. It is time the banks listened. Above all, I ask the Minister to continue to listen to the voices of the people on the street and to the young people who are caught in mortgage difficulties, particularly those in local authority and affordable housing shared ownership schemes.

Martin Heydon (Kildare South, Fine Gael)
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I welcome this opportunity to speak on this motion. With unemployment, the issues raised in the motion are among the biggest facing the country and its citizens. The resolution of these issues would bring us a long way on the road to recovery, which is why they are a priority for the Government.

Like all Deputies, I deal with constituents every day of the week. This evening, I will note some of the financial difficulties experienced by some of my constituents. I know two experienced entrepreneurs who attempted to start a new business. Between them they have more than 60 years experience and have never missed a bank repayment, but they cannot get funding. A post-graduate student who has funded her years in college through loans which she has worked to pay off every year, in her final step to what would be a valuable post-graduate qualification has been refused any form of credit to complete her education. A working family man with five years remaining on his mortgage and no mispayments is unable to get a new mortgage to buy a larger home.

Changes must be made and I welcome the stability that has been brought to many elements of the banking system this year, but we must continue to improve the situation. The establishment of the Credit Review Office, CRO, is very welcome. It is a valuable resource for many small businesses and farmers. Deputy Ross took a pop at the office but he failed to mention that almost 50% of the cases that went to the Credit Review Office succeeded in having decisions overturned. Instead of knocking the CRO we need to see its remit growing and to put more resources into it.

I have already raised this point with the Minister and I call on him again to consider the extension of the services of the Credit Review Office to cover individuals who have been refused credit or given reduced credit facilities for a viable business proposition. A CRO for individuals would give them an alternative if they are refused by a bank and would make sure their voices are heard. It would encourage the banks to fully consider all applications received on a full commercial basis and would provide us with valuable information on the number of applications being refused and an indication of whether these refusals are based on valid commercial considerations.

Our banks are still not lending enough money and this is affecting the growth of our economy which is so important. Businesses are going to the wall because of a lack of funding. It was recently reported in the media that banks are borrowing from the ECB at 1% and buying government bonds at higher rates to make a return, instead of using the funding for what it was designed, which is to get money circulating in the economy. This issue needs to be addressed. The purpose of the ECB money is to get money back into businesses and into the economy.

I am aware of the difficulties being faced by holders of variable mortgages with Permanent TSB. At present, neither the Central Bank nor the Department of Finance has a statutory function in the interest rate decisions made by individual lending institutions nor has the Central Bank requested additional powers over the setting of retail rates. There is a balance to be struck between a nationally controlled banking system which could end up answerable to many public interests and a system that would allow us to exert more control over the commercial decisions of banks. It is imperative that we get that balance right.

Joanna Tuffy (Dublin Mid West, Labour)
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With the agreement of the House I will share some of Deputy Dowds's time.

The issue of negative equity is raised at my clinics and in constituency queries to me and to other Deputies. A number of Deputies have tabled parliamentary questions to the Minister for Finance requesting updates on what action is being taken to help people in negative equity. Not all people in negative equity will need to be provided for by the financial institutions but the provisions currently do not cater for all the kinds of cases that have arisen. In reply to my parliamentary question the Minister stated there had not been a significant number of inquiries to the Central Bank about negative equity mortgages. Time has moved on since I asked that question.

I refer to an article in the Sunday Business Post on 4 March. It reported that two banks, the Bank of Ireland and Permanent TSB, were offering negative equity mortgages. The article mentioned that the products being offered by those banks might have limited application and may not be relevant to all types of negative equity cases in which people might need assistance from the banks. Experts did not think there would be a significant take-up of these negative equity mortgages because the products have limited application and these type of mortgages would not be attractive to either the lender or the customer.

I have encountered varied cases. I cite the example of a couple who bought a house and who then separated but they are still owners of a house in negative equity. Neither party can move on, buy another property and continue with their lives. Another example is a person who relocated to another part of the country, is in negative equity in a ghost estate and is now unemployed. Such a person is stuck in that situation. Those of us who represent commuter areas know that many people bought houses outside their own area in places like Athlone and Carlow but they may now work in Dublin. They are in negative equity and they are unable to move out of their situation. The people who contacted me have not had a resolution of their case from the banks. I advise people to engage with the banks and hope that the situation can be improved.

The issue of negative equity is a social issue and the Government must do something about it; more needs to be done in this regard. It is not enough to advise people to engage with the banks. People in negative equity need a clear pathway so that they can move out of that situation, either to stay in their homes or to move on to another home.

Jim Daly (Cork South West, Fine Gael)
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I welcome the motion which is timely. Any focus on this issue is a good day for democracy and for Ireland. I understand and appreciate the negative equity generation because I am a member of that generation along with many of my friends and colleagues. We all want to see the measures outlined in the Keane report brought to a head sooner rather than later in a bid to help these people. The Government has taken steps this week and even today with the establishment of an interdepartmental committee to oversee the work of the implementation body. I look forward to any resolutions from this committee.

The banks have been capitalised but the idea of any Member of the Oireachtas running a bank is a separate issue and one must be careful where to draw the line as regards governance, the Government and the banking sector. It may not be much comfort to the people in negative equity and struggling to pay their bills to know that the politicians were all of a sudden to dictate the interest rates for the banks and take an active role in the management of the banks. Interest rates are more complex. While the ECB is providing money at 1% and banks are charging 4% and 5%, the banks do not receive a full flow of money from the ECB and they rely for much of their funding on their deposit rate base which is a very competitive market. The situation is more complex than suggesting that the 1% should be matched because they cannot get their full funding from the ECB rate. An element of risk is built into many of the mortgages. Politicians sometimes get carried away as to dictating terms of reference for banks and how the interest rates should be set.

I support the efforts to provide credit finance for the small and medium business sector. In the past year, the banks have been restructured and recapitalised, a mortgage arrears resolution process is in place. The Irish Bankers Federation provided Members with an update today on the code of conduct on mortgage arrears. The personal insolvency Bill will be brought before the House by the end of April, in line with the troika commitment. Some of the failings of the Credit Review Office have been outlined but it is important to note that 50% of cases have been overturned and this decision has been honoured by the banks. The microfinance loan fund and the temporary partial credit guarantee scheme are examples of initiatives taken to address this very important issue.

Tony McLoughlin (Sligo-North Leitrim, Fine Gael)
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I welcome this brief opportunity to speak on this motion. All Deputies could give first-hand accounts on how many of the banks are dealing with constituents but the verdict would not be good. I refer to the wording of the Fianna Fáil motion - "the lending performance of the banks is currently being measured by the amount of new credit sanctioned rather than the amount actually drawn down and put into circulation in the economy;". A recent Mazars survey, commissioned by the Department of Finance, has shown that demand for credit is low. However, this may be because many people do not bother to ask for credit as they believe they will be refused. The perception is that the banks are not giving out money. This perception needs to be changed. The only way a bank can make money and profits is to sell money and if this is not the case, they are like the proverbial pub with no beer.

Many banks were not part of the bank guarantee and they do not impress me. Some are half out the door, so to speak, while others operate as cashless banks, even though they are what are termed as high street banks. I know of one case in which one of these banks refused to issue a quote for a mortgage to a customer despite the fact that he had paid off an existing loan on a house which he had sold. He had been with the bank for more than 21 years, covering two mortgages. He had never missed a payment, was debt-free yet he was not even given a quote. I ask why is such a bank operating in this country.

A constituent told me about his experience in seeking a mortgage of €110,000 on a house valued currently at €320,000. The bank has taken more than three months to make a decision in this case and will now only grant him a loan of €90,000, well below the required amount, despite his large income and debt-free property worth €500,000 at current valuation, offered as security. Many similar cases have been brought to my attention as a public representative.

Banks such as the Bank of Ireland are making efforts and are to be commended. The Government's lending target for 2012 is €3.5 billion. I ask for a report from the banks next year on the delivery of this amount and a breakdown of how the money was loaned within communities.

I commend the Minister for Finance, Deputy Noonan, the Minister for Jobs, Innovation and Enterprise, Deputy Richard Bruton and the Ministers of State, Deputies Brian Hayes, and John Perry, on the measures introduced to ease the difficulties such as the establishment of the Credit Review Office, the SME regional workshops and the recently announced details of a micro-finance loan scheme and a temporary partial credit guarantee scheme to assist viable SMEs on the margins of commercial lending decisions to access additional credit. I welcome the initiative by my constituency colleague and the Minister of State with responsibility for small business, to hold a series of regional meetings with the Department of Finance Secretary General to hear at first hand the views and experiences of local business representatives, banking representatives and State agencies, on access to bank lending. This is a very positive step by the Government and I appeal to the SME sector to use this opportunity so that it will give the Government real information which will ensure some banks will be challenged on their current assertions that they are lending.

I appeal to accountants, in particular chartered accountants, to ensure their clients put together the best possible business plans and that they become involved directly with Credit Review Office if they believe their respective clients are not getting fair treatment from the relevant bank.

Joe McHugh (Donegal North East, Fine Gael)
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I welcome the opportunity to speak on this motion and the fact Fianna Fáil tabled it and to engage in constructive dialogue on it, although clearly we will differ on certain elements of it. We must, however, enter a new era in Irish politics, although we will always remember the past. Fianna Fáil contributed to the position we are now in but although it is part of the problem, it can be part of the solution. We must show maturity in this House and maturity of purpose in how we sort out the magnitude and array of problems we have.

A man once asked me, "How does one eat an elephant?". I did not have the answer but his answer was that one eats it bit by bit. That is the way we must progress in trying to sort out this country. This year marks the 100th anniversary of the sinking of the Titanic but in another 100 years, people will still argue about whose fault it was and about how the ship sank. It still will not change the fact that it sank. We must look at a new way of working in this House and the only way to do so is through constructive dialogue.

When we talk about lending and the obstacles faced by many small businesses in accessing credit, we must acknowledge the difficulties of so many people who have millstones around their necks and who must deal with the daily nightmare of negative equity and of not being able to move out of an apartment despite having young children who are growing up. They face major difficulties as their lives progress. A constituent of mine contacted me in the past week. While she and her husband are glad to have jobs, they still pay 40% of their monthly income on their mortgage. That is a nightmare scenario which the Cabinet is attempting to deal with. I congratulate the Taoiseach on heading up the Cabinet sub-committee to deal with mortgages and the level of restructuring going on. I understand that upwards of 74,000 mortgages have been restructured to date and more will need to be dealt with.

We must provide reassurances to the public and to so many people who wake up in the morning not knowing if they will own a house next month or not knowing if they will ever be able to pay back the millstone around their necks.

Peter Mathews (Dublin South, Fine Gael)
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It is very important that capable and experienced teams are formed in all the banking institutions to deal with mortgage loans, arrears and the restructuring of clients' situations. I visited constituents - a husband and wife - yesterday who had lived outside Dublin in a provincial town. They had good incomes but for family reasons, the illness of one of their children, they had to relocate to Dublin. They built their house in Dublin and had to take out a new loan. They had two loans and were on standard variable rates.

It was very important that the bank would respond intelligently and quickly but that is where the problem lay. The bank should have dedicated sufficiently experienced teams. It would have been a no-brainer to have been able to restructure and set out a new arrangement for those customers. Unfortunately, because of the large number of arrears and non-performing loan books which this institution had, this case was sidelined and that added to the stress. It was a double stress because of the change of location and the illness of one the children.

I use this opportunity to remind the banks to do everything they can to put in place teams of experienced people to address the problems and to restructure the loans expeditiously.

Robert Troy (Longford-Westmeath, Fianna Fail)
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I thank my colleague, Deputy Michael McGrath, for tabling this very important motion given the huge number of people affected. The motion essentially deals with three issues: the totally uncompetitive standard variable rate, SVR, currently being charged by Permanent TSB, a bank in which the majority stakeholder is the Government; the continuing difficulties small and medium-sized businesses are experiencing when they apply for credit; and the difficulties so many people face with regard to mortgage arrears.

I am sure that, like me, many Deputies received numerous telephone calls and e-mails today from PTSB customers all over Ireland pleading with us to do something about the unjustifiably high interest rates being charged - as if we did not know about them already. Although I accept the Government has no statutory function in this regard and cannot legally force the PTSB to reduce its STV, nonetheless, as a major stakeholder, it has the moral authority to intervene just as it did with AIB in November last year, an action on which I compliment the Minister for Finance, Deputy Noonan.

This issue is not about political point scoring but about creating awareness and highlighting the need for PTSB to acknowledge that the taxpayers of Ireland have supported this bank. It now has a moral obligation to support the more than 80,000 customers who find themselves trapped in totally uncompetitive mortgages. These customers do not even have the option to switch to an alternative, given the lack of real competition in the market.

We do not advocate that PTSB should offer rates on which it would lose money; that would not be in the taxpayers' interest. However, the fact remains that although the ECB has reduced interest rates by 3% since June 2007, the PTSB has reduced its SVR by only 0.25% in the same time period. PTSB's margin over the ECB rate has gone from 1.44% in June 2007 to 4.19% today. PTSB, a State-owned bank, is charging its customers 5.19%, or 2.19% more than AIB, another State-owned bank. On a €300,000 loan over 30 years a Permanent TSB customer will pay €1,666 a month compared to €1,264 for an AIB customer, a difference of €402 per month. One can imagine the difference this extra money would make to the quality of the lives of the people affected.

According to a recent Central Bank report, it appears some lenders are charging higher variable rates to compensate for the losses they are making on their tracker loans. In their contributions some Government Deputies seemed to think this was justifiable. It is not. The risk with such a strategy is that it may be counterproductive and may continue to exert upward pressure on arrears. In other words, PTSB is not only placing an enormous financial burden on families, which is the main issue, but its action is proving counterproductive for the company. Now that there are Ministers of State in the Chamber to hear the debate, I urge them to use their influence to ensure there is a reduction in the variable interest rate, thereby giving a lifeline to many struggling families.

I refer to the issue of SME access to credit. If the Government cannot see this is a major issue, it is even more remote from what is happening on the ground than I originally thought. I continually meet people from small businesses who say that this issue, along with that of commercial rates, is having a serious negative issue on their business. In the past year the Government ignored the SMEs, a sector that involves more 655,000 people. First, it reneged on its commitment to abolish upward only rent reviews. It also failed to review how commercial rates are charged.

In regard to credit, on 1 March Professor Patrick Honohan stated that Ireland is the most difficult country in the eurozone when it comes to small businesses accessing credit. Some 92% of SMEs claim the Government is either making no difference or is having a negative impact on SME lending. The chief executive of ISME, Mark Fielding, stated: "We must put an end to the fiction that bailed out Irish banks are functioning properly. Access to credit is abysmal, the application process is getting longer and businesses are not being told their rights." While the Government dithers and waffles, vulnerable small business owners are being terrorised by bankers, leading to a massive build-up of anger and frustration within the business community. These are not my words - they come from representatives of the business community.

The Government has made multiple announcements with regard to the loan guarantee scheme and the micro finance scheme but we still await the necessary legislation. That is nobody's fault but the Government's. Can we have less spin and more substance?

I would like to continue on the subject of mortgage arrears but do not wish to eat into the time of my colleagues. I am sharing time with Deputies John McGuinness, Willie O'Dea and Timmy Dooley.

Michael Kitt (Galway East, Fianna Fail)
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I call Deputy John McGuinness.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It has been a long time since I saw such an important debate in this House being completely ignored by Government. In spite of the apology from the Minister of State, it is an insult to the House and to the people of whom we speak that no Minister was present to take the debate. The Cabinet may have sent in two juniors to listen to us but all the Government benches are empty. That does not bode well for how seriously this debate is being taken. The Ministers of State should carry back that message to Cabinet and explain exactly what they heard in the debate.

I refer to Permanent TSB and the general debate we have heard on the SME sector, negative equity and the availability of finance. Most Deputies who spoke stated tonight what they have stated in other debates during the past 12 months. Nothing has changed. There is one thing that can happen. The Government can begin to wake up from its slumber and take this issue seriously. Why does it not call in Permanent TSB and tell it what to do? Like others, this bank received taxpayers' money to keep its doors open. Our money went into those banks to keep them sorted. Some of that money was specifically tagged for the SME sector and to assist those in mortgage difficulties, yet there is a growing number of people in serious difficulty with their homes and businesses. The Government is doing nothing about it. All the talk in the world, in this debate or in any other in this House, will mean nothing to anybody if an action is not taken. The Government should bring in Permanent TSB, tell it what to do and tell it to backdate it.

The Credit Review Office should be given teeth and a function or it should be closed down. It is doing a disservice to the whole system within this country and only offers the illusion of giving assistance to people. They get no assistance.

Some €7 billion was given to the banks to give to the SME sector, but only €1.7 was lent in new funding. The rest went to restructuring. I ask both Ministers of State present to ask the Minister for Finance to take back that money and give it to the credit unions, which can work with the county enterprise boards, although the Government is beginning to scuttle these too, dumbing them down so that they cannot function. Let us do this now and let us give that money to the SME sector to create jobs.

The State is working against its own people and against the SME sector. I offer the example of the National Employment Rights Authority, NERA, in my constituency which is now moving in on hairdressers and barbers, using SI 99 as part of the Minimum Wage Act 2000 in order to close them down. At a time when we want people to create jobs and apprenticeships, NERA is going into these businesses and tying up the people involved with red tape and bureaucracy, putting their apprentices out of work. What is the Government going to do about that?

I offer another example, this time concerning the Department of Agriculture and Food and relating to a special investigations unit that has moved in on veterinary practices. There is one such practice in Kilkenny now, fighting for its life with five jobs, receiving no word from the Department or the Minister, and no respect for its business. The unit has not explained to the business why it is being questioned and investigated. There has been only intimidation and bully boy tactics in regard to that business, a viable, well organised and well funded one that has respect in the local community. The Government is assisting the Department in what can only be described a Hoover-type instrument, similar to what the FBI had, to go into that business and close it down. It is not the first example and the Government has not changed it. That is what the State is doing to the SME sector. If it is not the banks, it is NERA or the special investigations unit. I ask the Minister of State to connect himself to the real world, to understand the difficulties facing mortgage holders and what is happening to families and their homes in terms of negative equity and to understand the struggle of small businesses to sustain the number of jobs they have. The Government is coming in with a heavy hand. As the Minister of State listens to this debate, I am not sure he will go back with the same passion and intention to the Departments causing these problems and effect some action to save the few jobs we have and to save the communities depending on the jobs.

I have heard people from both sides of the House talk about negative equity and people losing their homes. The Government is causing that to happen. In the election campaign, it promised reform and action but it has given nothing. I suggest the Government wakes up, pays attention and does something.

Shane McEntee (Meath East, Fine Gael)
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On a point of order, I accept what Deputy McGuinness said and I hope he accepts what I said. On two occasions, I stood on the Government side while there was no one on the Opposition side of the House. Deputy McGuinness should not throw stones.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Deputy McEntee is here tonight but he was not here for the debate. I accept that Deputy McEntee has made an apology but it is a little too late. No Cabinet Ministers are present.

Shane McEntee (Meath East, Fine Gael)
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I stood here on two occasions -----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How seriously is the Government taking the crisis in this country? Not that seriously.

Shane McEntee (Meath East, Fine Gael)
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On two occasions I stood here and there were no Members on the Opposition benches. Deputy McGuinness should be careful what he throws.

Willie O'Dea (Limerick City, Fianna Fail)
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I want to talk about the credit aspect of the motion. I am flabbergasted at the attitude of the Government. The three components of this topic include a burgeoning mortgage crisis, which is getting worse, delaying economic recovery and causing untold misery to hundreds of thousands of people. This includes those who can pay their mortgages at the moment but are worried about the future and what will happen if they lose their jobs or interest rates increase. The second component is a Government with a thumping majority, much of it due to votes as a result of promising to fix this problem or do something about it 13 months ago. The third component is that a ready-made solution exists in the report of the Law Reform Commission. This was available when the Government took office and was subsequently translated into legislation by my colleague, Deputy Michael McGrath, seven or eight months ago. We have continuous prevarication, foot dragging, delay, committees, interdepartmental groups, reports and studies while nothing is happening.

Shane McEntee (Meath East, Fine Gael)
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We are sorting out the mess of Deputy O'Dea's party.

Willie O'Dea (Limerick City, Fianna Fail)
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Like me, Governments Deputies are meeting people who are worried they will lose their houses, lose their jobs and wonder how they will pay their mortgages. I am in the unusual position of trying to justify the Government and trying to explain to people-----

Shane McEntee (Meath East, Fine Gael)
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Deputy O'Dea should explain what his party did.

Willie O'Dea (Limerick City, Fianna Fail)
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-----that the Government has not yet introduced necessary legislation. I try to explain that, even when the legislation is in place, structures must be put in place to implement it. We are perhaps 12 months from anything being put in place. Thankfully, for reasons that have nothing to do with the Government, very few people have lost their homes in this country but the Minister of State is aware of the number of people in arrears with mortgage payments. They are consumed with worry and anxiety about the future. The Minister of State is also aware of another cohort that we cannot count - those who ran into arrears over the past 12 months and, if we ever see the new insolvency legislation, could have been rescued. Now they have slipped beyond rescue and out of the net and they are guaranteed to lose their homes. There are also hundreds of thousands of people who can pay their mortgages but they are consumed by anxiety about the future.

The Government parties promised faithfully that they would sort out this problem quickly. It was a central plank of the election campaign. Towards the end of last year the jamboree at Farmleigh was conducted in a blizzard of self-congratulatory publicity. The most concise and direct advice I heard from that meeting of luminaries was from the former President of the United States, Bill Clinton, who said that we cannot solve the problems of this small country without unwinding the mortgage crisis and that we should give it top priority. The most concise, coherent and practical advice from the discussion at Farmleigh is the advice the Government is determined to ignore. Whoever said procrastination is the thief of time was not exaggerating. If anything, he understated the case because this Government's procrastination has robbed people of peace of mind and their family homes and will continue to do so.

Anyone who harboured lingering illusions that the credit situation in this country was normal had the illusions dispelled by the recent bank watch report by ISME and by the words of the Governor of the Central Bank, Patrick Honohan, a few days previously. It is a century and a half since a potato Famine devastated the economy of this country. The effects of the credit famine, which we are now experiencing, are somewhat less pernicious but are no less devastating in their consequences for the economy of the country. It is ironic that the institutions whose financial promiscuity did so much to bring about the problem are now practising a new form of financial parsimony, which is preventing the crisis from being solved. The banks are engaging in an Orwellian exercise. The banks are behaving like former employees of the ministry of truth in Orwell's Nineteen Eighty-Four. They have issued a plethora of reports, studies, interviews and analysis that is encouraging us to disbelieve the evidence before our eyes every day of the week. They tell us there is no credit famine and that the credit situation is normal.

The banks and financial institutions, including Permanent TSB, were stuffed with capital, to use the words of the Minister for Finance. That capital did not come out of thin air but was borrowed on behalf of Irish taxpayers and must be repaid with interest. It was not borrowed because we like the banks, because they are venerable institutions we want to continue ad infinitum or because they are national monuments in need of preservation. It was borrowed because we want banks to lend to the economy as credit is the oxygen of business. The economy cannot grow without a proper supply of credit. The banks have failed to adhere to their side of the bargain. It is a contemptible insult to the intelligence of the electorate for banks to produce reports, as they did until quite recently, saying that a certain amount of people applied for credit, 90% of whom were successful, and to conclude that everything is normal because we have 90% lending. There was not a word about the vast majority who were told not to bother wasting time and money applying or those told that, although they all satisfy the criteria, the bar will be raised to ensure they do not qualify. The attitude of the banks to Irish businesses seeking credit exactly mirrors that of the local Mafia chief in the famous scene from "The Simpsons". The tavern owner approached the banks, who were unhappy with his collateral and did not like his profit projections. He then went to the local Mafia chief who agreed in principle to lend the money but, because he did not like the collateral or profit projections, he would have to smash the tavern owner's arms and legs in advance. That is the attitude of the banks-----

Shane McEntee (Meath East, Fine Gael)
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The Deputy's Government overruled the Central Bank in 2005.

Willie O'Dea (Limerick City, Fianna Fail)
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-----and the Government is doing zero, zilch, nothing about it.

Shane McEntee (Meath East, Fine Gael)
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The Deputy has a cheek, as a former Minister in the last Government.

Willie O'Dea (Limerick City, Fianna Fail)
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The Government's proposals-----

Shane McEntee (Meath East, Fine Gael)
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The Deputy was part of the Government that ignored the Central Bank advice in 2005 and 2006.

Michael Kitt (Galway East, Fianna Fail)
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Please, Minister. One voice.

Willie O'Dea (Limerick City, Fianna Fail)
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I do not recall coming in here and interrupting the Minister, with his last minute arrival to cover the absence of the Minister.

Shane McEntee (Meath East, Fine Gael)
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The Deputy has a cheek.

Willie O'Dea (Limerick City, Fianna Fail)
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Keep chasing the stags. When I promised my electorate I would vote against the Government I did so, unlike you, Sir.

Shane McEntee (Meath East, Fine Gael)
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The Deputy let down his electorate.

Michael Kitt (Galway East, Fianna Fail)
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Please, Minister.

Willie O'Dea (Limerick City, Fianna Fail)
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The Government's proposals on the credit crisis is the longest running farce in the west end.

Shane McEntee (Meath East, Fine Gael)
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The Deputy's Government ignored the Central Bank advice in 2005.

Willie O'Dea (Limerick City, Fianna Fail)
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I have counted them and 19 times the Government publicly promised a partial credit guarantee scheme, which is a carbon copy of the English scheme, yet it has not produced it. It promised a micro-finance scheme and the princely sum of €10 million a year for the small and medium business enterprise sector. The Minister for Jobs, Enterprise and Innovation said that would enable loans of up to €25,000 to be given to SMEs. That is fair enough, but according to my arithmetic €25,000 into €10 million goes 40 times. There are 200,000 SMEs in this country. That leaves 199,960 SMEs unaccounted for. Is that the Government's approach to the credit crisis in this country?

The strategic investment bank, according to the Taoiseach, has become a strategic investment fund. It is heading for a strategic investment fudge. My message to the Government is direct and simple.

Shane McEntee (Meath East, Fine Gael)
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Nobody is listening to the Deputy.

Willie O'Dea (Limerick City, Fianna Fail)
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Stags are irrelevant. What is relevant are the people of this country who are consumed with anxiety and distress-----

Shane McEntee (Meath East, Fine Gael)
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Which the Deputy's party caused.

Willie O'Dea (Limerick City, Fianna Fail)
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-----and are going to TDs in their clinics every day because of the inaction of this Government.

Shane McEntee (Meath East, Fine Gael)
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The Deputy's party caused it-----

Willie O'Dea (Limerick City, Fianna Fail)
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My message to the Government is-----

Shane McEntee (Meath East, Fine Gael)
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-----along with his colleagues.

Michael Kitt (Galway East, Fianna Fail)
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Please, Minister.

Willie O'Dea (Limerick City, Fianna Fail)
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----that it is time to stop the prevarication, the delay, the platitudes, the excuses and the alibis. The time for action has long since passed.

Michael Kitt (Galway East, Fianna Fail)
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I call Deputy Dooley.

Shane McEntee (Meath East, Fine Gael)
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The Deputy should never forget that his party caused the problem. It sat on it.

Michael Kitt (Galway East, Fianna Fail)
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One voice, please. Order for Deputy Dooley.

Willie O'Dea (Limerick City, Fianna Fail)
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The Minister has been sitting on it for the past 13 months looking out at stags.

Shane McEntee (Meath East, Fine Gael)
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The Deputy would not know a stag if he saw one.

Timmy Dooley (Clare, Fianna Fail)
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I welcome the opportunity to contribute to this debate which is of critical importance. I suppose an element of banter across the floor of the House is appropriate but there is a much more serious issue underlying this motion, which is the reason it has been put down. The reason Members on this side of the House get exercised about it is because of the impact of these conditions on so many people.

The issues referred to in the motion affect almost every citizen of the State. There are probably close to 80,000 mortgage holders within the PTSB who are affected by this outrageous standard variable rate it continues to peddle. The standard variable rate charge is out of step with the marketplace and the Government has a duty to act because it is the principal shareholder.

An effort has been made by some within the Government to hide behind the standard lines that we cannot interfere in the operations of the day to day running of the bank or the profitability of the bank is a matter for the board. Those are the standard lines trotted out by Ministers and their squawk boxes on a day to day basis.

Willie O'Dea (Limerick City, Fianna Fail)
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They were the bondholders-----

Timmy Dooley (Clare, Fianna Fail)
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That is not appropriate or acceptable. The fact remains that the PTSB is State owned and it has a duty of care to its customers. It also has a duty of care to its shareholders, who are all the citizens of the State, the taxpayers, and it is not in the taxpayers' interest. The fact the taxpayer is now the shareholder is different from it being a bondholder or somebody who has it on their books as an investment. The taxpayer has a different set of criteria by which it would measure the way the bank should operate. The fact is that the bank, levying punitive charges on mortgage holders, affects spending and confidence in the economy and reduces demand in the economy in an overly aggressive way.

The normal rules of the marketplace do not apply now and therefore one section of society cannot be treated out of step with the other but that is what is happening here. AIB, which is largely in the ownership of the State also, has a different approach to its standard lending rate and it is not fair to say it has a different business or cost model. This crisis will have to be resolved in a protracted way over a period of time outside the normal market conditions because there are not normal market conditions. Properties cannot be sold and there is very little movement of property in the market. The reality, and the Minster of State knows this better than I do, is that houses are being sold under pressure on occasions at a lower cost than one could afford to build them. That is a clear indication that we are not working in a normalised marketplace, therefore, the principles have to be suspended. I do not want to go back into who did what, when and where but the Government must treat this as a serious issue. It must suspend normal market conditions or the normal rules that apply and assist these people in a manner that is relevant, appropriate and in step with the rest of the marketplace.

Neither is this in the interest of the mortgage holder. The punitive rates in place are forcing many mortgage holders into arrears, which is not good for overall economic activity. In many cases people have been forced into a position where they are unable to meet their repayments and that has a huge impact on their health. It has an impact on the lives of many people. It is making it virtually impossible for them to live in a normal way. It is putting pressure on families and reducing confidence in the economy. If we cannot restore confidence in the economy we will not get growth, and if we do not have growth we will not have confidence. It is a chicken and egg situation.

I accept that the banks must become free-standing. We all accept that they must restructure their balance sheets. They must be able to find a way in a stand-alone capacity in the years ahead but that must be viewed in the medium to long term; it cannot be done over night. The PTSB is involved in an aggressive resolution of a crisis that exists across the economy, and it wants to be first up and best dressed. Effectively, it is now within the control of the State and the State has a duty, in terms of the points I raised regarding its stockholder, who is the taxpayer, and the mortgage holder, to ensure the overall benefit to the economy. It must be viewed in a holistic way.

Confidence and growth are inextricably linked, and while we have punitive interest rates we will not get confidence or growth in the economy. All we will get is a continuation of the misery being inflicted on so many people. Forcing people into arrears will drive people deeper into misery. They are being forced into delinquency. Many people have made the lifestyle choices and the changes in their spending but they are not able to meet that level of payment, and we have a duty to help them. Some would suggest it is a relatively small institution by comparison to the others, but up to 80,000 people are affected and that number equates to more people because in many cases we are talking about 80,000 family homes. Some people can pay and if they can that is fine, but the bank is still putting a drain on the economy because they are putting money into it that probably does not need to be there in the first instance and could be used in other ways.

The Central Bank has suggested that some lenders are trying to square the circle of the tracker mortgage issue. I welcome what the Government has talked about in terms of attempting to address the tracker mortgage issue. It has referred to creating a vehicle or some other means by which that issue can be parked which would allow the banks to strip away that problem and get back to taking a more aggressive approach to lending. That ties in with what Deputy O'Dea stated on the other book but the fact remains that in the short term the bank cannot balance between the tracker book and the standard book in an effort to resolve the mistakes it made in a manner that cannot be seen as acceptable to any sector of this society.

A more serious issue for many mortgage holders, and it goes to the root of the failure of the banking system, is their inability to switch between lending institutions. There is no marketplace and no capacity to do that because there is no competition among lending institutions, and that is probably one of the most serious issues that arises. There is no way out for these people. They are stuck, and they are looking to us. I do not want to get aggressive about this but I ask the Minister of State, the Minister for Finance and their entire team to find a solution to this issue.

It will not break the bank or the Government. It should get this done as quickly as possible and move on to the myriad issues we have to try to deal with.

Fergus O'Dowd (Louth, Fine Gael)
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People here seem to suffer from a rather significant absence of memory and seem to forget that Fianna Fáil was in power for 16 of the past 20 years.

Willie O'Dea (Limerick City, Fianna Fail)
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They want to know what will be done now.

Fergus O'Dowd (Louth, Fine Gael)
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Whatever they might think, the public will never forget the way it was led into the current situation. An unsustainable housing and property boom was led by developers, their friends in Fianna Fáil-----

Michael Healy-Rae (Kerry South, Independent)
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We do not need a history lesson.

Timmy Dooley (Clare, Fianna Fail)
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All your councillors.

Michael Kitt (Galway East, Fianna Fail)
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Order, please.

Fergus O'Dowd (Louth, Fine Gael)
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I do not interrupt other speakers. Perhaps it is too much to expect that they might have manners now. The people will not forget why they are in the current situation and why people borrowed way in excess of what they could afford for properties that are now valueless.

Dara Calleary (Mayo, Fianna Fail)
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Tell us about the mortgages.

Mattie McGrath (Tipperary South, Independent)
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You forgot to come into the House, or did not care.

Fergus O'Dowd (Louth, Fine Gael)
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I would like to speak, if I can.

Mattie McGrath (Tipperary South, Independent)
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Where was the Minister of State at 7.30 p.m.?

Fergus O'Dowd (Louth, Fine Gael)
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People are in a very difficult position financially. They have mortgages they cannot pay and have lost jobs. The reason for that is the mismanagement of the country for many years.

Willie O'Dea (Limerick City, Fianna Fail)
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What are you going to do about it?

Fergus O'Dowd (Louth, Fine Gael)
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We accept responsibility for what we have to do. One cannot wipe away 16 years of mismanagement.

Michael Healy-Rae (Kerry South, Independent)
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Look forward.

Willie O'Dea (Limerick City, Fianna Fail)
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Stick to the script.

Fergus O'Dowd (Louth, Fine Gael)
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I do not have a problem sticking to my script but if the Deputy stuck to the facts it would be somewhat helpful. Perhaps it is time he did another show with the Rubber Bandits. He was most successful when he wore the mask and he should put it on again.

Michael Healy-Rae (Kerry South, Independent)
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This is not a laughing matter.

Michael Kitt (Galway East, Fianna Fail)
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Order, please.

Fergus O'Dowd (Louth, Fine Gael)
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The issue of mortgage arrears is of the utmost importance to the Government. The establishment of a Government committee to co-ordinate and oversee the implementation of a whole of Government response to the problem is evidence of this.

However, there is no single or quick solution to deal with the mortgage problem. Each case is different and the circumstances of each household will be unique. A range of solutions across a number of Departments, and also from the banks, will be required. Progress has already been achieved. For example, personal insolvency reform was identified in the Keane report as central to the resolution of the mortgage arrears problem.

Deputies will be aware that the heads of a personal insolvency Bill have now been published. The views of the relevant Oireachtas committee, and other interested parties, will be taken into consideration by the Government in the formalisation of the Bill. Other aspects of this implementation agenda are mortgages to rent and Central Bank engagement with banks. The provision of a mortgage advisory function will also be advanced by relevant Departments and agencies in conjunction with the Department of Finance.

On the issue of the standard variable rate charged by PTSB, it should be noted that mortgage rates generally are rising to reflect the increased costs of funding being incurred by all banks. The higher cost of funding is being driven primarily through the increased cost of wholesale funding and high deposit rates, which are beneficial for consumers. As banks reduce their dependence on ECB funding, as they should do, the cost of funding naturally increases.

While we sympathise with the impact of the higher PTSB rates on consumers, it is important to reflect on the facts of the situation. The average standard variable rate loan in PTSB, including buy-to-let mortgages, is €82,600. The average tracker mortgage is far higher and these borrowers are currently paying historically low rates. The banks have to strike an appropriate balance between operating a viable, commercial bank which can make a return for the taxpayer on its substantial investment and meeting the needs of consumers. In arriving at their decisions, the banks have to take into account their ability to operate a business which can ultimately sustain itself without the need for taxpayer support. The taxpayer has already had to pay far too much to support banks. This is not sustainable as the taxpayer has to fund public services to those most in need in our society, namely the elderly, the unemployed and the disadvantaged.

Neither the Central Bank nor the Department of Finance has a statutory function in regard to interest rate decisions made by banks. The Deputy Governor of the Central Bank has stated to the Government that, within its existing powers and through the use of suasion, the Central Bank will engage with specific lenders which appear to have standard variable rates set disproportionate to their cost of funds. Within this framework, we will continue to work with PTSB on the development of its future plans.

We need to be absolutely sure that we do not do anything which restricts or hinders the flow of credit. The Mazars survey found a reduction in the demand for credit. The level of application to the Credit Review Office, CRO, remains low. If people with viable propositions are being refused credit, they need to go to the CRO and nothing should discourage them from doing so. It overturns 50% of bank refusals and provides a user friendly service to borrowers. It can also assist when there is a constructive refusal of credit which was referred to yesterday. I appreciate that business people are fatigued but they must follow through on refusals to force the banks to respond. In that context, when Deputies are approached by dissatisfied businesses that have been refused credit, such businesses should go directly to the CRO. This is much more likely to improve the situation. When considering such cases, it must remain the case that viability continues to be the key determinant in the decision to grant credit and this is a factor which has constantly been highlighted by the credit reviewer in his report on bank lending.

The Government continues to see the SME sector as a vital hub in the recovery and regeneration of the economy. That is why the important and vital new initiatives such as the loan guarantee scheme and the microfinance fund are being introduced. The Government has done more in the past 12 months to return the banks to a more stable level than the previous Government did in its entire period of office. We intend to build on this progress and make sure the banks are focused on the needs of their customers and the wider Irish economy. That is the only way they will be able to repay all of the support that they have received.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I compliment my colleague, Deputy Michael McGrath, on the very constructive motion he put before the House yesterday dealing with mortgage difficulties and access to credit. As has been mentioned by previous speakers on this side of the House, access to credit is important for the economy, job creation and every household.

Public representatives are all very conscious that throughout the country businesses are finding it extremely difficult to access loans or maintain adequate credit facilities on an ongoing basis. Such credit facilities are essential to protect existing jobs and, in many instances, to help create much-needed new employment. The credit situation is, in many cases, preventing the creation of much-needed jobs and the lack of access to credit for many SMEs has caused some enterprises to reduce their workforce and, sadly, close.

Sole traders and people employing six, 50, 100 or more people want decisions and action to deal with this intolerable situation. They do not want to hear about reviews or reports, rather they want decisions from Government. The provision of adequate credit to businesses of all sizes is necessary and has to be addressed. The absence of credit is not hearsay and has not been exaggerated by the business community, householders or anybody else.

Such difficulties have been highlighted by the Governor of the Central Bank, Mr. Honohan, when he said that credit conditions for SMEs are tougher in Ireland than anywhere else, both in terms of cost and availability. The difficulties facing SMEs and the impact on the national economy is clear when one considers over 655,000 people are employed in over 200,000 small businesses. Those businesses are involved in all types of enterprise and a significant proportion of firms employ fewer than 12 people. Fortunately, they are spread throughout the country.

Such enterprises are very varied and include those involved in manufacturing and the provision of services. They employ people with varied skills, experience and educational attainment. A recent report from the Central Bank highlighted the difficulties in achieving the right credit conditions, the right credit climate and the subsequent difficulties facing businesses. The survey was referred to earlier in the debate and is worthy of note. It reported that more than one third of SMEs sought loans in the past three months, compared to one quarter of companies in the same period a year ago. The Central Bank report is in a similar vein in that it demonstrates an increase in demand for trade credit and overdrafts over last year. The Irish Banking Federation claimed that the drop in credit to SMEs is due to depressed demand. That simply does not add up. ISME, a representative organisation for a very important sector of our economy, continuously highlights the lack of progress in addressing the credit deficit. A Central Bank report demonstrates that the issuing of new loans to the SME sector falls far short of the quantum lost through the closure of credit facilities.

Last night, my colleague Deputy McGrath outlined again the unacceptable imposition on people due to the standard variable interest rate charged on mortgages by State-owned Permanent TSB. The interest rate being charged can only be described as exorbitant and the Government ought to exert the necessary pressure on the institution to achieve a just and fair result for the mortgage holders.

I hope the partial credit guarantee scheme that the Government proposes to launch and which we heard about so often will be successful. It was promised that it would be in place by the end of the first quarter of this year but this promise will not be honoured. I understand that, to bring in the scheme quickly, one must opt for the de minimis State aid rule, but this would be very constricting. I understand that if an enterprise has accumulated grant aid totalling up to €200,000 over the preceding three years, it would be excluded. Who decides on the viability of the enterprise? We do not want our banking sector deciding on the viability of businesses in the country. It is very important that the scheme be brought forward as soon as possible and that it not be as constricting as would appear to be the case from what we have heard to date.

Séamus Kirk (Louth, Fianna Fail)
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I am glad of the opportunity to support my party spokesman, Deputy Michael McGrath, in moving the motion to support a mortgage interest rate cut by Permanent TSB. In my constituency - I am sure the Minister of State, Deputy O'Dowd, will be familiar with it -- many people are directly affected by this issue. I am speaking on behalf of the estimated 80,000 people nationally who are seriously and adversely affected by the issue.

This House affords backbenchers, Ministers of State and Ministers the opportunity to debate in a practical and logical way the issues of the day. There is no issue more pressing than that of distressed mortgages, negative equity and people simply losing faith in their ability to hold onto the properties they bought and worked hard for. There are many who will find themselves in serious financial trouble for many years to come.

In a recent paper entitled Variable Mortgage Rate Pricing in Ireland, it is stated some lenders are charging higher variable rates to compensate for the losses they are making on their tracker loans. It states, "One bank's [...] variable rates are significantly lower and another bank's [...] variable rates are significantly higher than its peers, controlling for funding costs, arrears rates and other factors." The reality is that this needs to be examined urgently. A plan needs to be put in place to find a solution. I call on the Minister to consider this very serious problem. We need action and we need it now. We need a commitment from the Minister that he will engage in discussion with Permanent TSB so it will reduce its standard variable rate. The standard variable rate charged by Permanent TSB is out of line with the market rate and the rates of other State-owned banks.

Deputy Michael McGrath asked last night why Permanent TSB can offer new customers a standard variable rate of 3.7% while existing customers are being charged 5.19%. That highlights very clearly that the cost of funds is not the issue.

One other area I would like to mention is a possible tax relief for those who help out family members with a distressed mortgage, be it in Ireland or the United Kingdom. I know of a case from the boundary of my constituency and that of the Minister of State, Deputy McEntee, that concerns an individual working in the Untied Kingdom who is helping a family member in Ireland with a distressed mortgage. There is no tax relief available to the family member. A strong argument can be advanced that we should have a bilateral taxation agreement to cover this specific issue. Distressed mortgages can arise in the United Kingdom and Ireland. In the parish of Crossmaglen, people living 100 yd from one another on the Dundalk-Crossmaglen road may be living in two different jurisdictions. They could be related or members of the same family. There is no tax relief if one helps the other with a distressed mortgage.

This needs to be examined. It is but another element of the problem we are discussing tonight.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Members of all parties and none for contributing to this debate. There are some key themes associated with my party's motion. The motion should not be objectionable in any way. It is designed to be constructive and to assist the Government in dealing with issues that clearly need to be dealt with.

With regard to lending to SMEs, we have called for a very simple change. Instead of measuring the lending performance of the banks by examining the amount of credit approved, we should measure instead the amount of money drawn down and put into circulation in the economy. At the very least, the Government should report those figures in a clear and transparent way and not simply accept what AIB and Bank of Ireland tell it about the amount of credit they have sanctioned.

On the issue of mortgage arrears, all we are asking is that the Government make a statement on its implementation strategy which pulls together all the various elements and sets out how to deal with the issue. To say, as the Minister of State, Deputy Brian Hayes, said last night, that the Keane report is being implemented is simply not true. I found out in the response to a recent parliamentary question that one of the key recommendations in the report, that we set up an independent mortgage advice function, is still being considered by the Government. It has not yet made up its mind as to whether it is a good idea. All we ask is that the Government come forward with its strategy, as some Government Members have called for over the past two nights.

The main purpose of the motion we have tabled is to put the spotlight on the standard variable rate being charged by State-owned Permanent TSB. Before I address this, I must mention the customers of EBS, who are astounded that, despite the EBS now being wholly owned by AIB, they are paying a standard variable rate of up to 4.45%, which is well in excess of the rates charged by the parent company to its customers. They are asking why this is being allowed despite the Government having extolled the virtues and benefits of the merger of the two banks last year.

In setting out the debate on the question of Permanent TSB last night, I laid out in comprehensive detail the reasons the Government should be putting pressure on Permanent TSB to reduce the standard variable rate it is currently charging. That the customers are being treated unfairly is absolutely irrefutable. The Government should just accept that. It has not even said that much.

Up to 80,000 customers are being crucified by the rates being charged by a bank that was bailed out by the taxpayers through the guarantee and through recapitalisation of up to €4 billion. For the Government to hide behind the line that the bank is a commercial entity and state there is nothing it can do simply does not stand up to scrutiny. This is because it set a different bar for AIB last November. Very publicly, the Government hauled the bank into a meeting. There was a stand-off for a few hours and the Minister of State, Deputy Brian Hayes, emerged and stated it was pathetic that the bank was not passing on the ECB rate reduction. Eventually, however, the bank conceded and passed on the reduction. All we are asking is that the Government apply the same principle to the customers of Permanent TSB.

Many of the facts have been put on the record and there is no need for me to repeat them. The Minister of State and his colleagues know the real difficulties faced by families. The Minister of State, Deputy O'Dowd, said he and the Government sympathise with the customers of Permanent TSB. They do not want sympathy as it will not help them to make their mortgage repayments, clothe and feed their children and keep a roof over their heads. What they want is action.

My party is calling on the Government to address the blatant anomaly in the interest rate charged by Permanent TSB to its standard variable rate mortgage customers. The Government should use the same zest and determination in dealing with Permanent TSB now that it showed with AIB last November. All Members should unite tonight behind this motion that sends a clear message to the banks that in their hour of need we came to their rescue with a bank guarantee and recapitalisation, allowing them to serve the needs of the economy. It should not be the other way around. I am calling on the Government to intervene in a proactive way and give the customers of Permanent TSB the relief they deserve. They should not be treated in any way differently to the customers of AIB or any other bank in which this State has a controlling interest.

I commend the motion to the House.

Deputies:

Hear, hear.