Brian Hayes (Dublin South West, Fine Gael)

The Senator is absolutely right: I did not answer and I apologise to him. We have seen some progress in this area following the most recent report of the troika, including, as one Senator mentioned, a reduction in the interest rate. I very much agree that it is in all our interests for a third banking force to be re-established. I understand that significant proposals on Permanent TSB will be placed with the European authorities by June. It is accepted that the only way forward for the bank would be to park its tracker book, which is a significant drag on the totality of the loan book. That the troika made this announcement in its most recent visit is a welcome development. The Government would be delighted to see significant investment in the bank from abroad. While we are going forward with a two-bank policy with the banks downsized by comparison with where they were, the dilemma is that we do not want to create an uncompetitive environment for the future. It is crucial to have competition and if Permanent TSB could be that force, the Government would welcome it. However, it requires others to invest in it. If it is restructured in such a way that some of its loans could be parked - a kind of good bank-bad bank idea - it may well become more attractive for international investors who might see an opportunity in it.

Senator Sheahan outlined the case of a party which up to recently got a very negative response from the bank, which now seems to be moving. I very much welcome that and we need to see more of it. If we begin to see the range of options being put forward by the banks and pushed by us on them to deliver, I believe we will see the kind of progress we want. While I hate to say this, the banks are traumatised by all of this and it requires an enormous cultural change in the Irish banking system. I was struck by the recent comments of a new CEO of one of the banks, who told me that a previous CEO had never been inside any branch of a bank, such was the kind of near papal view that some of these people had. They were regarded as being so big that they did not need to go into ordinary branches, and speak to ordinary bank workers or ordinary people about lending policy. With their lending policy they totally destroyed the country and they need to rethink how they get money into the real economy. They also need to eat a considerable amount of humble pie in that process. That will require them getting into communities again as they did ten years ago, thereby understanding the needs of businesses - small and big - and understanding what is required to get credit going. We are beginning to see that but much more needs to be done.

Senator Hayden rightly raised the issue of the rent-to-rent exclusion. These people get no benefit whatsoever. They are excluded from any scheme because they are letting their principal house. Obviously it would require an amendment to the Finance Act, which we review on a regular basis. I will again raise the issue with the Minister for Finance. I have come across a number of such cases. They are people who are hit for everything even though it is their only home.

The Governor of the Central Bank recently asked forcefully why the banks are not getting on with resolving the problems on the buy-to-let side. He indicated that until this boil was lanced - as it were - we would not see the kind of resolution required. While the Central Bank publishes a detailed data series on the arrears position of primary residential mortgages, it does not publish comparable data on buy-to-let mortgages. However, the bank has published some data on this subject. In a conference the bank hosted in October 2011 on the Irish mortgage market, it estimated that by the end of December 2010, some 10.9% of buy-to-let mortgage balances were in arrears of 90 days or more. Separately, in a presentation to the Oireachtas committee on finance in October last year the Central Bank indicated that at the end of December 2010, 57% of the buy-to-let loans of the four banks included in the 2011 Central Bank financial measures programme report were interest only. It is a major problem that must be addressed. I agree with the Governor of the Central Bank that until it is addressed, we will not have the ultimate solution to this problem.

An issue raised by Senator Walsh concerns the question of whether we have quantified the categories and classifications of those in this distressed situation. At the end of this month the banks will report to the Central Bank on all the proposals they will put into the Irish market in the second half of this year. Part of that report will deal with that question, quantifying who owns what, the age groups and the classifications therein. It will then be a matter for the Central Bank, I presume, to publish that information for the public. The banks have been working on this for the past six months or so and the Central Bank has made it clear to all the banks that this is a key part of its matrix on which it has not received information so far. I presume that when the report from all the banks goes to the Central Bank at the end of May, the Central Bank will publish the data the Senator is seeking and we will see the level of indebtedness for the age cohorts and for the income cohorts.

The Senator asked if any study has been carried out on the drag on the economy as a result of not dealing with this problem. The Keane report addressed this, although I am not sure if it quantified the amounts involved. However, it did a small amount of work on this area. I agree that until this issue is resolved there will be a substantial drag on the economy. As Senator Sheahan said, people are saving or are not spending. I have encountered appalling cases in my constituency where 80% of people's disposable income is spent on mortgages, a circumstance that is unsustainable. We need those people spending again in the domestic economy. I am sure work has been carried out in the Department of Finance in terms of quantifying the drag, and if I can get that information to the Senator, I will. In the first instance, however, it is a matter for the Central Bank to publish the level of indebtedness, the groups and the age cohorts. I presume it will do that after it receives the data on the last day of this month.