Tuesday, 29 January 2019
No Consent, No Sale Bill 2019: Second Stage [Private Members]
I move: "That the Bill be now read a Second Time."
I am proud to move this Bill and hope it can get cross-party support in this Chamber. I must say there is no reason for that cross-party support not to be given, because it simply implements what Deputy Michael Noonan said was best practice during his time as Minister for Finance and what the Central Bank’s own code of practice recommends.
In simple terms, the Bill puts into law a code of practice that the Central Bank itself drew up. The first line of that code of practice provides: "A loan secured by the mortgage of residential property may not be transferred without the written consent of the borrower". In other words, no consent, no sale. There may be some who say that this is a fine principle in normal times but we are not living in normal times, and they are right. These are not normal times. In normal times we do not have €2.34 billion in arrears of over 720 days. In normal times we do not have 64,510 accounts linked to family homes in arrears, 45,178 of them in arrears of more than 90 days. Accounts in arrears of more than two years now constitute 43% of accounts in arrears, and at €2.4 billion, represent 90% of outstanding arrears balances.
These are not normal times. We are living with a problem caused by a banking collapse. We need a political and societal response to that, not just one that protects the banks. We must find a solution that looks after the families in arrears and indeed the tenants whose landlords find themselves in arrears. For my party, vultures are no part of that solution. They are profiteering out of misery and should be shown the door. Fine Gael rolled out the red carpet and we must now live with the consequences. The Pontius Pilate act played by the Minister for Finance, Deputy Donohoe, as State-owned banks sell mortgages that are paying their way is despicable. On 29 November last year Permanent TSB announced it was selling 6,139 loans linked to family homes. This is not the first time family home loans were sold by this bank or other banks, including the State itself through the Irish Banking Resolution Corporation, IBRC, to vulture funds. What made this a new low was that the mortgages involved were those of families meeting their agreed arrangements with the bank. No sale to vultures is right but this sale was particularly offensive. It is time for action. It is time to say, "Enough is enough".
I will give Members a quick run-through of the provisions of the Bill. Section 1 contains interpretations of the sections. Section 2 is the crucial section. It introduces an obligation on a lender to seek permission from the borrower before a loan is sold when it relates to a residential property. Section 3 legislates for cases where the original lender will service the mortgage as an agent of the transferee. The lender shall confirm that the transferee’s policy on the handling of arrears and in the setting of mortgage interest rates will be the same as that of the original lender, and that the original lender will handle arrears as its agent.
Section 4 sets down the conditions where the original lender is surrendering control over interest rates and arrears policy. This will require the explicit consent of the borrower. Section 5 lists the information that must be transmitted to the borrower on foot of a request for consent under section 2 of this Bill. It may be the case that some of these points are already covered by the Consumer Credit Act 1995. This is something we can tease out on Committee Stage.
Section 6 sets out the rights of the borrower and the duties of the transferee in the case of a transfer. Section 7 is important. It lays out some very specific exemptions to section 2, which requires consent, such as when a bank is failing. The term "serious business difficulties" is defined as, "difficulties of a gravity that the Central Bank determines that a lender is failing or likely to fail". There are no wide exceptions in this legislation. This is a tight definition based on the triggers that would precipitate the resolution process in EU law.
Section 8 sets out powers for the Central Bank. Section 9 confirms that a lender in breach of this legislation is liable to the administration regime of the Central Bank. We can discuss how adequate that regime is, but for now the important fact is that there are repercussions for ignoring this law, unlike the code from which it derives. Section 10 allows the Central Bank to draw up implementing regulations while section 11 of this legislation is the title of the legislation.
It is clear that this Bill is in no way a get-out-of-jail-free card for borrowers. In no way does it mean a borrower can simply not pay and expect to stay in his or her home. That spin comes from desperate Government Deputies trying to divide their own constituents rather than stand up to the vultures. We must always draw ourselves back to the question of context. How did we get here? Did tens of thousands of previously unblemished families suddenly lose the will to pay their mortgages in full? Of course not. That is not what happened and we all know it. The cruel irony is that the banking collapse directly led to the loss of jobs and of businesses which in turn lead to hundreds of thousands falling into arrears. Ten years after the banking collapse, these same banks are now turning on those families unfortunate enough to have suffered during that time and are throwing them to the vultures. This is a vicious circle and its victims are hardworking families and individuals doing their best to recover after the banks crashed the economy.
Anybody with a sense of justice or fairness must see these vulture sales as completely unacceptable. The Government will surely say this Bill will end the market for vultures in this State. I hope so. I have no problem saying that. I do not want a vulture economy and neither does my party. Why not? It is because it is unfair for capital to swoop on distressed families, businesses and farms and pick off what it can before abandoning them. Vultures are interested in the short term. They see short-term profit and they swoop. That is not healthy for our economy or for society. An economy where vultures are prospering, often paying little tax if any, is not a healthy economy. It is the type of economy Sinn Féin wants to end. I am on the side of the struggling farmer, the struggling homeowner and the small businessman and businesswoman, not on the side of the vultures.
In contrast, let us look at how the banks are treated. These banks, which are being allowed to sell family homes to vultures, do not pay a penny of tax on billions of euro in profits and will not pay for a decade or two decades in some cases. They are subsidised by the help-to-buy initiative, they are allowed to charge rip-off interest rates, they reduce services in rural Ireland bit by bit and, to deal with the question before us, they are allowed sell off their loans without the consent of the borrower, in breach of the code of practice of the Central Bank, albeit that is a voluntary code. Why? The bailout is supposed to be over. These banks are profitable, so why is the Government policy about protecting them at all costs? Why are they not doing their job and making arrangements with customers who have paid them for years or decades while the banks ripped people off and stole their tracker mortgages? The European Central Bank, ECB, and the Central Bank have made it abundantly clear that there are many options available to banks to reduce their non-performing loans. However, this State has championed the cause of the vultures despite the damage and the pure economic short-sightedness of it.
I note the reported comments of the Central Bank today saying this Bill would bring about some type of Armageddon for everybody involved. Its spokespeople are implying that implementing a code the Central Bank itself drafted in 1991, a code that still applies, would lead to instability, increased prices and less lending. We have all heard this song before. Whenever a positive proposal is put forward to protect consumers from the banks or vultures it is the same tune. It is not credible and it cannot be used as an excuse to stall progress. This legislation is nearly word for word what the Central Bank code provides. That is a code that still exists, by which the Central Bank says that lenders need the consent of a borrower before a mortgage is sold. The Central Bank is taking a disgraceful position if the reports are true. There will be no Armageddon. We will see a healthier banking culture.
I should not need to remind anybody that the Central Bank is supposed to hold a mandate to protect consumers in financial matters.
How is its position in opposing this Bill compatible with that mandate? A central bank drawing up a code of practice criticising directly democratically elected Deputies who try to implement that very same code is a crazy situation. It is time to end the fixation with vulture funds and put people first.
This legislation is very simple. As stated in the code of practice, the Central Bank's own code, "A loan secured by the mortgage of residential property may not be transferred without the written consent of the borrower." That is where Sinn Féin stands, and proudly so. I look forward to hearing where others stand. We are saying let us all join together and say very clearly, "No consent, no sale".
Maire and Sean are a married couple in my constituency in Dublin Mid-West. They both work, and they have worked their entire adult lives in modest wage jobs. They get up early in the morning and they work hard, and they raised their now adult son exceptionally well. In their entire life they had never missed a mortgage payment until Permanent TSB unreasonably hiked up its interest rates and put them into difficulty. What did they do? They did what any responsible mortgage holder would do. They engaged the banks immediately. They sat down with them, went through the mortgage arrears resolution process and came out on the other side of that with a split mortgage. They have met every single payment under the terms of that agreement since it was reached. Their intention was always to return to full payments and eventually honour the full loan they took out to buy their family home.
In November last, they contacted me at a time when they were trying to see when they could return to full payments. They had received a letter from their lender to say their mortgage was due to be sold. They were not told to who, for how much or the consequences of that. That family have said to me repeatedly that they feel let down by their lender but also by the failure of the Government to protect them. They are now in a position where they simply do not know what will happen. Three months on, they still have not been contacted by their new lender and they are genuinely fearful that they could lose the home for which they worked so hard.
If this Bill passes here today, it comes too late for Maire, Sean and their son, and the other families who have been left in this position, but there are many more families like these people who can be protected. I have not heard any argument as to why the Minister would not pass this legislation. As Deputy Doherty has said, we are looking forward to hearing what other Members have to say but I say to Government that if it opposes this Bill, it is not only letting down all of these families but demonstrating clearly that it has no moral compass when it comes to protecting families that work hard, pay their bills and expect the Government to take their side. I imagine there are many Government backbenchers who will be squirming in their seats on Thursday when the vote on this Bill is being taken.
This Bill is very basic. It simply seeks to put into law and make real what the Government and the Central Bank consider best practice. It is not a dreamt up idea but a real solution to halt the scourge of vulture funds and is the right thing to do. No bank should sell one's loan to a vulture fund that has no morals or respect for human life. The only thing these vulture funds respect is profit.
These banks have been bailed out by Irish taxpayers, the very banks that caused the economic crash in the first place. The Government has normalised many issues in recent years such as homelessness, the very poor health system, suicide and many more. Let us not put the vulture funds into this bracket too.
We must support this Bill. I ask all Members in the House to support it. It is about providing solutions for people and not for banks. What happens if they do not support the Bill? They will be sending families to the guillotine, the very same families that bailed out these banks, and now the banks want to hit them again. We have the perfect opportunity to do the right moral thing here tonight. If Members do not support this Bill, I have always said that where there is an action there is an instant reaction. People will die and have died. Marriages will and have collapsed. Families are left broken. Children are left without any hope for their future. Do we want to be responsible for that? Those of us on this side of the House certainly do not want to be responsible for it. I can see the heading now - Government and banks with blood on their hands. Is that what we want? It is not what those of us on this side of the House want. Is this what we want to be proud of? Do Members want to tell their children or grandchildren in years to come that they made a terrible mistake or that they did the right thing and sided with the people they were elected to serve and not the banks? Which story will they be telling? I ask them to, please, support this Bill tonight.
This is simple but very important legislation. In November last, Permanent TSB announced it was selling 6,139 loans linked to family homes to vulture funds. These mortgages involve families who were meeting their agreed arrangements with the banks. They were fully up to date but the sale still went ahead. I have an issue with any sale to vulture funds but these sales were particularly heinous.
This is not a complicated Bill. It is sensible and not especially drastic. It simply wishes to provide a legal basis for a code of practice that sensibly believes that if a bank is selling one's mortgage, one should be able to say "Yes" or "No. I took my mortgage out with you and I would like for it to stay that way instead of being given to a vulture fund. Thank you very much".
The Bill builds on the Central Bank's own code of practice on the transfer of mortgages. The first line of the code of practice states: "A loan secured by the mortgage of residential property may not be transferred without the written consent of the borrower". Until recently, it seemed to be the view of Government that this should be respected. The former Minister for Finance, Deputy Noonan, stated: "Notwithstanding its voluntary nature, I expect that best practice dictates that the code be applied by all institutions to all classes of residential properties." What is the reason for the change? Why is the Government so enamoured with vulture funds now that it and the Central Bank are willing to disregard their previous code of practice?
The victims of this are hard-working families and individuals who are doing their best to recover after banks crashed the economy. It is time for action, and Sinn Féin says that enough is enough. The Taoiseach, Deputy Varadkar, may be a lover of vulture funds. I am not, nor is Sinn Féin. The Government may say that the Bill may discourage or stop vulture funds coming here. Given that their business is buying up half the country, all for a quick buck, with no long-term interest or regard for us as a people or a community or for those whose properties they have the loans belonging to, that is no bad thing.
The banks selling off these loans are not paying a penny of tax. They are subsidised by us by the help-to-buy scheme. They have been allowed to charge rip-off interest rates. It is time that we said enough is enough. We need legislation to stop the sale of these loans to these vulture funds where the borrower has clearly said they do not wish it to be sold. They are entitled to that, and the Government should back this legislation.
Ar dtús, ba mhaith liom mo chomhbhrón a dhéanamh leis an Leas-Cheann Comhairle agus leis an Teachta Pearse Doherty agus go háirithe leis na teaghlaigh de na fir óga a fuair bás san timpiste millteanach i nDáilcheantar an Leas-Cheann Comhairle. Gabhaim mo bhuíochas chuig an Teachta Pearse Doherty fosta mar chuir sé an Bille tábhachtach seo ar aghaidh.
Mar a dúirt na cainteoirí eile, Sinn Féin does not share the Taoiseach's opinion that vulture funds will willingly make deals with households and write down distressed mortgages. That has not been my experience in my Dáilcheantar in County Louth. We also oppose the Government's support for three Irish mortgage lenders, which the Government wholly or partly owns, selling off distressed residential mortgages to vulture funds. Last August, Ulster Bank sold off a portfolio of 5,200 mortgages to Cerberus. It was a deal worth €1.4 billion. The bank gave its customers 90 days notice of the sale of their mortgages. The Dáil will recall the sale by NAMA of Project Eagle in the North and of Siteserv, and the role of Cerberus in all of this is still the focus of a commission of investigation chaired by Mr. Justice Cooke and of an investigation in the North by the National Crime Agency.
The voluntary code of practice states: "A loan secured by the mortgage of residential property may not be transferred without the written consent of the borrower."
The Central Bank has acknowledged that no lender or credit firm has ever been punished for breaches of the code of conduct. In the years since the economic crash, the Central Bank has been more concerned with the welfare of the banks than the welfare of families at risk of losing their homes, including many in County Louth. Many households and small business owners in the county face uncertain futures because their mortgages have been sold off to vulture funds or whose mortgages might be sold off in the months ahead. An Teachta Pearse Doherty's Bill will protect households against their mortgage being sold to a vulture fund without the permission of the person involved by placing the code of practice into law. If it is good enough to be in the code of practice, it is good enough to be in legislation. I urge all Teachtaí to support this Bill.
Ba mhaith liom mo bhuíochas a chur in iúl chuig an Teachta Adams as ucht a focail comhbhrón dom féin, don Teachta Pearse Doherty agus do na fir óga a fuair bás de chuid na teaghlaigh Roarty, Harkin, Harley agus Scott san timpiste uafásach sin oíche Dé Domhnaigh.
On behalf of the Government, I also offer my sympathy to those affected by that tragedy.
The Government is opposing this Bill because it does nothing to strengthen consumer protection while it would cause severe damage to the mortgage market with potentially major impacts on financial stability and ultimately on the economy. The apparent logic behind Deputy Pearse Doherty's Bill is that customers whose loans are sold to private equity funds are worse off than those whose loans are not sold. The Central Bank carried out a review of the code of conduct on mortgage arrears, otherwise known as the CCMA, to ensure it remains as effective as possible and to examine this perception. The Central Bank sought the views of consumer representatives and advocates working to assist borrowers in financial difficulty, engaged with statutory bodies and industry stakeholders and conducted inspections of a retail credit firm, two credit servicing firms and a bank. It also gathered and analysed data relating to arrangements under consideration or being put in place by banks, retail credit firms and unregulated loan owners and ascertained whether they were more or less active in relation to repossessions. As the House will be aware, the Central Bank found the CCMA is working effectively and as intended in the context of the sale of loans by regulated lenders. It also found no material difference in the level of repossession activity. In fact, if we look at the number of principal dwelling house, PDH, repossessions that took place from quarter 1 to quarter 3 of 2018, out of a total of 727, banks were responsible for 644 repossessions and non-banks were responsible for 83. The Deputy's apparent logic does not stack up.
The House will recall that late last year, the Government supported and assisted Deputy Michael McGrath in bringing his Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 into force. The plight of those who find themselves in mortgage arrears is a major concern to the Government. This is demonstrated by the establishment of the State funded Abhaile scheme, which seeks to get solutions into place for those in mortgage arrears by providing them with free and independent expert advice and support tailored to their individual circumstances. This includes the identification and negotiation of solutions, and support at court if they are facing repossession proceedings. As recently as yesterday, the director of the Insolvency Service of Ireland highlighted how 95% of personal insolvency arrangements negotiated by personal insolvency practitioners result in people staying in their homes. We are making progress but we need people to engage in the process and we are doing all we can to encourage this.
The Central Bank of Ireland has significant concerns about the terms of the Bill from a consumer protection, prudential supervision and financial stability perspective. It, too, is strongly of the view that the various statutory Central Bank codes of conduct and the Consumer Protection (Regulation of Credit Servicing Firms) Acts of 2015 and 2018 provide sufficient protections to consumers whose loans are being sold. As the Minister for Finance has stated many times in this House, all mortgages or other loans which are sold or assigned to a new creditor will continue to be subject to the terms of the contract as entered into by the borrower. As a matter of contractual law, the new creditor is not able to unilaterally change the terms and conditions of that contract.
Deputy Pearse Doherty has cut and pasted, with some minor amendments, the outdated voluntary Central Bank code of practice on the transfer of mortgages. This is not how good legislation is developed and drafted and, consequently, it is no surprise that it conflicts with other more recent legislation. The voluntary code was put in place as far back as 1991. However, the legal, regulatory and consumer protection environment has changed significantly since then and it is no longer suitable for a very changed financial environment 28 years later. The Central Bank has informed the Department of Finance that it intends to consider withdrawing the code this year in light of the key protections now contained in statutory codes.
Deputy Doherty's Bill will ban the sale of any mortgage loan unless explicit written consent is given by the consumer. The level of interference proposed by the Bill in the mortgage market is, we believe, both disproportionate and potentially unconstitutional. One of the Government's key priorities is to support the normalisation-----
-----of our banking system over time. The Government is working to ensure that our banks are able to invest in households and businesses and provide the credit and lending that is needed, all the while ensuring that the most appropriate and effective framework of consumer protection is in place. This Bill does not in any way support or complement these key priorities.
Aside from preventing loan sales to tackle non-performing loans, the Bill would also impede the funding model for mortgages because it makes securitisation almost impossible, increases the risks for lenders and effectively raises questions over the use of asset covered securities as a funding source. All these issues would result in increased interest rates for existing standard variable rate mortgage holders and would also be reflected in reduced new mortgage lending with obvious knock-on effects for the construction of new residential property. This would go against all that we are trying to do in these areas.
As the Bill compromises the transferability of mortgages and weakens them as a form of security, it would also be reasonable to expect that it could render residential mortgages ineligible for use as collateral by banks when seeking European Central Bank, ECB, or Central Bank emergency funding in liquidity operations. This would be a catastrophic development if a crisis were to occur in future. As we saw during the most recent crisis, Irish banks pledged a large portion of their mortgage books as collateral to the ECB for emergency funding and to take away this flexibility would create obvious financial stability risks. The Central Bank of Ireland and European Central Bank will only accept collateral for funding purposes that can be taken over if a bank defaults on its obligations.
The main mortgage lenders in the market have used asset covered securities as part of their funding strategy for many years through issuing bonds for market funding. These bonds are acquired, in the main, by international investors as the structure is well understood and similar to that which exists in other European markets. The covered bonds rely on the assumption that they are secured on the underlying mortgages which can be accessed in a distressed situation. Clearly, anything which could impact investors' ability to access their collateral could severely impact the credit rating of such instruments and, by extension, the pricing and investor appetite for such bonds, potentially rendering the model inoperable.
Securitisation is an important part of the financial system and when the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 was before the Oireachtas at the end of last year, it was the subject of much consideration. It was accepted that the passive securitisation model, where the investors do not play a role in the administration of management of an individual loan, do not have any significant adverse implications for consumer protection. However, the Bill proposed by Deputy Doherty, which requires borrowers consent for all loan sales or assignments even if the assignment is undertaken for bank liquidity or other legitimate commercial purposes, will, even though it will not impact in any material way on the borrower, reverse this approach and could set at naught the approach adopted for the recent Consumer Protection (Regulation of Credit Servicing Firms) Act 2018.
The rehabilitation of our banking system has been slow but good progress has been made. A critical element has been the reduction in the number of non-performing loans and much of this has been achieved through non-performing loan sales. The continuing high level of non-performing loans on Irish banks' balance sheets is a vulnerability that presents a risk to financial stability and could impede the provision of credit through additional regulatory capital requirements.
It also results in an opportunity cost in foregoing new lending to households and firms. Again, both the Central Bank and my Department believe that the costs imposed by this Bill on financial institutions may in turn have the chilling effect of increasing interest rates for consumers which is the last thing we want to see. It is also important to highlight that if loan transfers to third parties are no longer a viable option for banks to allow them reduce their non-performing loans, a likely consequence would be an increase in the number of repossessions by banks. The significant commercial and financial restrictions imposed on lenders by this Bill has the potential to restrict their ability to raise liquidity and funding on reasonable terms and their inability to sell their non-performing loans could have knock-on capital implications. It could impose significant economic and financial costs for the Irish economy and society and, as we saw in 2008 and the following years, this burden will eventually and ultimately have to be met by the Exchequer and society at large. Therefore, this Bill does pose very significant long-term implications and inherent contingent liabilities for the Exchequer and therefore it does not require a money message.
I am sure. I cannot emphasis strongly enough how disastrous this Bill would be for this country. Its effects will only be negative and wide reaching. For the consumers it seeks to protect, they will simply see a mortgage market which has limited funds to lend, increased mortgage interest rates and the possibility of an increase in repossessions. For the financial system, it will add uncertainty at a time when we already have more than enough uncertainty due to Brexit. I call on the House to oppose giving this Bill a Second Reading.
I am sharing my time with Deputy McGuinness and we will have ten minutes each.
I would like to express my personal condolences to Deputy Pearse Doherty, the Leas-Cheann Comhairle, the other Oireachtas Members from Donegal, their constituents and, above all else, the families of the four young men who tragically died in the road accident at the weekend. It was a devastating event and it puts everything else into perspective.
I welcome the opportunity to make some remarks on this Bill. The Minister of State, Deputy Canney, in his response on behalf of the Government, certainly did not hold back in the predictions he and the Department have made about the implications of the Bill. He cited increasing interest rates, an increase in the number of repossessions and significant economic and financial costs for the Irish economy and society as a whole. It is important the Government understands, certainly at least from our perspective within Fianna Fáil, why there is such frustration among consumers and mortgage holders with the current system and the difficulties they face on a day-to-day basis in dealing with so-called vulture funds.
Deputy McGuinness is the chairperson of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach and Deputy Doherty is a member of it. We have tried on many occasions to get the so-called vulture funds to come before the committee to engage with us, answer questions, debate their business model, the way in which they deal with individual mortgage accounts, the type of solutions they offer and how they make their decisions. On each and every occasion they have refused to engage and to come before a committee of this House. This House passed a motion on that very issue sometime ago. That in itself leads to much suspicion and worry.
One can say what one may about the banks, and we certainly do not hold back at that committee or in general in this House in criticising them where it is warranted, but they come before that Oireachtas committee, complete a very detailed questionnaire and answer questions. We are not always satisfied with the answers we get but we do get engagement and there is no hiding place for them. When we contrast that with the other loan owners, these funds which purchase loans from financial institutions, there is no accountability, no engagement and up until recently, those funds had no direct oversight by the Central Bank. I welcome the fact that the Government supported our Private Members’ legislation which, in essence, regulates those funds for the first time. I acknowledge the work of the Minister's Department and his support in bringing that about, and in recent days ensuring that it was signed into law.
It has long been our position as a party that the banks should be working through their loan books themselves. They should be making decisions on a case-by-case basis. They should know their customers. They certainly should have an intimate knowledge of the history of each individual mortgage account and they are best placed to do everything that possibly can be done to rescue that mortgage and to ensure that the family home is saved.
I acknowledge there are mixed messages from the Single Supervisory Mechanism. When we met its representatives in Frankfurt some months ago, they were at pains to say they set no targets. There is no pressure on the institutions to reduce their non-performing loan levels. I know that is not the case. They may not have told the banks how to do it but they certainly have told them they must do it and that they must reduce their non-performing loan levels to European norms of the order of 4% to 5% of their loan book. Therefore, they are speaking out of both sides of their mouth.
When it is said, as it often is, that the vulture funds are more likely to do deal with borrowers than banks, that may well be the case if one is willing to sacrifice one's home. As somebody who advocates for borrowers and deals with individual cases quite a lot, I have not come across an instance where somebody has been able to stay in his or her home and has negotiated a very good deal with these vulture funds.
Regarding this legislation, we will support it on Second Stage. It warrants very careful examination at the pre-legislative scrutiny phase. I note the Minister of State, Deputy Canney, said it does require a money message. I take it the Bill will not be in any way supported by the Government, in fact it will not allow it to proceed to Committee Stage, but perhaps the full pre-legislative scrutiny can still be conducted and that should be done.
An opportunity was missed when it came to the review of the code of conduct on mortgage arrears. This is an issue I raised directly with the Minister. Under section 39 of the code, any lender is only required to consider the forbearance options, the alternative repayment arrangements that it offers. It is only required to consider those; it is not required to consider the full suite of options that are available under the mortgage arrears resolution process. There is a gap, a deficit, there. It means that, in effect, these funds can say to borrowers that they do not provide split mortgages or arrears capitalisations and are not in breach of any code, notwithstanding the regulation that has now been extended to them. That is a change that should have been made and the Minister should still make that change.
In addition, when we brought forward legislation to provide powers to the Central Bank to restrict interest rates. That, too, was knocked back by the Department and by the Central Bank but the reality is that if one of these funds decided tomorrow morning that the interest rate on a loan is to double from 4% to 8%, there would be a hue and cry. It would be a scandal but there is nothing that anybody in this House, the Central Bank or in the Minister's Department could do to deal with that because the Minister refused to put on the Statute Book even limited powers to deal with the egregious interest rates which are currently being charged in some cases but which potentially could be charged in a scenario where interest rates are increased.
The fundamental problem with these funds is that their business model is very different from the banks. The banks hope to be here in 20, 30 or 40 years. They hope to build customer and brand loyalty. If they give out a mortgage there is a reasonable expectation that bank will still be the institution accepting the final payment on that mortgage in 20 or 30 years. There is no such expectation with any of these funds. They will not be here in ten, 15 or 20 years. They simply have a different business model. We are not only looking at one portfolio sale to one of these funds. We will see these sales go on again and again and the reality is that loans, over the course of the life of a loan, may well end up changing hands on multiple occasions, and that is not in anybody’s interest. It is not the road that we should be going down.
There is obviously an issue regarding the application of this code in respect of mortgages that have already been written.
Borrowers have signed a mortgage contract which explicitly allows the lender to sell on the mortgage. Perhaps it is a legal question. I would value independent advice from the Parliamentary Counsel or others on whether the Bill, if enacted, would have any impact on mortgage contracts already been entered into. Can the Oireachtas set aside that contractual provision to which both parties have already signed up? I have my doubts, but it is a matter of legal opinion.
On the consequences of the Bill for the financial system, the banks and so on, significant issues have been raised. Securitisation is a legitimate and bona fide financial transaction, especially in this context where it is passive, where there is regular management of loans and decisions on loans are made by the existing lender who continues to hold legal title. From my perspective, it is a bona fide transaction. The Minister of State, Deputy Canney, said on behalf of the Government that, if enacted, the Bill would lead to an increase in interest rates. Irish consumers and mortgage holders are already paying far more than they should be for loans. That is an issue we need to examine further and make progress on. It was also said it would stop non-performing loan sales. There is no doubt that the banks are under immense pressure from the European Union. They should work through their loan books and deal with them. If the Bill enters a pipeline that it will take many months to come through, it could accelerate non-performing loan sales because if someone in a bank is looking at a high level of non-performing loans, he or she might try to sell them before any such legislation came into place. That matter would need to be teased out.
There is a real issue, much of which derives from the lack of engagement and accountability of the so-called vulture funds. They are not easy to deal with, as I can tell the Minister personally. People have a reasonable expectation that their bank will continue to work with them and continue to administer their mortgage.
I support the Bill and encourage the Government to reconsider its position. All of the contributions I have heard so far, by Deputy Pearse Doherty and his colleagues in Sinn Féin, as well as by Deputy Michael McGrath on this side of the House, have focused on the individual borrower, the person with the mortgage or loan that has gone wrong. I stand beside them, as Deputy Pearse Doherty said he does, including farmers, businesspeople with bad loans and those in mortgage distress who have families and are in difficulty. I do not know how the Minister of State, Deputy Canney, can stand over his contribution as that is not what he stands for or believes in. He read it for the Minister for Finance, Deputy Donohoe. I do not think he read it for himself. Within government and on the Independent benches there is not complete support for the direction it has taken.
When the banks failed, the Government rushed to their support, set out new legislation, declared that it was an emergency, that they were different times which required the type of radical legislation that was implemented at the time. The banks that the Minister is defending have since got back to that position, with €1.6 billion in profits and do not pay tax, while the vulture funds are encouraged by the Government to buy up distressed mortgages and loans, with no accountability to this House. The position might not be as bad if one was to set out the type of legislation required to save the 80,000 or more mortgages that are in distress. They are not just mortgages. They are families and people we know within our communities who are affected by the banks. They did not set out to take out a massive mortgage and build a massive house. We all know the stories of how they went to the banks and came out with almost double what they had gone in for. They came out with car loans for which they had not gone in. They put their confidence in the banks which, not for the first time, led them astray. Now that they are in distress, they are turning to this House and pleading with us to give them some protection against the vulture funds, but the only response from the Government is to trot out a considerable amount of nonsense and misinformation.
Like Deputies Michael McGrath, Fitzmaurice and others, I have gone to meetings with vulture funds. They do not do deals. Even if they did, how does a person with a distressed loan or mortgage raise the money to buy himself or herself out of the problem when he or she has already been reported to the bank, appears on the credit bureau listing and, therefore, cannot obtain credit? The Minister of State, Deputy Canney, said there was only a small number, 83, of repossessions in the names of non-banks. There were 644 by the main banks. The Minister of State should put himself in the position of any one of those families. It does not just happen on one day but over a long time; it could be ten years. That family have to sit with their children, go through the trauma and allow the next generation of younger people to see what it is like to be treated in that way by a bank and a Government that does not care. We are not just ruining the lives of the parents but also those of the children. As we condone the actions of the banks, we are educating the next generation of bankers to be just as disgusting as this lot.
The argument is made that borrowers do not engage with the banks. Any of the people with whom I have dealt has not only engaged with the bank but every single week has written and phoned it. However, there is no engagement. The people concerned want to make an arrangement and honour their commitments. I am not arguing for those who do not want to pay but for those who are decent, have gone through difficulties and want to work their way out of them. We are not giving them the tools necessary to deal with the banks and their legal arm of banks and to assist them to get out of the difficulties in which they find themselves.
The vulture funds do not deals, do not come before this House and are not accountable. The Minister will say all of the protections travel with loans as they pass to the vulture funds, but they really do not in practice. Let us look at the structure involved in Permanent TSB transferring loans to Glenbeigh Securities and then to many other companies, before they finally end up in a trust fund in New York. All of the major houses that make money because of the trauma and desperate situations in which people find themselves are involved with the vulture funds and we do nothing but encourage them. The Central Bank and the European Central Bank are as much to blame. They never talk about the rights of the consumer and never stand over the rights of a whistleblower; rather, they stand full square behind the banks in full support of the terrible damage they do to Irish society and we say nothing.
I want to look at another arm of the State - the courts. I fully understand the separation of powers, but the last port of call for thousands of families is the masters court, where he checks the paperwork from the banks and borrowers. He has forced the banks to correct the paperwork or acknowledge that their paperwork is not adequate to press the charge against an individual concerned before the court.
Most of these individuals are lay litigants, by the way. Having done this and done the State a hell of a service while being fair to the banks and to the borrowers and creating a level playing field, he has now been removed from that task by the President of the High Court
I was astonished to learn last week that the media knew of this before Mr. Honohan did. Then, to try to compound the problem for the Master, certain comments were made by other judges and put out into the public domain to discredit him, a typical act of trying to destroy the messenger.
I will refrain now, having condemned them completely for their carry-on down in the Four Courts and the manner in which they treated this individual. It was incredible to read the reports of it. For the individuals who appeared in court, this was their last port of call. Now that it is gone, all they can do is turn to this House for further assistance.
No consent, no sale, that is the road we need to go down. We need to offer full protection to the individuals trying their best to make a deal to get out of the problems they face. This is exactly the same thing we did for the banks. We bailed them out, we put them back in business, and they are now beginning to treat business people, borrowers and those who are in distress in the same disgraceful manner in which they treated them before. It did not take them long to get back on their feet and to begin to turn around and treat people in a way we did not expect. I encourage the Minister to examine this Bill. If he will not support it, he should give us an alternative. He should also tell the Central Bank that it also has a job to look after the consumer in these cases, which it is not doing.
I offer my condolences to Deputy Pearse Doherty, the Leas-Cheann Comhairle and the other Deputies from Donegal on the tragic loss of four young people over the weekend.
I will support this Bill. It is a good Bill. I do not understand why we would not want to do something about an element of the code of practice that would basically give it a bit of power. I listened to the Minister of State, Deputy Canney, and, my God, I do not know what has happened in two years. Perhaps Ministers of State are reeled out, the senior civil servants hand them a page and they must read out whatever BS is on it. He is absolutely not the same person I knew two years ago, when we sat in front of the Minister at a table. I spent about 80 days up and down the road for all the good it did me. The first thing that was agreed with the officials of the Minister at the time, Deputy Noonan, was that before any bank could go to the courts about someone in a distressed mortgage, a split mortgage or mortgage-to-rent would have to be offered in the first two days. Have we seen this since? Absolutely not. I hope we are not wasting our night here and that the Government does not do its usual trick with a money order and send it to their good buddies whom they were with over in Davos and all these other places over the past week or two, and their buddies in Brussels who want to bring in other legislation to ensure that all loans that banks have can be sold on to vulture funds.
The former Minister, Deputy Noonan, put it on the record, and there is no doubt about it from what we have heard tonight from the Minister and the Taoiseach, that they are lovers of vulture funds. That is a sad thing. I heard what came out in the report tonight, and I do not think the Minister of State, Deputy Canney, believes the stuff he read out, that vultures are better. Let us be very clear. If a bank sells on a mortgage, a vulture will not offer the borrower a split mortgage. That is the bottom line. Let no one cod themselves. They look for a demand of money. Yes, a borrower who has one house and who is willing to get the hell out of it will probably get a write-down if the loan is bigger than the house is worth. This option is not very freely available to people with young families. This is what we are saying to the people. There does not seem to be any sympathy at all or any attempt to do anything about this.
Let me be very clear on this. A Bill was tabled here by Deputy McGuinness. I supported it, as did Deputy Mattie McGrath in front of me. Edmund Honohan put it together. It is sad to say that in the case someone who checks paperwork and who tries to ensure a level playing field, which is all any of us is looking for, is made sure he will not handle cases again for whatever reason. This is a person in whom many people would have put faith and who has given a bit of fair play to everyone on both sides of this argument. This does not just go one way. What happened over the weekend was disgusting. I am just flabbergasted that the Government will not support this Bill. We need even stronger legislation. This is for people to stay in their family home.
Fr. McVerry told us a week ago that there are 12,000 buy-to-lets. Even if one is not worried, as the Government is not, about the people who own the houses, what about the people living in them, which would be 24,000 or 30,000 people? We know about the current homelessness situation. Are we more worried about what Goldman Sachs made? I saw today what it made as a vulture. Are we lovers of Promontoria? Are we lovers of all these vulture funds around the world? Do we play the good kids of Europe to ensure we will get our loan books down and say, "Yes, sir"? This scaremongering is used then that interest rates will have to be higher and all these other different scenarios. There is always a solution for a bank. If it sells a loan to Promontoria, Goldman Sachs or whoever else, it can always say to the borrower, if he or she does want to get rid of it, that it will give him or her a 40% or 50% write-down. Their options are always there. Is it wrong to say to borrowers on the first day they go in that they must sign their name to the loan to the effect that they have done a deal with whichever bank they have done it with? Then the bank can decide to sell something on. We need a little realisation in this country. If I buy something, I will not be selling it down the road again. I take the risk on it. Banks have been bailed out in this country to the tune of €65 billion. There was scaremongering as to what credit unions would or would not do. They did not get near the money. They only used a few million.
We seem to have this psyche that whatever the ECB, the Central Bank and the Department of Finance say goes, that the banking sector must be left tax free and make plenty of money, that anything that looks dodgy will be sold on to someone else outside of this country, and that our country must be owned by foreigners. We are more concerned about this than looking after men, women and children in our own country. What is going on is deplorable. I am not a conspiracist but I believe that what I saw happen to Edmund Honohan over the weekend represents a stacking of the odds against the ordinary person.
We now move on to Solidarity-People Before Profit. I remind Members of ruling No. 458, which states that Members may not discuss the conduct or actions of judges.
The decision on the assignment of the Master of the High Court is an internal matter of the administration of the courts and should not be discussed in the House.
It is ominous, sinister and deeply worrying that cases involving debt have been removed from Mr. Edmund Honohan. He challenged the ruthlessness and brutality of these banks and vulture funds in how they dealt with people in mortgage distress who were trying to engage with them, and called them out for their ruthlessness. This matter is related to what we are debating here and the way in which the Government, in defending its opposition to this eminently humane Bill, makes reference to the potential impact on the global financial system and the system of securitisation of loans which lay at the back of the global crash of 2008. The Government is defending that.
The position under the Central Bank's voluntary code was that what this Bill proposes should, in fact, be the situation and people's mortgages should not be sold without their consent. However, the Government says that code was introduced 20 years ago and things have moved on since then. What has moved on is that the banking and financial system now depends on the securitisation of these loans in order to function. According to the Government, that is the reason we cannot do what the Central Bank, until recently, believed we should do when it comes to dealing with these loans and the relationship between the borrower and the lender.
One could be forgiven for concluding, as I do, that the Government's response to this Bill is to simply forget about the human being. The vast majority of people who were in front of Mr. Edmund Honohan, or in front of the courts, are just ordinary, decent human beings who, in good faith, obtained loans to put a roof over their heads because that is the only way vast numbers of people can get a roof over their heads. These people did not seek to rip off the banks and society but to put a roof over their heads, notwithstanding whether their loans are performing or non-performing loans. The bottom fell out of the economy because of the actions of the financial institutions and others speculating on property and driving the property market out of control. That was not the fault of ordinary people with either performing or non-performing loans. The idea seems to be that those people somehow have to take the rap to protect a financial system that is out of control. The fact that the financial system was out of control was what landed us all in this mess in the first place. The Government is defending that and has used it as its defence against a Bill that provides that people should have the right to consent or not consent to the sale of the mortgage loan they agreed with their bank or mortgage lender. I am trying to remember the type of lender Permanent TSB is.
No, there is a name for institutions like Permanent TSB. In any case, I am referring to banks and other forms of mortgage lenders. I do not accept the Government's defence for one minute because it means the human being goes out the window. It inflicts cruel anxiety and hardship on people who sought those loans in good faith. If borrowers have got into trouble with repayments, in the vast majority of cases it was not of their making. Deputy McGuinness and I have plenty of experience with people in these circumstances.
When the chief executive officers of the banks appear before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach they state that all will be fine if people just engage with their bank. From direct experience of dealing with people, I know that trying to engage with the banks and find somebody to talk to in the banks is often like trying to find a needle in a haystack. Sometimes, the only reason people manage to get a bit engagement is that a Deputy who, like me, has a line through the committee steps in and he or she may get the phone number of the CEO. Those are the lengths to which people have to go to get a meeting between two human beings to discuss the case. Even then, a reasonable solution may not be found because a week or month later different officials will be dealing with the case and may say they do not remember there was a meeting or this, that or the other. It goes on and on and, at the same time, the letters and threats keep coming from the bank. These terrify people who then end up in court facing threats of repossession.
This Bill proposes to bring this back down to a human level. It provides that the individuals who sought loans to put a roof over their heads would have the right to insist that the institution that gave them the loan maintain the existing arrangement. Borrowers would be able to refuse to allow their lender to flog off their loans to somebody else who does not know or care about them and views their mortgage loan as nothing more than an opportunity to make profit or trade on international markets. I see no justification for the Government's opposition to this Bill, other than that it has become a complete and utter slave to the financial markets and will do whatever the markets say.
I will finish by repeating something I said in the earlier debate. Let us contrast the Government's defence of the right of these banks to flog off people's loans to vulture funds, which will do what the hell they like to distressed mortgage borrowers, with the case of our friend, Mr. Sean Mulryan, who was in the news over the weekend. Mr. Mulryan borrowed hundreds of millions of euro and helped to bankrupt the economy, along with his other developer friends, yet the State engaged with him. The National Asset Management Agency paid him €200,000 to get his business going again. Mr. Mulryan then got himself out of NAMA with the assistance of some of the major international financial operators and is now back in control of sites in the docks, which he is flogging to the Central Bank for about €200 million.
The State engaged with Mr. Mulryan who was shown a great deal of human consideration. He was not a good faith borrower seeking to put a roof over his head. Having helped to crash the entire economy because of his greed, he is back in business and the Central Bank is to pay him €200 million to buy new premises beside the spanking new premises it has already required. Having moved from Dame Street, it will buy another new premises from Mr. Mulryan. The contrast could not be greater. That is a bit of moral hazard. The only moral hazard the Government is concerned with is the hazard that might impact on global financial speculators.
I take this opportunity to extend my sympathy to the families of Shaun Harkin, Daniel Scott, John Harley and Mícheal Roarty on their tragic loss at the weekend. Everybody, across the country, feels very strongly for them and I pass on my condolences.
I support this legislation which stands in stark contrast to the position Fine Gael has maintained since it came to power, that of taking the side of vested, private sector interests over the interests of ordinary people in this State. Since Fine Gael came to power, vulture funds have fast become a normal feature in the economy. Distressed mortgages are now regarded as a commodity, which are bundled up in new financial products and offered as fresh pickings for vulture funds making their way through the economy at the invitation of the Government. Fine Gael continues to open up the market to include a wider net of homeowners vulnerable to vulture fund takeovers.
A new low has been reached. The Government and those with vested interests in the sector have been doing their best to make out that vulture funds are a sign of a healthy, functioning economy. So much spin has been spun that when the Central Bank's report on the credit servicing funds was published before Christmas, the Government and key players in the industry, including the Central Bank, used the same report to speak positively about vulture funds. They made out that the vulture funds are not only good for the economy but were better than the banks for those with distressed mortgages. Either the banks have reached a new low in the country or spending has reached a new high. Either way, we are in sorry times if vulture funds are better than banks because the banks are bad and vulture funds are worse.
The existence of vulture funds in our economy is a symptom of a complacent Government prioritising private sector interests over the interests of ordinary people. It is also a symptom of a banking system collapse and a system that has failed to provide a service to its people. Banks, through incompetence and prioritisation of a select few, have developed a situation where vulture funds could easily move in. The recession was used by the Government and banks to transfer the responsibility of loans to other entities beyond the radar of the Central Bank regulations. This is no doubt done on purpose because it suits Fine Gael to shirk its responsibility for financial hang-ups from the recession and place them on another entity. For that reason, those of us in opposition, who have defended the rights of homeowners, have consistently called for greater regulation of credit financing firms. That is why I support the Bill.
The Bill aims to put on a statutory footing the original voluntary code and ensure the terms of the original mortgage and the way in which they deal with arrears remain the same. However, the Minister has already ruled out putting the mortgage transfer code on a statutory footing, defending the stance by saying consumers are already fully protected. I have long believed the role of traditional pillar banks, as we know it, is over. They are no longer functioning for everyday people and have instead protected the interests of a select few. This is not taking into account recent scandals which are too many to list. For that reason, it is worthwhile considering alternative banking models and considering the role of credit unions which will work on behalf of people. A capital-rich credit union business could easily replace a foreign vulture model with €14 billion on deposit. The credit unions could take on distressed mortgages from banks and work directly with homeowners to find long-term, sustainable solutions. That is a solution that would benefit people and that is not what the Minister is interested in.
The problem of vulture funds will not go away any time soon. In an alarming new proposal, a European Commission directive aims to develop a secondary market for non-performing loans which would expand the distressed mortgage market and increase the role of vulture funds in the economy. It will also restrict the right of EU member states to impose their own regulations on vulture funds. Inevitably this will undermine the rights of borrowers and consumers and ultimately homeowners. Instead of voluntary codes, we need to see a complete ban on the role of vulture funds in the mortgage and housing sector but apparently the EU always works on our behalf.
One of the most regressive developments in economics from the late 1970s and early 1980s, in the Thatcher-Reagan era, was the process of securitisation and the bundling and selling of loans. The most despicable aspect of that development was the bundling and selling of mortgages and home loans. It has profoundly impacted on hundreds of thousands of Irish citizens, especially in the years of this Government since 2011.
I am delighted to have a brief opportunity to strongly support the No Consent, No Sale Bill 2019 tabled by Deputy Pearse Doherty and Sinn Féin. Last Wednesday, I attended Deputy Pearse Doherty's informative briefing on the Bill and heard outstanding contributions on the mortgage and securitisation crisis from David Hall of the Irish Mortgage Holders Association and Carly Bailey, whose family lost their home in this despicable process.
We passed the Consumer Protection (Regulation of Credit Servicing Firms) (Amendment) Act in 2018, which became operational in the past week. I spoke strongly in support of that Bill and I welcome the small step towards regulating vulture funds. Sinn Féin’s Bill will profoundly strengthen the regulation by requiring the consent of the mortgage-holder before a mortgage can be sold. It is a welcome addition to a process of finally beginning to regulate vulture funds. It is a pity that coalition partners, Fine Gael and Fianna Fáil, are not supporting this welcome Bill. A point Deputy Pearse Doherty made on a number of occasions and which my colleague, Deputy Pringle, has just made is that what we are doing here is simply putting on a statutory basis the Central Bank's mortgage rules and making them a statutory requirement. It is very disappointing to read today that the Central Bank is warning the Department of Finance not to support the Bill and saying it will somehow reduce banks' ability to sell non-performing loans. One of the scandals is that so many performing loans have been sold to vulture funds. A whole host of other spurious reasons were given in the Central Bank's opinion on why the Minister should not do this.
The Minister knows from his experience in Dublin Central, as I know from Dublin Bay North, that the Bill is the right way to go and we should do it. It is sad that Fine Gael has had a particular affection over the years for vulture funds. I was in this Chamber when the Minister's predecessor, Deputy Michael Noonan, extolled the virtues of vulture funds. He talked about vultures in the ecosystem. They fulfil a useful function. He obviously meant they pick the carcass clean. In this case we are talking about the intense suffering of families who have lost their homes and suffered grave stress. They are the kind of constituents we meet week in and week out. We had the appalling situation a few weeks ago when the Taoiseach said that vulture funds are more effective than banks. The reality is that Fine Gael, over the past eight years, has done everything possible to protect the kind of asset-earning, profit-motivated actions of the pillar banks, all banks and the flotilla of vultures that follow in their wake.
I support the Bill proposed by Sinn Féin and Deputy Pearse Doherty.
I appreciate being in a position to support the Bill. It is very worthwhile to bring it before the Dáil. Why is it that people in a vulnerable position are being blackguarded in the way that they have been without being consulted? Why do they see big businesses coming along and buying up the loans which means they end up in properties owned by a group of people who have millions? It is inherently wrong. It is very disappointing that the Government will not support the Bill because it is exactly what it should be doing. Every person in the House should support it. There are big write-downs for everybody. There were write-downs for people who owed millions of euro. Why is it different when ordinary, honest-to-God couples find themselves in financial difficulty? If the institutions are going to sell off loans to vulture funds and people like that at a write-down, why is the write-down not given to people who are in the house? Why can they not go away and get a loan for a lesser amount of money than what it was originally and stay in their family home at an affordable price that they can pay? That is why I support Sinn Féin in what it is doing here. It is very worthwhile. It is wrong that not everybody is supporting it. I know the Minister has to look at everything but I do not see why he does not support the Bill because it is worthwhile.
I support the Bill wholeheartedly. I have already sympathised today with those affected by the tragic accident in Donegal, which is so sad. There are many tragedies on a daily basis as a result of the carry-on of the Minister's Government and successive Governments in allowing the banks to run this country and to control it. There is a meeting in the post office on Clogheen tonight, which I should be at. The post office is being closed thanks to the Minister. Most of us here unanimously agreed we should support the post offices for 12 months and put some capital into them to allow the introduction of the community models we looked at in Denmark and Germany with the profits going back into the community.
However, the Minister vetoed it. He cannot look at me now. He vetoed it because the Government is 101% in hock to the banks. The former Minister, Deputy Noonan, said that we needed the vultures and that they were very good and necessary. One would know he was never a farmer and saw the way vultures deal with dying sheep and lambs just after they are born, taking the eyes out of their heads. That is what they are. He mentioned the carcasses as well.
The Taoiseach has said the vulture funds are more effective than the banks. It is easily known he never had a mortgage, business loan or a family threatened with being thrown out. The way the Government is treating the people is disgraceful. The contempt it has for the public is beyond belief. It will not support any Bill to put manners on the banks. Thankfully, the Government will lose this vote again owing to a sea change from Fianna Fáil. I understand today it was due to vote with the Government, but the confidence and supply agreement must have got a bit of a shudder. The pipe must be rusting somewhere again. They are afraid of the people, and why would they not be?
As with other Deputies, I have met families who are trying to deal with the banks and trying to do their best. I am not here to speak for the "won't pay, can't pay, don't want to pay" people. I do not represent them. I am talking about ordinary people who took out loans in good faith and are trying to deal with the banks. They sell on the loan for 20% or 30%. They will not offer it to those people instead. Deputy Fitzmaurice and I tabled amendments to the Finance Bill proposing that the Government should make up the balance in taxation for what the vultures get it for, but the Minister refused. I would be ashamed if I were the Minister for Finance who allowed the vulture funds to do what they are doing to the citizens of the country. A week after we celebrated the centenary of the First Dáil, I would be ashamed to be the Minister for Finance.
The Master of the High Court, Edmund Honohan, was helping people. He spent countless hours and days preparing legislation to be brought to the House. He has been fair. He has not been unreasonable to the banks, he has been fair with people, and he has been admonished and removed from the system by the powers that be at the Government's request because he is appointed by the Government and not by the courts, Mr. Justice Kelly or anybody else. He is appointed by the Government. The Minister knows that but he wants no message of support for ordinary people. The Government is in hock to the banks. Its legacy is a disgrace and will be a disgrace. We can see what has happened with the children's hospital and everything else. The Minister is just self-serving.
I voted for the bank guarantee, the single biggest mistake I made in my life and I have made many of them. I will regret that to the day I die. What have they done to us? The Minister will see how his friends in Europe treat us in the next six weeks when Mrs. May gets tough. We will see if Europe cuts us adrift like it did with the bailout when it charged us 6% for the money even though we got it from the IMF for 3%.
What the Minister is doing is a thundering disgrace and he should be ashamed of himself. There is not a single solitary soul on the other side of the House and it is sad that there is not a Labour Party Member in the House.
They took my time, but it is all right. Like the other Deputies, I commiserate with the families in Donegal who lost their four lovely sons. It is very sad.
I do not understand what is going on here at all. I am sure the same is true of anyone outside looking in here seeing what is going on. We debated a Bill to put money away in a rainy day fund and to make this generation suffer more without services even though they are struggling to survive. They are already struggling as it is and yet we want to make sure that we pay the banks in the next bailout. The Government had money a few minutes ago to put into this fund. Why does it not do something about these people who are in distressed situations and who have mortgage arrears? Fine Gael promised it would do that if it got into government again. We all subscribed to the ideal that we would help people with distressed mortgages.
I know there are some people trying to milk the system. However, where a genuine family cannot pay their mortgage, the Department of Housing, Planning and Local Government should fund the local authority to buy out that house and rent it back to the people who are there. If one considers it logically, they will have to finish up in a house somewhere. They are surely not going to be put out under the bushes or on the side of the road.
What is happening is terrible. These people went into a financial agreement with a bank, signed on the dotted line and, sadly, things have gone wrong for them. It is totally and absolutely wrong to allow the banks to sell their deal to some vultures in another country. It goes against the grain.
I do not know if the Minister is after meeting a leprechaun or something. Half an hour ago he had money to put into a rainy day fund, and now he cannot assist these people who are in mortgage arrears and are in the terrible situation of losing the roof over their heads and upsetting their families and lives forever. It is wrong that we are going to continue to allow the banks to sell off their loans to a vulture fund. If the Minister has all this money, why does he not do something about the nurses-----
Ba mhaith liom mo chuid ama a roinnt leis na Teachtaí Munster, Mitchell agus Stanley.
I got here just as one of the Ministers of State read out a prepared Government script in which he said, "The level of interference proposed by the Bill in the mortgage market is, we believe, both disproportionate and potentially unconstitutional." Let me tell the Minister of State that the level of interference by vulture funds in the banking market in people's homes day in and day out in this country is unconstitutional and disproportionate. The biggest scandal is that much of that is done while the Government has controlling shares in some of those banks.
Later the same Minister of State went on to say that if the Bill is passed, it would not be "a viable option for banks to allow them reduce their non-performing loans, a likely consequence would be an increase in the number of repossessions by banks". The Minister of State had the gall to say that if we pass the Bill, the State will repossess people's houses. That is literally what it is because the State still owns a number of those banks. The Minister of State is threatening that those banks would repossess people's houses.
One of those same banks, AIB, only yesterday announced that it is proposing to pay €100 million for Payzone, not €100 million to the people who are in mortgage distress or a reduction in their loans that it is giving to Cerberus at 40 cent or 50 cent in the euro to purchase bad loans from it. It has never offered that to its mortgage holders who are distressed. We have seen distressing scenes.
I have met people in my clinics, and I presume every Deputy has met such people, who are broken in health and broken in spirit. They no longer have the courage or fight left in them to face up to the bailiffs or to institutions such as Cerberus.
What has been said about the Bill is shameful. The Bill is logical in every single way.
The Government, which was elected by the people, wholeheartedly endorsed a voluntary code of practice on the transfer of mortgages which was drawn up by the Central Bank and considered to be best practice. At the time, the then Minister for Finance, Deputy Noonan, said, "Notwithstanding its voluntary nature, I expect that best practice dictates that the code be applied by all institutions to all classes of residential property." Given all that is happening across the State, the Government still favours such a light touch to regulation despite the fact that these banks caused the economic crash, destroyed our economy and left the people to pick up the tab, a tab we will be paying for decades to come. The Minister knows that this code of practice on the transfer of mortgages meant nothing and means nothing.
It was not worth the paper it was written on and the Government knew that. The first line of the code provides that "a loan secured by the mortgage of residential property may not be transferred without the written consent of the borrower". The Government knew that meant nothing by virtue of the fact that the code was voluntary. There was nothing in place to force the banks to abide by the code of practice. This Government did not see fit to introduce legislation to stop the banks selling off family home loans to unaccountable vulture funds and it still does not see fit to do so. The families, the very people the Minister was elected to protect, the families behind these loans, do not feature in Fine Gael land.
Three months ago a State bank that was bailed out by the Irish people announced that it was selling over 6,000 family home loans to an unknown entity. These were loans belonging to families that had been engaging with the bank, some of whom had never missed an agreed payment but again, the Government did nothing. It sat there smugly and turned a blind eye. The Government continues to sit there while family home loans are being sold of to unaccountable vulture funds, ignoring the suffering of families. Government members ought to be ashamed of themselves. They are not ashamed, but they ought to be.
Sinn Féin has brought forward this Bill to stop banks selling off loans to unaccountable vulture funds. Every Deputy in this bubble who has a modicum of conscience should do the right thing and support this legislation. No consent, no sale.
I welcome the Bill introduced by my party colleague, Deputy Pearse Doherty. Unfortunately, in recent years it has become very clear that voluntary codes of practice for financial institutions and banks are not worth the paper they are written on. Permanent TSB has signed up to the Central Bank's code of practice for the transfer of mortgages which states that a mortgage on a home cannot be transferred without the written consent of the borrower. This same bank has sold thousands of home loans to vulture funds and third parties. The families who had these loans were paying back the money they owed. They had agreements in place and were doing everything they were supposed to do but Permanent TSB was happy to sell their loans to a vulture fund.
It is quite telling that banks, many of which were bailed out by the taxpayer when their gross mismanagement led to the banking crisis, are now turning on those who are doing their best to repay their loans. I would have thought, given the disaster caused by the banks in this State, that the Government would have stepped in and tightened up regulations in this area. The Minister cannot stand by as banks throw their customers to the vulture funds. This legislation is just one example of what the Government should have done. Most vulture funds have no interest in working with borrowers to restructure or renegotiate their loans. They want to get their hands on the home to sell it for profit.
This Bill makes sense. It reinforces what the Central Bank has already outlined as the correct way to deal with loans.
The Bill before us is very straightforward. It aims to protect mortgage holders or householders from having their mortgages sold on by banks to vulture funds without their consent. We all know what vulture funds are capable of because we meet people in our constituencies who have been their victims. I have come across many such people in my own constituency of Laois-Offaly. Banks have sold mortgages with €150,000 still owing to vulture funds for as little as €50,000 or €60,000. The same offer was never made to the householder because it did not fit in with policy and the Government never included it as part of its policy. Such an offer would have made the mortgage affordable and sustainable for the mortgage holder who was in difficulty.
We are talking here about the same banks into which the State put billions of euro of taxpayers' money in order to save them. Where is the fairness and justice in this, when the State can protect banks and bondholders, including unsecured bondholders, but cannot act to protect the householder?
This Bill is not radical. It is very straightforward and it provides for what is already included in the Central Bank's voluntary code of practice. On its introduction, the former Minister for Finance, Deputy Noonan, said that he expected that the voluntary code would be applied by all institutions but that did not happen. In fact, they completely ignored it and thousands of householders have been affected.
Last year Permanent TSB sold off 6,000 loans, including some in Laois-Offaly. Vulture funds treat such loans as commodities but homes are not commodities for struggling families. We must ease the torment and stress on families who are struggling to pay mortgages. Behind each one of these mortgages is a human story. We must put in place solutions for people similar to the solutions that were put in place for the banks. We must protect the basic right to a secure home.
We have heard various bogus reasons as to why this Bill cannot be enacted, according to the Government. However, when it came to bailing out the banks, the Government was able to rush legislation through this House, through late night sittings, which crucified this generation of taxpayers and their children. No consent, no sale. Deputies should support this Bill and I particularly urge Deputies in government to do so. They should do the decent thing.
As others have said, Deputy Doherty and the Leas-Cheann Comhairle represent a county that is currently grappling with a terrible tragedy. I also want to extend my condolences and I know that, given the kinds of communities that both Deputies represent, they may know the families personally. I am conscious of the deep sadness that their county is grappling with at the moment.
Having said that and genuinely meant it, I want to tackle the self-serving illusion that has been put forward by some speakers this evening, namely that they are the only people who care about citizens who find themselves in great mortgage difficulty, at risk of losing their homes or with debts that have become unsustainable. These are citizens of our country whom I know. They are in my constituency and I have heard, at first hand, the great challenges that these citizens face in trying to deal with this crisis. However, not a single Opposition Deputy, at least while I was in this Chamber, stood up and made reference to the fact that mortgage arrears in our country have reduced. I did not hear a single Deputy make reference to the Abhaile scheme, for example.
I did not hear a single Opposition Deputy make reference to the Insolvency Service of Ireland or speak of the difference it makes to citizens, as highlighted earlier this week. That service plays an important role in ensuring that citizens can stay in their homes while dealing with their financial difficulties. I did not hear a single Opposition Deputy refer to the insolvency legislation which has played such an important role in reducing the level of distressed debt in our country. No one made the point that the level of repossessions that we have seen in our country to date has, thankfully, been below that forecast by many when our country was dealing with enormous levels of financial difficulty. No reference was made by any Deputy to the supports that are in place, the progress that has been made or the various laws that were enacted by this and the previous Government that have played a role in offering support to citizens at times of great difficulty. Of course I know, because I represent such citizens too, that those supports do not always work for people. I know that despite the supports that I have acknowledged - but that no one else acknowledged - there are citizens in all of our constituencies for whom they are not enough. They still find themselves in difficulty with their banks.
Let us deal with the legislation that is being proposed here.
The legislation proposed by Deputy Pearse Doherty would not just remove the ability to make loan book sales to private equity firms or the so-called vulture funds referred to, it would also, in effect, remove the restriction on a bank to make any loan book sale to anyone. I have said time and again that loan book sales should only happen after every mechanism and option has been explored, something which has not been acknowledged in this debate. The reality is that the numbers of non-performing loans of the banks have to be reduced. In the period from 2008 to 2011 I heard speaker after speaker call for regulation, independent institutions and a Central Bank that was up to the job, but when the Central bank issues a statement of concern about this legislation, it is dismissed. Members cannot have it both ways. They cannot call for an independent regulator and strong Central Bank institutions and then, when they raise concerns about the effect of legislation such as this, dismiss them by saying they are not looking to serve a longer term interest and alleging various things about their intentions.
The challenging reality is that many of the banks have levels of non-performing loans in an economy that has been in income and employment recovery for many years which, in some cases, are too high. I have heard many speakers reference Permanent TSB, but I have not heard a single speaker reference the fact that at the start of last year Permanent TSB's figure for non-performing loans, as a percentage of its balance sheet, was nearly 24%. After years of effort, one quarter of its loans were impaired. I acknowledge that more could and should have been done for some, but after years of effort to try to reduce the level of non-performing loans, that is where the bank stood, at a multiple of the European average and way ahead of where many other banks in Ireland stood.
What has also not been acknowledged is that even if this legislation were to be passed, the banks would still have those targets. They are not targets which have been set by me; rather, they are set by the same independent regulator that this Dáil, in the aftermath of the financial crisis, stated we must have and could not undermine. They are the targets set and why have they been set? They have been set because in the awful event that we get into another economic crisis and if the banks enter it with the level of non-performing loans they had until recently, we will have banks that will not be as strong as they need to be in facing a changing economy, a new level of risk being created, a doom loop banking crisis and difficulties we have all said we want to prevent. That is why the levels of non-performing loans are being reduced and targets are being set to have them reduced. If a bank has a difficult balance sheet, it affects the rates of interest it can offer to new businesses and its ability to make new credit available to families, farms and small and medium sized companies Members and I represent.
As outlined by my colleague, the Minister of State, Deputy Canney, a money message is required for the Bill. It is my view that if the Oireachtas passes the Bill, it will have significant and negative consequences for the ability of the banks to meet the needs of the regulator in terms of regulation, for which many speakers both this evening and in previous years called. It is for that reason the Government is opposing the Bill, as well as the likely affect it would have on the financial interests of the State such that a money message would be required.
I will not allow any speaker to allege that because I am aware of wider interests that the banking system has to meet, in particular, the need to meet the requirements of an independent regulator which this Dáil, in the aftermath of the crisis, stated needed to be in place, and because I am making the point that the banks need to be able to meet new and existing investment and lending needs, I am indifferent to or do not care about the anxiety or worry citizens, including families, face. No Member of the House has a monopoly of compassion or understanding of the difficulties citizens can face. We have a range of supports in place that many speakers did not see fit to acknowledge.
Tonight the Government has an opportunity to do something it has not done since it entered office following the collapsing of the economy and our society by Fianna Fáil in collaboration with the banks and their powerful interests. In those dark days the banks ran roughshod over the people and the State authorities mandated to protect them, most especially the Central Bank, abrogated their responsibilities. Images and scenes that we thought had been consigned to the history books and would never see again have re-emerged, all under the watch of the Fine Gael-led Government. Unprecedented numbers of citizens are lying in sleeping bags on footpaths tonight in cities and towns throughout Ireland. This has developed as a direct result of the Government's failed housing policies. Families are sleeping in Garda stations, bed and breakfast accommodation, hotels and so-called temporary solutions. The Government has stood on the side of the banks and against ordinary people who sustain Ireland as a society. The ordinary people of Ireland want to live in a society, but it seems that the Government wants us to live in an economy. Let us put this notion right. The Government - Fine Gael and its Independent colleagues - can outline which side it is on: it is either on the side of the banks or the people. I do not accept the red herring that enactment of this legislation would lead to higher mortgage interest rates. We already have the highest interest rates in Europe, again, under the watch of Fine Gael in government. It has failed to take on the power of the banks and the markets because it sees them as allies. It has allowed vultures into the country because it will not interfere or upset the market, but it will happily sit back and watch families being dragged by the ears from their homes by the banks and their thugs.
I commend Teachta Pearse Doherty on bringing forth this legislation. I suggest a significant majority of the people will also commend him. Again, I advise the Government has a choice. It can put power back with the people and statutorily provide for their legal consent or it can ignore our needs and interests at its political peril.
It is clear that vulture funds have no interest in reaching solutions with homeowners. They have no interest in restructuring loans or providing for interest only payments.
The sale of distressed mortgages by banks such as Permanent TSB to vulture funds puts homeowners and renters in a very dangerous position that could result in large-scale repossessions. The Government has shown itself complicit in such sales. The State is a major shareholder in Permanent TSB, owning 75% of the company. This is a company that was bailed out by taxpayers' money to the tune of €4 billion.
Last year Permanent TSB sold its Project Glas loan portfolio to Start mortgages, an affiliate of the vulture fund, Lone Star Funds. The portfolio contains loans which Permanent TSB considered as non-performing loans. It later emerged that the sale also included performing loans. Many of the people whose loans were being sold to the vulture fund were people who were genuinely paying their mortgages, after making prior arrangements and agreements with Permanent TSB. The State has a responsibility to these people, particularly as it is the primary shareholder.
In a real case, a constituent of mine in secure employment and with a disabled adult in the family has a mortgage of just over €100,000. He is up-to-date with repayments on this mortgage, agreed with Permanent TSB. This mortgage has nonetheless been sold to that vulture fund causing himself and his family great distress and uncertainty. Should their house be repossessed another family with a disabled adult will be made homeless. This Bill will empower borrowers like this and prevent banks causing such uncertainty and distress to families by selling loans to unregulated and unaccountable vulture funds. I urge TDs to support this Bill and end the distress of families and the threat of homelessness that hangs over many of their heads.
First, a Leas-Cheann Chomhairle, I thank all the Members who participated in this discussion tonight and in particular those, which was everybody apart from the the two Ministers, who support and see the need for this legislation.
I also want to thank those who expressed sympathy with me and Deputy Gallagher and the wider community, particularly the families of the tragic victims of the road collision on Sunday. There are no words that can express the hurt and loss that has been experienced by the families and friends and wider communities of Gweedore, the Rosses, and Cloch Cheannfhaola on the loss of Shaun Harkin, Daniel Scott, John Harley and Mícheal Roarty. It is a very difficult time we are going through.
Returning to this legislation, this is the code of practice that the Minister asked about back back in 2012, when he tabled a parliamentary question to the then Minister for Finance, Deputy Michael Noonan. Deputy Noonan's answer said in answer to that that notwithstanding its voluntary nature, he expected that best practice would dictate that the code be applied by all institutions to all classes of residential property.
Is the Minister telling me that Deputy Noonan was telling him that the bank should do something that was going to wreck the economy, push up interest rates, lead to mass evictions and repossessions and every other thing that the Government side has thrown at this Bill tonight? The reality is he was not; this is the same code of practice that has been in place in the Central Bank since 1991 and is still in place there. The Central Bank has a code of practice where it outlines to the banks what they should do in the case of transferring a mortgage. We have repeated time and time again that the first line of that advice is that a loan should not be sold without the consent of the borrower. This is a very basic principle which has never been rescinded.
There is only talk about having it rescinded because I have have started to question this issue and the legal premise of the fact that it is voluntary, and the fact that I have met with the Central Bank and informed it that I am bringing forward legislation to put this into a statutory code. All this legislation is doing is what the former Minister, Deputy Noonan told the current Minister back in 2012 is what the banks should have been doing anyway. The code of practice that is currently in place does what Central Bank is saying.
Questions were raised on the constitutionality of the Bill and Deputy Michael McGrath raised a pertinent question as to whether legislation like this could impact on existing contractual law. If one looks at the 1976 Family Home Protection Act, at that point in time a spouse, usually a man, who was the sole registered interest in the home, if selling on the property could do so without the consent of his partner and spouse. This House introduced legislation that changed that and said "no consent, no sale". One had to get the consent of one's married partner if one wanted to sell a a loan, remortgage the property and so on. It is the same premise that it is here in this Bill.
A number of other things have been said about this Bill which simply do not stack up. Deputy Ó Caolain put it well when he talked about red herrings. The reality is that the mask slipped when the Government, in the Minister's first introduction, said that it was in favour of the normalisation of the banking system. To me it is never normal when family homes, and people who are meeting their arrangements have their loans sold on to the vulture funds without their consent. That is not the type of normal banking system that I or people out there want. The Minister says over and over again that the Opposition does not have a monopoly on compassion for those who are in mortgage distress and find themselves at the peril of the vulture funds or the banks. If that is the case then stand up and show us, because the Minister holds the shares in Permanent TSB that allowed the bank to sell 6,139 mortgages which were meeting their arrangements to Glenbeigh, a fund which will pay Permanent TSB for these mortgages and will get the receipts from these individuals paying their mortgages. This fund is unregulated and will continue to be unregulated, despite Deputy Michael McGrath's legislation. This is a fund that could raise interest rates in the morning and can change the rules without any recourse. This legislation is about taking a side and doing what should have been done many years ago because it is past time, unfortunately, for so many people who find themselves in the grip of vulture funds. For many others we can ensure that we can protect them. The simple point is that vultures should never have long-term products, they only have short-term interests. That is the problem. It has been said before by David Hall and Deputy McGrath and others, and I concur with them, that if one wants to lose possession of one's home and have the residual debt written off, than a vulture fund is a place for that person. If one wants to stay in the family home then it is better to remain with the bank.
Many Deputies in this House have been waiting a very long time to find out if the Government is going to issue a money message or not. Tonight the Government is saying that it could block this Bill on Committee Stage, despite this Dáil democratically wanting this legislation on the Statute Book. The Government is saying it will block this. I am saying that we will fight the Government on Committee Stage on this Bill. I will finish on this valid point; I believe that the Government has been abusing its position on money messages. If on Committee Stage, after legislative scrutiny it is believed that this Bill should go forward, and the Government attempts to block it by way of a money message, then maybe we need to do this in a legal forum because this would be an abuse of process. There is no charge or additional tax on the people and the Government's arguments are flimsy because it wants to stand for the vultures, for the banks and against the people. That is the problem the Minister has and he is on the wrong side of the argument on this one.
Before I put the question, I thank the Members of the House who have expressed sympathy through myself and my colleague Deputy Pearse Doherty, as the local TDs, to the families of Mícheal Roarty, Shaun Harkin, John Harley and Daniel Scott who lost their lives so tragically in that fatal accident in west Donegal on Sunday evening last. Cuirfidh mo dhuine bhur gcomhbhrón in iúl do na teaghlaigh an tseachtain seo. Ar lámh dheis Dé atá na leads sin.