Darragh O'Brien (Fianna Fail)
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I move:

That Seanad Éireann notes:- the worsening crisis in respect of mortgage arrears with over 94,000 residential mortgages in arrears for greater than 90 days and over 28,00 buy to let mortgages in arrears for the same period;
- almost one in four family home mortgages and more than one in three buy to let mortgages are now either in arrears or have been restructured; 
- the slow progress made to date by banks in identifying and implementing solutions for distressed borrowers; 
- the additional burden being placed on families struggling with their mortgage arising from cuts to child benefit, PRSI increases, the Local Property Tax and other measures in Budget 2013; 
- the adverse impact on mental health, the well-being of society and the domestic economy arising from the failure to adequately address mortgage distress; 
- widespread concern about the threat of a significant increase in family home repossessions arising from the Mortgage Arrears Resolution Targets Programme, the proposed changes to the Code of Conduct on Mortgage Arrears and the government's plan to reverse the Dunne judgment;
- in effect, the bank will retain a veto in the vast majority of cases over any proposal to restructure the mortgage under the planned new personal insolvency service; Recognises:- the importance of tackling the mortgage arrears crisis to support economic recovery;
- the best interests of society is served by ensuring that families can remain in their homes so long as reasonable efforts are made to meet their mortgage commitments;Calls for:- the establishment of clear, consistently applied guidelines in respect of reasonable living expenses for distressed borrowers;
- the family home to be protected from repossession unless every other possible alternative has been exhausted including giving the borrower the option of entering a mortgage-to-rent arrangement;
- the government not to introduce legislation to remove obstacles to the repossession of family homes until such time as the Central Bank is satisfied that the banks are properly addressing the mortgage arrears crisis by entering into meaningful long-term sustainable solutions to mortgage distress with individual borrowers, 
- the setting up of an Independent Mortgage Resolution Office under the new Insolvency Service to arbitrate between borrowers and lenders and where necessary to make a binding mortgage resolution order; and
- treater emphasis on implementation of long-term sustainable mortgage solutions such as split mortgages, shared equity and permanent interest rate reductions. 

We are particularly concerned that the problem is getting worse. Householders are now facing the additional burden of the residential property tax, which we have debated at length. That tax does not take into account ability to pay or the possibility that somebody could be paying the tax on a property that is already in mortgage arrears. All of us meet people in our areas who are either already in arrears or are just about able to pay their bills. The Irish League of Credit Unions and others have independently reported on the amount of disposable income that remains available to people.

I propose to offer solutions rather than simply lambast the Government for the slow rate of progress. I think we can all agree on certain matters. Nearly one year ago the Minister of State suggested to this House that the Personal Insolvency Bill would be a game changer. I am sorry to say that I do not agree. I do not mean that in any disrespectful way but because I am particularly concerned with the veto allowed to the banks. For this reason, the motion proposes that the Government should consider the legislation that my colleague, Deputy Michael McGrath, has introduced to establish an independent debt settlement office. If we leave the resolution of the mortgage arrears crisis to the lender without protecting the mortgagee, we will still be dealing with this issue in four or five years' time. The fairest approach is an independent office with full arbiter powers to adjudicate on specific cases.

Furthermore, the Government needs to establish a view on how to define a sustainable mortgage. It is not acceptable to me, my colleagues or the vast majority of citizens that the definition of "sustainable" is left to the bank to decide. I ask the Minister to reconsider the provision suggested by New Beginnings and FLAC that no more than 35% of net take home pay after tax should be used to service a mortgage. If that can be set as the benchmark we can begin to consider solutions such as split mortgages, which are happening sporadically, and extensions to mortgage terms. This House had a late night debate on the wind down of IBRC and the new terms for the promissory notes. Ireland in effect received an extension of a mortgage term and a reduction in interest rates. The general public, who are doing their best to pay their mortgages, are asking for the same thing. I am not sure that debt write-downs are the way forward but many of the people who are in arrears have 20 or 25 year mortgages and have the capacity to extend their mortgage terms. However, when they request extensions the banks revalue their properties at the current market rates and, even if they agree, allow a maximum loan-to-value of 80% on the new valuation. That is no use to the applicants because their mortgages are higher than the new valuation. The Government needs to set out clearly what sustainability means. We cannot leave it to the banks or the Central Bank to define this. We need to state what is fair because people need hope in this area. There is no hope as matters stand.

Last year the Minister of State at the Department of the Environment, Community and Local Government with responsibility for housing, Deputy Jan O'Sullivan, addressed this House at length about the mortgage-to-let solution, whereby and individual would hand the property to a local authority and pay rent on it. I described this proposal as an abomination but in any case most local authorities refuse to even operate the scheme.

When we leave it up to lenders or local authorities to actually come up with good faith solutions, it simply does not happen. The domestic economy will not move unless we work towards resolving the mortgage crisis. It cannot be done by simply setting a target for our pillar banks to talk to X thousand people a month on a case-by-case basis. As we wait for solutions, the problem is getting worse. Will the Government review its proposals to get rid of the statutory code of conduct on mortgage arrears and its plan to reverse the Dunne judgment?

I disagree with the Secretary General of the Department of Finance, Mr. Moran, that the level of repossessions is unnaturally low. I do not agree with letting the market decide as there is no society but an economy, as advocated by a former Prime Minister in our nearest neighbouring country. This should not be the policy that Fine Gael or Labour follows. If the statutory code of conduct on mortgage arrears is removed, the levels of distress among borrowers will increase exponentially. Furthermore, if the Dunne judgment is reversed, it will tell the banks to carry out wholesale repossessions of homes and not just on principal private residences.

The Minister for Finance, Deputy Noonan, has spoken at length about second properties and the buy-to-let sector. I do not believe this area should be fair game either. Up to 40,000 families invested in buy-to-let for their future because they may not have a pension scheme. They are not necessarily speculators or developers. They also need some protection. Nobody should take the legs from under these people who have put tens of thousands of euro into these properties.

We have raised several matters in this motion. It will be seen from it too that it is not a political motion. We are not lambasting the Government but are trying to put forward genuine solutions to this problem, solutions which my colleague Senator MacSharry brought forward over a year ago in his Family Home Bill which was defeated in this House by only three votes. We are trying to come forward as a party with solutions to assist. We are imploring the Government not to leave the personal insolvency legislation as it stands with a full veto for the banks and without recourse to an appeals process, as well as reversing the Dunne judgment and tearing up the statutory code of conduct on mortgage arrears.

Marc MacSharry (Fianna Fail)
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I second this motion and I am glad to have another opportunity to debate this issue. However, it is not talk we need but action on the various recommendations to solve the problem of mortgage arrears. I do not hold the Minister of State, Deputy Brian Hayes, responsible for this matter. In fact, he is a brilliant performer and I am great fan of his. However, we are only as good as the briefing material we are supplied with and the information at hand. Whoever wrote the Government’s amendment to our motion has not been listening to the debate on mortgage arrears. It states, Seanad Éireann “acknowledges that this Government inherited a severe mortgage arrears crisis from the previous Government”. What does that mean? We have the Taoiseach on the front of Time magazine accepting accolades that were for the late Brian Lenihan for the actions he had taken and yet this Government claims all the problems were created by the previous Government. There were some governments that managed to do the same in Spain, Portugal, Greece, Japan, Italy, Cyprus, America, France, Germany and many other countries. Fianna Fáil is a lot better than the GAA and the Catholic church. I accept there were some mistakes made and they have been acknowledged and apologised for but still we have some muppet in the Fine Gael press office writing that Seanad Éireann “acknowledges that this Government inherited a severe mortgage arrears crisis from the previous Government”. The motion might as well state it also acknowledges the brilliant fiscal management as announced on the radio by the Minister for Finance, Deputy Noonan, when sympathising with the nation and supported by the Minister of State, Deputy Brian Hayes, and many others.

One reason the opinion polls are not favourable to the Government is that people are a bit sick of being told this is all Fianna Fáil’s fault.

John Gilroy (Labour)
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It is.

Marc MacSharry (Fianna Fail)
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The Government has been in control for two years and mortgage arrears have increased 50%. We brought forward the Family Home Bill in 2011 to put up tangible solutions to the problem yet at the time the Government claimed it was not necessary and was unconstitutional. It even claimed the code on mortgage arrears was working exceptionally well when the Central Bank’s own analysis of it stated 60% of the banks were not even following it.

I, like many other Members, have had to mediate on behalf of vulnerable families in mortgage arrears who do not feel capable of taking on the banks. I had a case of someone who wanted to avail of the mortgage-to-rent scheme which the Government announced recently with much fanfare. However, the bank would not allow them to avail of the scheme. Instead, it reduced the mortgage repayment to €250 for three months so the individual could pay down some secondary debt. That is superficial and does not deal with the problem.

One of the contributing factors behind the rejection of Croke Park II is because people see the Taoiseach, the Minister for Finance and the Minister of State, Deputy Brian Hayes, celebrating the benefits of lengthening out our term of debt and the promissory note deal but see nothing for them in return. The Minister of State stated it was great for exiting the programme and getting us back into the markets. The phrase used was “re-profiling our debt”. While these developments are welcome, people are asking what is in it for the people. What about the couple in an estate in Sligo town whose value of their home is down 25% and who want to avail of the mortgage-to-rent scheme so as not to throw equity down the drain but are told they cannot? Instead, they are told their mortgage repayments will be reduced to €250 for three months. That is like Brussels telling the Minister for Finance that our repayments on the promissory note will be reduced for a while but then it will shoot back up again afterwards. It would not be worth anything.

The people have not entered this debate. The banks are superficially engaging with people in mortgage arrears. I accept the chief executive of AIB is briefing Members now about the bank’s approach to mortgage arrears. One can show lots of statistics but on the ground no one is getting real solutions. Have the banks told those people at my age, 39 years of age, who have a 25-year mortgage and have paid off 15 years of it but lost their job, that it will freeze their mortgage until the economy bounces back and they find employment again? Has this happened to anyone? No it has not.

Now we are tearing that up and I am flabbergasted by that. The Personal Insolvency Bill was described aptly by Deputy Higgins in the Dáil; it is like putting the foxes in charge of the henhouse. The banks are all-powerful and we have torn up the code of conduct on mortgage arrears by telling the banks to forget it and do whatever they want and get on with it. This is ridiculous in the extreme. As Senator Barrett has said here many times, there seems to be a private stairway, metaphorically speaking, for bankers into the Department of Finance. Sadly, this has been borne out. I look forward to an explanation for this in another debate, as well as an explanation for the contact between the Secretary General, Mr. Moran, and the Barclay brothers to try to facilitate the sale of assets that belong to the people. This is very worrying.

To return to the current issue, how many times must we have this same debate? How many times must we acknowledge that we need tangible solutions rather than woolly stuff that looks good on the surface but does nothing on the ground? With regard to the mortgage-to-let option, we are taking no cognisance of the fact that families live in these homes. Banks and receivers will not give tuppence for those people. They want vacant possession and will sell homes out from under people. We need to consider this seriously.

Martin Conway (Fine Gael)
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I move amendment No. 1:

To delete all words after ‘‘That’’ and substitute the following:‘‘Seanad Éireann:

- acknowledges that this Government inherited a severe mortgage arrears crisis from the previous Government and notes the responsibility of the previous Government for the creation of that crisis and its abject failure to properly address it;
- recognises that the Government has already taken a number of significant steps to address the mortgage arrears problem and also to stabilise the banking and wider economic situation;
- acknowledges, in particular, that shortly after taking office the present Government established the interdepartmental mortgage arrears working group and that it is now implementing the key recommendations of that report;
- notes the speedy publication by the Government of comprehensive legislation to reform our insolvency laws and the enactment of the Personal Insolvency Act 2012, which provides for non-judicial debt resolution mechanisms including a personal insolvency arrangement which will facilitate the retention of their family home by individuals who are insolvent and enable them to resolve debt issues by agreement with creditors with the assistance of a personal insolvency practitioner;
- recognises that Central Bank interaction with mortgage lenders is key to addressing mortgage arrears and that the Central Bank is now further intensifying its engagement with the main mortgage lenders to ensure that lenders offer sustainable solutions to their customers in arrears;
- supports the Central Bank in this work in particular in setting specific targets for action and in monitoring and auditing the achievement of those targets;
- also notes the Central Bank’s review of the code of conduct on mortgage arrears to strengthen protections for customers and also allow to provide for effective, timely and sustainable resolution of individual arrears situations;
- accepts that, for a functioning mortgage market, it is necessary to protect and vindicate in a fair manner the legitimate rights of both debtors and creditors;
- while accepting that the option of repossession has to be one of the options to deal with mortgage default and distress, also notes the view of Government that this should only be an option of last resort and that there are a range of other resolution options available that can be deployed to deal with mortgage distress in the best interests of both the borrower and lender;
- encourages the Government and other authorities to continue with the work to bring the Insolvency Service of Ireland and the debt resolution processes provided for in the Personal Insolvency Act 2012 into operation as soon as possible;
- notes that the Insolvency Service of Ireland will shortly publish guidelines on reasonable living expenses for debtors who propose to enter into debt resolution mechanisms; and
- condemns the failure of the previous Government to publish or enact any legislation to reform bankruptcy and insolvency law and its failure to create any statutory debt resolution mechanisms or structures to facilitate individuals in financial difficulty to resolve such difficulties by agreement with creditors and to facilitate the restructuring of mortgage debt.’’.

Marc MacSharry (Fianna Fail)
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A bit of colour too.

Martin Conway (Fine Gael)
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The Government is committed not just to dealing with the mortgage crisis but to dealing with the economy. I see this as very much a micro approach. The macro approach is being dealt with by the Minister for Finance, Deputy Noonan, and the Minister of State, Deputy Hayes, with their various initiatives in Brussels, from the promissory notes to what happened at the ECOFIN meeting the other day and through the many other segments we do not hear about that are happening in the background. The choreography and myriad of small things happening facilitate a bigger wheel and will bring results in due course.

The micro side of the issue concerns the individuals in this country who are on their knees trying to survive. This morning I had the experience of meeting a client who got a good deal from Permanent TSB. I am aware Senator MacSharry has an interest in that institution, and his father is doing great work there. The deal achieved by this individual was acceptable. It was not 100% what she wanted, but it was not far from it. Certainly, it will allow her to sleep at night, which she has not been able to do for a long time. This was my first positive experience of dealing with a bank in a long time. Perhaps we are now seeing a situation in which the banks are beginning to respond.

The Government has set ambitious targets to be met by the end of the year. While I like the idea of a report card on the Government, this issue is very much a report card for the banks as each arrangement made will help a family in trouble. I am confident the targets will be met because the banks are finally realising they have a significant responsibility here. When people are prepared to meet the banks some of the way, they have a moral responsibility and a responsibility to the country to go a long way towards meeting them. Obviously, there will be situations in which people bury their heads in the sand. When this happens, it is very difficult to know what to do. People are given every opportunity and I hope that those people who are in trouble will engage with the system. They may find, like the person with whom I dealt this morning, that things are not as bad as they seem. The banking industry is finally realising it has a responsibility in this area.

I wish to comment on the issue of buy-to-let properties. I received a letter two weeks ago from a couple who had bought three houses with money earned during more buoyant times. Now they are in a situation in which they cannot meet the mortgage repayments. The rent being received for the properties is only a fraction of what they were receiving and they are now facing financial ruin. Potentially, they could be taxed on losses. I have not come across a situation before in which a person could be taxed on losses, but it is possible this couple face that. There is an issue with regard to buy-to-let properties. During the boom, people received advice from so-called financial advisers to buy property, but they now find themselves in a situation in which these properties are a noose around their necks. This is an issue that needs to be addressed.

I believe the Government has taken this issue by the scruff of the neck. The situation has been that the banks and bankers have been slow to react and they have not played ball in the manner expected by the citizens of this country who bailed them out. Some institutions are better than others. I did not realise the CEO of AIB is in the Oireachtas today. This is good. It is important that the CEOs of AIB and all the other banks engage with the representatives of the people who hear daily what people are going through. The CEO of Permanent TSB will be in the Oireachtas tomorrow. This type of collaboration, discussion and accountability is important. However, the manner in which the CEO of another bank treated the Oireachtas Joint Committee on Finance, Public Expenditure and Reform a couple of months ago was regrettable. That aggressive type of personality and behaviour is not what is required in a time of crisis.

We are in a war. The people are in an economic war for survival. The Government is at the helm of the ship, trying to steer us through the most turbulent and aggressive waters the country has ever seen. Our mere survival was at risk a couple of years ago. Now, we can see some sort of light at the end of the tunnel and some hope of plain sailing ahead. Make no mistake, however; there are turbulent and troubled waters ahead. These will be a challenge and the situation will be difficult. There has never been a better time to be in Government, because this is a time when political leadership is required, not just from the Government, but from all sides of the House. There has been significant political leadership from all sides and I hope to see that continue. That is what the people expect of all of us. I commend the amendment to the House.

Kathryn Reilly (Sinn Fein)
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We all know the harrowing effect mortgage distress has on people and are aware of the statistics surrounding the economic crisis and the personal effect all of this has on many families. Unemployment is approximately 14% and some 1.8 million people have only €50 left at the end of the month. More than 180,000 mortgages are in serious distress and approximately 115 fall into distress each day. For many people, paying their mortgage is not an option. Families throughout the country are suffering. They are distraught and people wonder whether they will be able to pay their mortgages or feed their children. Many people can only pay their mortgages by making impossible choices at the end of the month on what bills to pay. They must choose whether to pay for their home or pay other essential bills.

The alarm bells for the mortgage crisis began ringing in December 2009. The exponential rise in mortgage arrears in the subsequent three and a half years reflects the absolute and abject failure of successive governments to deal with the situation. I must agree with the first part of the Government amendment, which acknowledges that the current Government inherited a severe mortgage arrears crisis from the previous Government and notes the responsibility of the previous Government for the creation of that crisis and its abject failure to address it properly.

The property bubble was fuelled by the cosy relationship with developers, lax regulation of the banks and reckless tax policies. The number of families in mortgage distress increased dramatically - to almost 50,000 - between 2009 and 2011. The 180,000 families that are currently in mortgage distress are rightly asking why Fianna Fáil did not introduce the proposals we are discussing today when it was in government. Why did Fianna Fáil not legislate to protect the family home when it had a chance to do so?

Darragh O'Brien (Fianna Fail)
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I will go through that at the end.

Kathryn Reilly (Sinn Fein)
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I know Senator O'Brien dealt with his proposals earlier on.

I would like to speak about the current Government proposals. My party has expressed concern about the power of veto that is given to the banks in the Personal Insolvency Act 2012. Our fear is that the Act will be of little use to the majority of people who are currently in distress. We believe we need to stop treating the banks with kid gloves. We have allowed the threat of repossession to loom large. We need to start taking better and more decisive action in this regard. My colleague, Deputy Pearse Doherty, has expressed concern that the code of conduct on mortgage arrears leaves the power of final say in cases of mortgage restructuring in the hands of the same banks that allowed the crisis to escalate. We are also concerned that residential and buy-to-let mortgages are being put in the same category.

Matthew Elderfield has said there will be an increase in repossessions if banks consider it more beneficial to sell a house at its current value than to restructure the loan. There was a fear that banks would be allowed to repossess after 30 days when the 12-month moratorium was lifted. There were also concerns that as part of the suite of new measures, banks would be given the power under the revised code of conduct on mortgage arrears to move borrowers from tracker mortgages as part of any restructuring. We believe there needs to a fair approach to mortgages that involves putting the family home first, with independent adjudication leading to resolutions.

I will go through some of the proposals we have detailed in our amendment. We believe an independent statutory distressed mortgage resolution process needs to be established. As part of that process, it should be possible to establish legally binding mortgage distress resolutions on a case-by-case basis. It would protect the family home by means of a variety of measures, including write-downs, shared equity and transfer-of-tenure-type social renting.

One of the benefits of our proposals is that money can be saved by reducing an at-risk mortgage to a payable amount. As we all know, unmanageable mortgages cost the State money. If the banks do not deal with distressed mortgages, they will be required to raise more capital. We feel that if this is not dealt with in a concrete way that helps home owners, further economic problems will be created. In other words, the domestic economy will be further depressed if a large section of the population is taken out of the spending economy. That, in turn, will exacerbate the problems we face down the line.

We need to direct the banks to deal with this issue in a proactive manner. We should make sure the banks do not have the power of final say on mortgage restructuring. We have to ensure this is done in an independently adjudicated way. If we require the banks to pass on the interest rate reductions agreed by the European Central Bank, that will ensure people get the best value. We have detailed some solutions and suggestions in our amendment, which I appreciate will not be taken. I am sure the Minister of State will comment on them when he contributes to this debate.

Aideen Hayden (Labour)
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I welcome the Minister of State to the House. I do not question the bone fides of those who have proposed this motion. They have shown their concern for this issue on a number of occasions in this House. I refer particularly to Senator MacSharry. When he proposed his Private Members' Bill, we said that while we supported the theory of his proposal, unfortunately we could not support the legislation itself because it placed too much emphasis on the role of the courts in resolving these issues. Our view was that out-of-court settlements were preferable for most people.

It is important for us to acknowledge that progress has been made. The Government has been in office for just over two years. While it might not be all-singing and all-dancing, the Personal Insolvency Act 2012, which this Government introduced, is very comprehensive. It remains to be seen how the legislation, when it is rolled out, will link with the existing code of conduct on mortgage arrears provisions. Much of what is coming down the track is presenting us with challenges. The rules and procedures contained in the code of conduct on mortgage arrears and the mortgage arrears resolution process are being fundamentally overhauled. The mortgage arrears resolution targets, which require lenders to propose targets that we hope are viable, are being rolled out. The Land and Conveyancing Law Reform Bill 2013 will be passed. As I mentioned, the Personal Insolvency Act 2012 is being rolled out.

At this point, I would like to formally second the amendment, as I believe I am required to do.

Up to now, we have experienced what I would loosely call a phoney war. We could sit here all day and debate the reasons for the phoney war. Clearly, the Dunne judgment is one of those reasons. In effect, it tied the hands of lenders in seeking summary judgment for possession. There are other reasons for the phoney war. Principally, bankers and financial institutions have not been willing to face this country's serious and significant problem with mortgage debt. It is probably the greatest crisis faced by this Government and this country at the moment. I will not revisit the numbers that demonstrate the extent of that distress. There is an issue in this regard. There are reasons targets have to be set for financial institutions. It is important to bear in mind that for every borrower in this country, there is a lender. I do not believe lenders have faced up to their responsibilities with regard to the mortgage crisis. I await the day when they face up to them.

I would like to take this opportunity to raise a couple of issues, set out where some of the proposals that have been made to date stand and elaborate on what needs to be done to make progress. A debate of this nature gives us an opportunity to make positive suggestions as well as rehashing recent history. This House has considered a number of motions on mortgage arrears over the last two years. I am disappointed that the mortgage-to-rent scheme is being rolled out so slowly. I accept that conveyancing issues and other legal difficulties have arisen. I have been assured that faster progress has started to be made.

The original Cooney report proposed that a mortgage-to-lease scheme be considered as a possible solution. If such a scheme were available to banks and - potentially - the State, it would be much more cost-effective than the mortgage-to-rent scheme. I put it to the Minister of State that it should be considered. It would involve the relevant lending institution offering the State a long-term option over a property for ten or 20 years, similar to what happens under the rental accommodation scheme or the long-term leasing scheme. It would ensure the property would not have to be acquired by a housing association. I ask all parties to consider this proposal.

Much of the debate on this issue to date has focused on residential mortgages. Members know I feel very strongly about this. Some of the comments made by people such as Patrick Honohan and Matthew Elderfield have treated those who live in buy-to-let properties like second-class citizens.

Darragh O'Brien (Fianna Fail)
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Hear, hear.

Aideen Hayden (Labour)
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There has been a great deal of talk about family homes in the residential sector. One in four families in this country lives in a rented property. In the Dublin area, the figure is one in three. Some 40% of people in Galway live in rented properties. They are families too and deserve to be recognised as such. We have not yet had a process in this area. We have had a process for people in residential mortgage distress, but we have not recognised the importance of assisting families that live in buy-to-let properties. The ill-thought-out comments that have been made in this regard have suggested it is appropriate to let rip in the buy-to-let mortgage sector. We need to recognise those family homes and consider carefully how the lives of those families are to be taken into account.

I wish to speak briefly about social housing. I am conscious of the level of arrears in local authorities. They have been able to put a mortgage arrears resolution process in place, but they do not have the resources to offer the options that banks and financial institutions have been able to offer. They need to be capitalised to the point at which they will be able to offer such solutions.

I would like to refer to the review of the code of conduct on mortgage arrears. I have sincere difficulty with the case-by-case approach that is being taken.

Thomas Byrne (Fianna Fail)
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Hear, hear.

Aideen Hayden (Labour)
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People do not know where they stand. A person on a certain income can receive a proposal from one lending institution, but somebody else on the same income might be given a totally different option from another institution. If we do nothing else, we should recognise the importance of free and independent expert legal advice. There needs to be a level playing field in this regard. We do not have it at the moment. People are getting offers from lending institutions. We are setting targets for lending institutions.

Those proposals that are being made have to be proposals people can live with. I am meeting people every day who say they do not know if it is a good deal. They need to have the ability to go to a fully-formed independent body that can give them the expert legal advice that puts them on the same level playing field as the financial institution they are dealing with. While we, of course, have expert groups like MABS and so forth, I do not accept we have in place a fully-fledged expert resource for people who find themselves in these situations. I ask that this be considered.

Thomas Byrne (Fianna Fail)
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I agree with much of what Senator Hayden has said, particularly in regard to the case-by-case issue. That is a phrase that should be struck from political and economic language in this country. I heard Sinn Féin also brought this up in the past couple of months as it favoured a case-by-case approach. What it means in practice is a person going in before the bank official and talking about his or her case on a case-by-case basis and being hard done by, instead of having a generalist approach that applies to everybody, which the person can slot into based on his or her own particular circumstances. People would then know exactly what is going on.

David Cullinane (Sinn Fein)
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The Senator obviously does not know what is going on.

Thomas Byrne (Fianna Fail)
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I certainly do. I know more than the Senator. The amendment the Government has put forward really shows how out of touch it is, particularly its first and last paragraphs, which keep going back to the last Government instead of addressing the crisis that is before us. The Government states it has inherited a huge problem from the last Government-----

I am sorry, the Ministers of State are in discussion about some important matter of State.

Paddy Burke (Fine Gael)
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There is a changing of the guard with the arrival of the Minister of State, Deputy Joe Costello.

Thomas Byrne (Fianna Fail)
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Mortgage arrears have doubled under this Government. It is about time the Government took this issue seriously because it has not dealt with it at all.

While Senator Hayden’s comments were very well thought out and based on her experience, I was disappointed to hear her look forward to the Land and Conveyancing Law Reform Bill 2013. In my view, that Bill is an abomination and it is an abomination that the Labour Party would be introducing legislation to reintroduce repossessions into this country when nothing has been done in regard to unemployment or to protect the family home. That legislation is shocking in its brevity and cruelty. Repossessions will start as soon as that legislation comes into place and there is nothing for the family homeowner, for families or, indeed, for the buy-to-let sector, about which Senator Hayden made points with which I agree.

That legislation must be opposed and shot down. The Labour Party must look at what it is bringing in. What is happening in that legislation is that the Government wants to revert to how the law stood before the Dunne judgment. However, it does not seem to be aware of the fact the conveyancing textbooks are critical of the law that applied before the Dunne judgment in that there is no discretion in court as to whether or not to grant a repossession or what options should be offered to people. The only discretion in that Bill is the discretion to go through the personal insolvency legislation. The Minister of State, Deputy Brian Hayes, was in this House in July 2011 when I and Senator MacSharry brought forward the Family Home Bill, which was intended to give judges options and discretion in repossession cases. That Family Home Bill 2011 was designed to address a defect in the law that existed at that time, before the Dunne judgment, which the Government now proposes to go back to. It is madness. Nothing is being done for the family homeowner and families in arrears.

The mortgage-to-rent scheme is a total sham. I believe 13 cases have happened throughout the country or are in progress. A Louth county councillor whom I spoke to yesterday raised the issue of how many cases were in process in Louth and was told there was one but nothing has happened in regard to it. This is a sham and it is about time we stopped talking about it. People have come to my clinics in recent weeks wondering how they get onto this mortgage-to-rent scheme. The truth is, and Senator Hayden alluded to this in some sense, that one cannot get onto the mortgage-to-rent scheme. It is not possible to do so because, even if the banks want to do it, the local authorities do not want to do it, or, if the local authorities want to do it, the banks do not want to do it. The borrower, or the person in the family home facing repossession, cannot do anything about it and does not have any choice in the matter, but they are given this hope that turns out to a sham - this hope that turns to despair.

I have a serious difficulty with the row-back on the code of conduct for the financial institutions in regard to mortgage arrears. The fact is this is the only protection from the banks available to borrowers in arrears. Despite the amendment's criticism of the previous Government, that code of conduct dates back to the previous Government. In point of fact, apart from the Personal Insolvency Act, which is not even in force yet, that is the only protection for people in arrears and nothing whatsoever has happened under this Government. That is a matter of recorded fact. What the Government is proposing to do is to row back on that and to give the banks more powers. That is wrong.

Why does the code of conduct only apply to regulated banks while the much heralded Land and Conveyancing Law Reform Bill 2013 that is being brought in will apply to any bank, financial institution or local authority which holds a mortgage? They will all be given the power to repossess a property, absolutely full square under statute of this Oireachtas, but the only protections that apply for anybody else only apply in terms of the Central Bank supervisory function for the banks the Central Bank supervises. There is no legal protection in this country if the person is with a bank that is not regulated by the Central Bank. Moreover, if the person is with a bank that is regulated by the Central Bank, his or her only recourse is to complain to the Central Bank because the person has no course of action in a court against the bank, and no test case can be brought by a voluntary organisation like Threshold or FLAC because there is no protection under statute.

We have put forward protections and put forward many pieces of legislation, the latest being the Mortgage Resolution Bill. We had put forward the Family Home Bill in the Seanad which was designed to give the courts the power to protect families and to provide options, but the Government rejected this and told us it would be all sorted out in six months. Nothing has happened. It is about time the penny dropped with the Members opposite, who must realise that nothing has happened and tell the Government this. We need to do something about this because it is a major drag on the economy, people cannot afford to spend money because of their mortgage situation and the banks are still in a state of limbo, despite the fact they have been given billions or euro to deal with the issue. However, the Government seems quite happy to let the banks do what they want, whether it is in regard to interest rate reductions, branch closures or dealing with people on a case-by-case basis, which is the Government's preference.

I ask the Government, if it is bringing in the repossession law to give all of the financial institutions, including banks and other lenders, that power, to please bring in a law to protect people and not just a Central Bank code of conduct. I am pleading with the Government to finally understand the scale of this problem because, in my view, the Government does not understand it.

Catherine Noone (Fine Gael)
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The motion as tabled is important in many ways as it seeks that we would ultimately recognise the mortgage arrears problem, which I believe we all recognise. Much of this has already been dealt with by the Government and, while I do not necessarily agree with the idea of having a motion on the topic, it does allow us to discuss the matter. We all acknowledge there is a way to go on this issue and that it is very much an area in flux.

On mortgage arrears, the Government policy has four strands, namely, the resolution strategy, the Personal Insolvency Act, advice services and the mortgage-to-rent scheme. In reference to the first point, it is worth noting that the rate at which mortgages are falling into arrears by more than 90 days and the number of early arrears cases under 90 days have both reduced, although I accept this is only a small sign of positivity in a very negative space. There is no question the numbers are stark and there is no taking from everything that has been said about it already in the House. Some 94,500 are in mortgage arrears for more than 90 days, with over 23,000 in arrears of more than 720 days. The gravity of the situation is certainly acknowledged by all sides of the debate.

I have concerns with regard to the banks and would echo some of the concerns expressed on both sides of the House when it comes to how the banks are actually handling people who are in arrears. People spoke of advice and expertise. It strikes me that not only is the advice at the level required by borrowers not available but, while the banks might be coming up to speed with their internal expertise, it simply has not been available in the recent past. There is an onus on the banks to improve their own situation in this regard.

We must do more than hope if there are no signs of some improvement on this front. We must hope there will be a vast improvement in this area. I agree with Senator Hayden's point when it comes to resources and expertise. The case-by-case basis is very unsatisfactory. The fact that banks can keep the decision makers away from the person dealing with the individual client is very frustrating for people in mortgage arrears. They are listening to somebody who has no say in the matter tell them that they will talk to a particular head office and various people in the bank who have no face as far as the borrower is concerned.

The Central Bank recently published a series of measurable, timed goals for the six main banks which will ensure specific, measured progress towards the objective of increasing engagement with borrowers in arrears. I welcome the targets outlined and the fact that targets exist. The target that by the end of June 2013, banks should have proposed sustainable mortgage solutions for 20% of distressed borrowers is a tangible target that we must welcome. We must ensure these targets are met by the banks. It is important that we work to ensure that there is a framework within which banks must work. Citizens going bankrupt is not a useful solution for banks, the country or citizens. From the Central Bank's perspective, the main point is to ensure that banks are actively in dialogue with their customers who are in trouble and to come to an acceptable solution.

It is with that same rationale in mind that the Government put together the Personal Insolvency Act. While some may criticise it and it has been criticised here today, it will be legislation over the banks' ability to veto any proposed solution. Ultimately, the banks are incentivised to properly engage in the process because the Act makes bankruptcy a feasible alternative by reducing the period of bankruptcy from 12 years to three. If the banks do not make an agreement under the Act, a mortgage holder could end up in bankruptcy, which would worsen the financial position of the bank overall.

The third strand of the Government's mortgage arrears policy is advice. I agree that more needs to be done in this area. I have already alluded to this but distressed mortgage holders offered long-term restructuring by their lenders can avail of free independent financial advice. I am hearing in dispatches and from people with whom I have spoken that the quality of this advice is not of the level that it should be. The Government acknowledges the great difficulty that mortgage arrears pose for families across the country. This situation is in flux and the Government is introducing targets and various measures. I hope the Government will not take any nonsense from the banks when it comes to the targets that have been implemented. We have taken enough nonsense from the banks. "Targets" is my favourite word this evening but I hope that while the expertise was not in banks and there was not as much of a structure as has been introduced now, we will not take any further nonsense from the banks when it comes to mortgage arrears.

David Cullinane (Sinn Fein)
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I do not get my information from the dispatches. I get it from ordinary families who arrive in my constituency office every week in ever-growing numbers. These are people who cannot afford to pay their mortgages and are in mortgage distress. It is very clear to those families that this Government does not fully understand the depth of the mortgage distress crisis in this State. The numbers speak for themselves. A total of 180,000 families are in mortgage distress. This is twice the amount in mortgage distress since this Government came into office. Of this figure of 180,000, 140,000 cannot pay their mortgage now or in the future. We know that 1,000 families fall into mortgage distress every month. Many of them cannot pay their mortgages for long periods of time.

Going hand in hand with that is the lack of any cohesive intervention, measures or policies from this Government to support people in mortgage distress. This is despite the fact that the taxpayers of this country put billions of euro into the banks, particularly the pillar banks. Over €90 billion of taxpayers' money in some form has been put into the banks - €30 billion for write-down on the NAMA loans, €30 billion to recapitalise the banks and €30 billion in respect of the Anglo promissory note. Of the €30 billion that was put into the pillar banks, the Government put €18 billion into those banks. A total of €10 billion of the overall money that was put into pillar banks was to be used to offset losses in the domestic mortgage sector. As the Minister knows, rigorous stress testing was carried out and the banks came back and told the Government how much money they needed to have strong capital ratios and to be able to deal with the losses in both the commercial and domestic markets. A total of €10 billion was provided for to deal with losses in the domestic mortgage situation.

However, the banks are doing nothing to help people in mortgage distress. This Government is doing next to nothing either. It is allowing the banks to have a veto and full control. Every week, I and I am sure other Senators get copies of correspondence from banks saying that they will not engage with mortgage-to-rent arrangements, split mortgages or any of the so-called interventions that are there. I can provide the Minister with any number of letters from banks which advise people to sell. That is what the banks are saying. They are telling people to sell their houses and pay back the balance. The Government does not seem to realise that there will be some level of write-down. It is inevitable because if the banks force people to sell or repossess those homes, and we are talking about family homes, the banks must sell those properties at a reduced price, probably a fire sale. If this happens the banks will only get a fraction of what they are worth, will not get all their money, will land those families in debt and leave them without a house, and will still have taken a loss. There needs to be an imaginative response.

We have proposed an independent mortgage resolution body. We want to see a fair solution and a mortgage restructuring panel set up independently to look at each mortgage situation on a case-by-case basis. To respond to criticisms of our position that it should be done on a case-by-case basis, every case is different. Everyone's family and income circumstances are different. The size and location of people's homes and the opportunities they may have in the future differ. We want to allow the independent body to impose a fair solution that would look at the suite of interventions that are there, be they split mortgages or mortgage-to-rent. It may involve some level of write-down but the panel could look at what is the best fix for everybody - the taxpayer and the family - and impose that solution rather than allowing the banks to have the veto they have at the moment. That is all we are trying to achieve.

It is quite obvious that if the Minister and Government do not act, the situation will get worse. Aside from the impact that will have on all those families in mortgage distress, the simple reality is that as long as families are trying to pay a mortgage they simply cannot pay and their debt is unsustainable, people will not have money to spend in the domestic economy. If the vast majority of families are servicing debt, they do not have money to spend and it exacerbates the problem we have in our domestic economy. The Minister needs to act, put an independent body in place and impose fair solutions. Keeping the family home must be at the heart of that.

There must be some level of write down, but it is crucial to remove the veto from the banks and enable an independent body to impose fair solutions to ensure people remain in the family home.

Marie Moloney (Labour)
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Senator John Gilroy has six minutes.

John Gilroy (Labour)
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I welcome the Minister to the House. Some 94,000 mortgages are in arrears, which is shocking. There is an onus on Members to do what we can. Let me acknowledge the constructive ideas put forward by Fianna Fáil in particular Senator Darragh O'Brien's contribution was very thoughtful. The idea, whether it originated in Fianna Fáil or Sinn Féin and they can argue over that, of an independent debt settlement office-----

Darragh O'Brien (Fianna Fail)
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We published a Bill.

John Gilroy (Labour)
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-----has been described as a useful model. There are some operational, legal and constitutional difficulties but I think it is a good idea that could be reworked. It could be part of a solution. I acknowledge that Senator MacSharry has done a great deal of work on this area, but his contribution today has me perplexed and requires a response, but I will leave it to somebody who has a better brain that mine to respond to it because I could not make head nor tail of what he was saying. We had a geography lesson about Japan and America, but his history lesson was not as good as his geography lesson. We agree that the Ahern legacy is toxic but I am disappointed that we do not realise there is no value in blaming Fianna Fáil all the time. That is unproductive. We are in government and it is up to the Government to sort it out.

David Cullinane (Sinn Fein)
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You can take the man out of Fianna Fáil.

John Gilroy (Labour)
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What will I say about the Sinn Féin contribution? If one strips away the rhetoric of concern, the Sinn Féin contribution is pure political point scoring and does not merit another mention.

What is a sustainable mortgage? It has been said that a sustainable mortgage is one that requires no more than 35% of income to service it, but even FLAC and New Beginnings have pointed out that this may not be applicable in every case. People with higher incomes may be able to afford to service a mortgage with 35% of their income, but people with lower incomes or no income at all will not be able to do that. That points to the complexity of the issue we are grappling with and trying to sort out. I am depressed about the willingness of the banks to see this problem in all aspects of its complexity. I think the banks have been mean-spirited and very narrow in their interpretation. We have seen this at our clinics. The Sinn Féin Party does not have a monopoly, but all parties see distressed people at their clinics. Yesterday, on one of the more popular RTE radio shows, a caller rang in to say that one of the banks, which was not named, had insisted on the couple selling their house because the price would cover the loan. They sold their house and paid back the loan but the bank then charged them €12,000 for early settlement of the mortgage. That points to mean-spiritedness and we need to take cognisance of it.

There are four elements to our approach in attempting to resolve debt, but I wish to dwell on one element. The guidelines for the personal insolvency legislation were leaked in reports in the public domain. I do not know whose interest is being served by giving such detailed information about the proposed guidelines because we know they have not been discussed by Cabinet yet. By publishing these type of guidelines stating exactly the level of income lenders will allow people to have and what lifestyle that will allow people seems to suggest that the banks are in a position to state the guidelines have been leaked from the Government and this is what the Government is prepared to tolerate. I think we need to go back and state clearly that this Government will not tolerate the meanness, narrow-minded and mean-spirited interpretation of some of these rules that will allow the banks to take half of people's income over €250 per week. What incentive will anybody have to do something for themselves if that is the case? We need to take this back to Government. I spoke about this issue at our parliamentary party meeting this morning. I think it is absolutely shocking that such information is being leaked. Whose interests are being served by leaking this information? These leaks are not in the interests of the people of Ireland.

One would think intuitively that those in the age cohort of 30 to 40 years would be most affected by the mortgage crisis. However, I read a report recently that shows that the age group who are mostly affected are those aged between 30 years and 50 years. This age group are conventionally considered to be the most productive. I am not going to ignore the personal plight of people who are in debt, but from the societal point of view, those in the 30 to 50 years age cohort are most productive and consequently the highest spenders in any economy. These people are now over burdened by household and personal debt.

We are making a good start but we need to get on with this work.

Marie Moloney (Labour)
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I understand that Senator Barrett wishes to share time.

Sean Barrett (Independent)
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With the permission of the Chair, I wish to share time with Senator Norris.

Marie Moloney (Labour)
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Is that agreed? Agreed.

Sean Barrett (Independent)
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I thank the proposers of the motion and all Members who have spoken about this problem. I welcome the Minister of State, Deputy Joe Costello. In the greater Dublin area, which the Minister knows well, a house that cost the equivalent of €100,000 in 1997 rose to €500,000 and nobody's income kept up with that bubble in property prices. We are now trying to address this now.

The leaking of the guidelines was designed to annoy people. We need to get the legislation up and running as quickly as we can. It might be that somebody might watch Sky Sports and do nothing else. He is doing much better than the banks, as he is living within his budget and to say that he cannot watch Sky Sports is absurd. Senator Bacik has made a very good point on child care. The leaked guidelines would require a woman working outside the home and earning less than the cost of child care to give up her career and pension prospects and as Senator Bacik pointed out that child care might last for two or three years. If that is in the guidelines, I hope the Minister will get to work on them.

I acknowledge that the Minister for Justice and Equality, Deputy Shatter moved and accepted many amendments and was in the Seanad until 10 p.m. on occasion. Credit is due to him, but we need more action now. The MABS report is quite shocking and shows that many of the people in debt were older than we had thought because they had bought products from equity release, as they were encouraged to borrow more. It would have been expected, and MABS referred to this, they would have paid off the mortgage. There must be a general warning to beware of banks bearing false gifts. We need to reform the banking system significantly. I do not think it has changed at all in recent times. I recall banks boards comprising people such as James Minahan, Patrick Lynch, Louden Ryan who were eminent people in Irish economics and the banks moved away from choosing such people in their era of madness.

No. 25 on the Order Paper is Mortgage Credit (Loans and Bonds) Bill 2012. I mentioned to the Minister of State at the Department of Finance, Deputy Brian Hayes that the banking crisis did not happen in Denmark. The Danish people would want to route the money through the existing banks, which are the banks that got us into trouble in the first instance. If Danske Bank would set up a different way of financing housing that would be useful. The destruction of the building society movement is very capably covered in the book about Michael Fingleton. The Educational Building Society was meant to be a co-operative and its principle was almost philanthropic, that is teachers with houses would give money to younger teachers to buy houses.

The corruption of the system into the worst form of banking is an episode which must not be allowed to be repeated.

Marie Moloney (Labour)
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The Senator is eating into his colleague's speaking time of three minutes.

Sean Barrett (Independent)
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There must be no evictions from buy-to-let properties. The landlord can sell on the property to someone else, but the tenants should be allowed to stay and pay rent to the new landlord. Let the landlord take the capital loss. That is happening in the case of hotels up and down the country, some in County Kerry and others in County Mayo. Hotels have dropped in value, from €40 million down to €10 million and €3 million. The people living in these houses must be protected, a point on which I completely support Senator Aideen Hayden. We need further action by the banks and the public interest directors. The finance committee was not able to find out what they were supposed to be doing.

I am delighted to share time with Senator David Norris.

Marie Moloney (Labour)
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Senator David Norris has two minutes.

David Norris (Independent)
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We will see about that.

There is an argument against having Sky Sports, but it is a moral rather than a financial one. As Sky Sports is owned by Rupert Murdoch, how could anyone have it in the house?

I was not in the House to hear the discussion, as I was attending the Joint Committee on Foreign Affairs and Trade. Therefore, if the point I want to make has been raised, I apologise.

When I was listening to the radio the other day, I heard a man who had a mortgage of €110,000 speak. He had negotiated with the bank which to give him time had agreed to an interest-only arrangement for six months. However, it had not told him that he would be charged a penalty of €11,000. That is appalling and fraud. The banks are still swindling the people and it must stop. I ask the Minister of State to force the banks to stop it, as they are crucifying people, which is outrageous. How many mortgages were sold on to hedge funds, these other capitalist cannibals? These are appalling instances.

The code gives very limited protection and the proposed changes will make it even more difficult for mortgage holders to be considered as co-operating. Who is in charge of all this stuff? Who will act as judge and jury? “'I'll be judge, I'll be jury,' said cunning old Fury: 'I'll try the whole cause, and condemn you to death.'” It will be the bloody banks once more; they are in charge of this whole process. Therefore, it is neither equal nor fair, nor independent.

I refer to the business of the banks having the restrictions on making unsolicited telephone calls lifted from them. When one is in financial distress, this is one of the worst things to happen for one's mental health. I have spoken about this issue for many years. As they are driving people to take their own lives, this practice should be stamped out at once. Making unsolicited telephone calls should be made a criminal offence. I should not need to say this to the Government because, tragically, in my lifetime a Minister, under pressure, took his own life. I am not saying it was the same pressure, but it just shows what pressure can do to people in the most responsible of positions. What about the vulnerable or half-educated person? I find it shocking.

People should not have to give up their tracker mortgages as part of the deal. There should be an independent body and an independent appeals body because the definition of what is fair and reasonable should not be left to the banks. What the hell do they know? They traded recklessly for years. They traded disgracefully and most certainly were not fair and reasonable. Things are still coming to light about the way they dishonestly and fraudulently took money out of people's bank accounts in terms of foreign exchange transactions and God knows what else. Is the Minister of State satisfied that they should have in their control the definition of what is fair and reasonable?

There is far too much control vested in the banks. The wonderful people involved in the anti-eviction group stood in solidarity with the cancer victim of a certain age who had been living in her house for 60 years in an area in the north inner city that the Minister of State knows, near the place of which we both have such happy memories. The sheriff was called to put her out. However, her neighbours and those involved in the anti-eviction group stood in solidarity with her. I was ashamed to be Irish on that day.

There should be an independent group comprising people from the voluntary sector - people who have done wonderful work - MABS and FLAC, insolvency practitioners and mortgage holders. These individuals should be involved because they are the ones who know what the problems are, who know it is not just a horrible thing on a bank balance sheet.

I spoke this morning about the financial situation. I said the people were the victims of an international financial swindle. I ask the Minister of State if he would be kind enough to pass on my remarks because he, even more than me, is a good friend of President Higgins. Thank God for him. What he said to the European Parliament today about human morals was brilliant and marvellous. I heard the synopsis. He spoke about human values, not swindling techniques and the idea that imposing rigid financial tiers on a subservient people-----

Marie Moloney (Labour)
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I ask the Senator to conclude.

David Norris (Independent)
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I will end now. I have just returned from Cyprus and what is happening there is a thundering disgrace. The people concerned came here and told us that we could not and must not burn the senior bondholders because it was a matter of principle, legality and morality. They then went to Cyprus and forced the Cypriots to do so. They are picking us off, one at a time. We are little experiments for them. They should be told to go to Hell.

Colm Burke (Fine Gael)
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I welcome the Minister of State. We need to deal with other issues as well as that of mortgage arrears. For the past two years the Government has been working to encourage job creation, as jobs generate income and borrowings can be serviced. The Government has made significant progress in the past six months on the issue of financial stability, which will assist many families in dealing with the difficulties they face. Once there is financial stability, it will be possible to move forward on the issue of job creation for unemployed mortgage holders. Much has been done in this regard in the past two years. The third element is how to deal with the issue of mortgage arrears. A large number of mortgage holders are in arrears and in many cases it will be very difficult for them to service their loans. The Government introduced the personal insolvency legislation which will work to give people an avenue to deal with their mortgage difficulties.

It is interesting to reflect on the progress made by the country. As a practising solicitor, I remember the case of a man with four young children who wished to buy a three bedroom semi-detached house, on which the deposit was £100 which he did not have. I was able to send him to a bank to borrow the £100 in order that he could pay it and buy the house. What happened to the property market then given that the most expensive item anyone will buy is a house? We allowed the speculators and the developers to make huge profits without any restriction.

In 2002 Peter Bacon gave us plenty of warning. In 1997 property in Hong Kong had decreased in value by 70%. We were doing exactly the same in Ireland, but we did not heed the consequences in Hong Kong. When house prices are allowed to rise, the cost of a mortgage also rises. When mortgage costs increase, wages must also increase. When wage costs increased, the country became uncompetitive. All of this happened, not during the lifetime of the Government but during previous the 14 years under other Governments. This should not be forgotten when solutions are being proposed.

I agree that the banks made very significant mistakes. I refer to an example in which people were forced to sign documents and they did not know what they were signing. A gentleman who came to my office understood he was signing a guarantee on a €40,000 top-up loan for his daughter

She had already borrowed €220,000. I asked him if he was sure he only signed a guarantee for €40,000 and he said he was absolutely definite about it. I pulled a copy of the title to his daughter's houses from the Land Registry folio to find he had signed a mortgage for €260,000 on a house now worth €140,000.

We need to examine many things which happened over the past number of year to ensure they never happen again. We must deal with people who are in financial difficulty and we need to be innovative in how we do so. Going back to the 1980s, there was a huge slump in the property market and we introduced particular grants to allow people surrender local authorities houses so they could buy their own houses but we now need to be far more innovative in dealing with this issue.

The personal insolvency legislation has been enacted but we need to look at new ideas. In Germany, the developer builds the house but does not furnish it. The person who buys it rents it out for 20 years and the person who occupies it must pay the cost of furnishing it but he or she has a guarantee of being able to live in it for 20 years. We need to look at new ideas in regard to how we provide housing in that it is not just in two distinct ways, namely, owning a home and having a mortgage or living in a local authority house. We need to look at that third idea rather than having the short term 12 month or two year letting agreement. We need to do something more than what we are doing already. It has worked very well throughout Europe over the past half a century. We need to look at that system so we can keep rents down and get better value for our money in terms of how those properties are managed. We need to move forward in that area and not just look at this area alone. There are many other areas at which we need to look and we need to be very innovative in how we do so.

This debate is welcome. It is important we do everything possible to support people who want to stay in their own homes but who are in financial difficulty. We must do everything possible to ensure the maximum number of people and families can do so. That is the constructive way this Government is approaching it.

Brian Ó Domhnaill (Fianna Fail)
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I welcome the opportunity to debate this issue. Is ceist fíor thábhachtach í seo do phobal na tíre, go háirithe do na daoine a bhfuil morgáistí acu agus iad anois i droch áit de bhrí nach bhfuil siad in ann na billí atá orthu a íoc. I was looking at a couple of figures when Senator Colm Burke was speaking and at the time of the last general election, approximately 6% of all household mortgages were in arrears of 90 days or more. Today 12% of all household mortgages are in arrears of 90 days or more which is a 100% increase in arrears. What has been done since? Promises made before the election seem to have dissipated since then. Nothing has been done to force the banks to write-down some of the debts. Some of the banks are actually restructuring because it makes economic sense for them to do so. However, there has been a lack of decisive measures taken by the Government to deal with this issue.

Just over 90,000 people are in mortgage arrears - people who are struggling and to whom Senator Norris, among other Senators, referred. These people are suicidal. There was a debate on the national airwaves last week in which Mr. Ben Dunne, someone with whom I have not always agreed, spoke passionately and on behalf of the people. Some banks are putting pressure on people. I spoke to someone at a clinic last evening who the banks were telephoning at 8.30 p.m. and 9 p.m. It is time the Government brought in guidelines so that banks must act responsibly and must assist rather than frighten customers. Some people are on the brink of suicide as a result of this issue.

I am not trying to play any political games because we are all in this together, whether in opposition or not. The fact is that it is two years since the last general election and there has been a 100% increase mortgage arrears. They have not been dealt with. Senator Colm Burke was right that the mortgage arrears issue is linked to the economy. Let us look at the economy and at what was inherited. Davy Stockbrokers outlined that in the last quarter of 2012, 50% of Irish mortgages were in negative equity while many owner occupier loans were in arrears of 90 days or more. It outlined in that report that negative equity was not the driving factor in regard to mortgage arrears and that the key factor was labour market developments, in particular unemployment and long-term unemployment.

The unemployment crisis has not been addressed. A promise was made before the last general election that 100,000 jobs would be created by 2015 but we are losing approximately 1,000 jobs per week. The economy is broken down into three areas, namely, foreign direct investment, the agrifood sector and the domestic economy. Let no one make a charge that when in government, Fianna Fáil did not establish the foreign direct investment economy. Who developed Food Harvest 2020, a template document which is driving the economic resurgence in the agrifood sector? It certainly was not the current Government. It inherited and supported it but it did not produce it. In fact, the Minister for Agriculture in the North is going to use it as a template to develop the agrifood sector there. The third area that is causing all the problems in regard to mortgage arrears is the domestic economy, which is dead. People are not spending; they are trying to pay their bills. There is no money moving in the domestic economy. If one speaks to any retailers, small or large, they will say that. It is only the Government that can boost or bolster the domestic economy but it has not done so. That is why we have the difficulty of job losses, in particular in the retail sector, and of mortgage arrears. The domestic element of the economy is not being dealt with.

I refer to the proposals in the insolvency legislation. We heard about the fracas in the Judiciary over the past 24 or 48 hours. One of the reasons it is showing a lack of confidence in the current Government is the manner in which proposals are being brought forward under the insolvency legislation, which has been agreed by the banks. The Government sat down with the banks before talking to the national Parliament about this legislation. The judges have been side-tracked in this process while others, including county registrars, have been included and part of their salaries will be paid by the banks so that the desired outcome - that is, home repossessions - is achieved. That is exactly what is happening. The Government is facilitating the banks by ensuring the people making the decisions are on the side of the banks. It is absolutely disgraceful.

Colm Burke (Fine Gael)
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That is outrageous.

Brian Ó Domhnaill (Fianna Fail)
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That is what is happening and that is what much of the row between the Government and the Judiciary is about. The Judiciary is being undermined by the Government.

John Gilroy (Labour)
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On a point of order, it is convention that part of the Oireachtas would not criticise another element of it.

Brian Ó Domhnaill (Fianna Fail)
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Will the Senator clarify that?

John Gilroy (Labour)
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I will clarify it. It is called the separation of powers and as part of the Oireachtas, of which this House is one third, it is inappropriate to criticise another part of it.

Brian Ó Domhnaill (Fianna Fail)
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The issue was raised on today's Order of Business.

The issue has developed because of the fallout from a comment made by the Minister for Justice and Equality when he undermined the Judiciary. It is disgraceful and it was the first time it had happened in the history of the State. It came as a result of the legislation, which is one of the six elements about which the Judiciary is unsatisfied.

Marie Moloney (Labour)
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I ask the Senator to conclude his comments on the separation of powers as his time is up.

Brian Ó Domhnaill (Fianna Fail)
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Neither I nor anyone on this side of the House within Fianna Fáil criticised the Judiciary. The criticism came from the Government.

Aideen Hayden (Labour)
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The Senator said it very well.

Brian Ó Domhnaill (Fianna Fail)
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It came from the Government. Senator Hayden's party created the row, so do not try to point the finger over here.

Marie Moloney (Labour)
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I ask the Senator to resume his seat as his time is up.

Joe Costello (Dublin Central, Labour)
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I thank all of the Senators who have contributed to the debate. I did not hear the early part of the debate as I arrived when Senator Thomas Byrne was speaking.

I am speaking on behalf of the Minister for Justice and Equality, Deputy Alan Shatter, who is unable to attend this evening. I have listened to many constructive proposals, which are welcome. Senator Byrne's comments can only be categorised as a rant, because he said nothing constructive. He ranted and attacked the Government in the strongest language possible. The Government inherited a problem which was created by its predecessor, which the Senator was part of as a Deputy. The problem was created largely by the property bubble. While the construction sector was out of control there was still fuel being thrown on the fire, with further tax incentives of up to 100% being offered. By the time the market reached its crescendo in 2006 we were building more than 90,000 houses or units of accommodation here while less than 100,000 were being built in England. A country with a population of 65 million built roughly the same number of units of accommodation as a country with a population of 4.5 million. What did the Taoiseach of the day say when he was criticised for it? He said that those who criticised him about construction policy should go away and commit suicide. Clearly, Fianna Fáil should recognise that inheritance and apologise to the people for what happened.

This Government, in stark contrast with its predecessor, has made considerable progress across a number of sectors in addressing the significant and severe mortgage arrears crisis that it inherited. The crisis is directly linked to the economic situation presided over by members of the previous Government. There was a failure on the part of the previous Government, though it was in office for a considerable period, to propose or introduce relevant insolvency or bankruptcy reform legislation.

Each motion on financial and economic matters that Fianna Fáil brings before the House or the Dáil appears to be informed by the same amnesia. There is little or no recollection of its failed policies that resulted in an economic, fiscal and banking collapse. Thousands of people have lost their jobs, living standards were substantially reduced for families and, ultimately, the country lost its economic sovereignty. That was a result of the actions and inaction of the previous Government.

Darragh O'Brien (Fianna Fail)
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The Minister of State's hands are full of pages of irony.

Joe Costello (Dublin Central, Labour)
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The Government has two overall key strategic objectives in this area. First, there is a need to ensure that mortgage holders who are experiencing real difficulty should, where appropriate, be assisted in remaining in their homes. Second, any framework and range of supports for mortgage holders must be able to distinguish between those who cannot afford to pay their mortgages on their primary homes and those who choose not to pay. The principle of a fresh start for people facing genuine difficulty in dealing with their mortgage commitments is a key priority.

The Government, on assuming office in 2011, established the interdepartmental mortgage arrears working group, which issued the Keane report. That was one of the first acts done by the Government. The action had not been taken by the previous Government, but it should have been. The Government is now implementing the key recommendations of the report, which was published in October 2011. Based on its recommendations, the Government established the mortgage arrears steering group to co-ordinate the responses of the Departments and agencies that are centrally involved. Since March 2012, the steering group has reported to the Cabinet committee on mortgage arrears.

In contrast with the inactivity of our predecessors, let us consider some of the important initiatives that have been taken by the Government. For example, the mortgage-to-rent scheme, available since June 2012, is a mainstream social housing solution for the most acute cases of mortgage arrears. Lenders are now engaging with the process and substantial progress has been made. More than 800 cases have been put forward for the scheme. Development of a mortgage-to-lease scheme is also progressing. Under the scheme, the lender would become the long-term owner of the property after voluntary repossession has taken place. The household would become a social housing tenant of the relevant local authority and the local authority would, in turn, lease the property from the financial institution for the period of the lease. An information and advice service has also been established to help people in mortgage arrears through the website keepingyourhome.ie, an information helpline and the availability of independent financial advice for people being offered long-term restructuring proposals by the banks.

The most significant development in addressing the area of personal over-indebtedness, including mortgage arrears, has been the development and enactment of our new personal insolvency legislation. The Personal Insolvency Bill was published in June 2012, passed by both Houses in December and signed into law in December. The development of modern insolvency law was a key commitment in the programme for Government. It was also required under the EU-IMF-ECB programme of financial support for Ireland. It was inspired by the Law Reform Commission's significant contribution in its 2010 report on personal debt management and debt enforcement and by the recommendations of the Keane report.

The Personal Insolvency Act 2012 provides for three new debt resolution processes which, though requiring approval by the court, are essentially non-judicial in nature. The debt relief notice, DRN, will allow for the write-off of qualifying debt up to €20,000, subject to a three-year supervision period; the debt settlement arrangement, DSA, provides for the agreed settlement of unsecured debt, with no limit involved, normally over five years; and the personal insolvency arrangement, PIA, will enable the agreed settlement of secured debt of up to €3 million - although the cap may be increased with the consent of all secured creditors - and unsecured debt without limit, normally over six years. The Act also provides for automatic discharge from bankruptcy after three years, subject to certain conditions.

The Act introduces new insolvency resolution concepts to Irish law. The new PIA is a process that is unique in insolvency law anywhere in providing for the negotiated resolution of secured debt in a court-sanctioned process that provides certainty for creditors and, if I may say so, hope and relief for debtors. The personal examinership approach in the PIA is designed to be sufficiently flexible and robust to address complex personal insolvency cases which may include combinations of trade, consumer and mortgage debt. It offers a second chance mechanism for talented and capable individuals and entrepreneurs not only to return to solvency but to make a contribution to the economic development of our society.

To protect the constitutional rights of all concerned and to prevent potential actions for judicial review, the Act makes provision for enhanced oversight by the court of the three new debt resolution procedures. The enhancement of court involvement gives a significant benefit to the debtor by providing protection from enforcement actions by creditors, either during the negotiation period or during the lifetime of the arrangement. In order to deal with this anticipated volume of work and to facilitate the speedy consideration of insolvency applications, a new cadre of specialist judges of the Circuit Court is being recruited.

The Insolvency Service of Ireland was established on 1 March 2013 by ministerial order. It will be formally launched tomorrow and will commence its information campaign, which will include its website, the issuing of publications designed to assist those interested in the new debt resolution processes and the opening of a public information line. The announcement of the regulatory framework for personal insolvency practitioners will follow shortly. The director of the Insolvency Service of Ireland, Mr. Lorcan O'Connor, is working with all speed to complete the administrative and technical preparations to ensure that the full operation of the provisions of the Personal Insolvency Act can begin as soon as possible.

The Personal Insolvency Act makes provision for the Insolvency Service to draw up guidelines on reasonable living expenses which will apply in respect of a debtor in one of the new insolvency processes. In developing these guidelines the Act requires the Insolvency Service to have regard to a number of criteria. The Insolvency Service has engaged in extensive consultation with relevant Departments, agencies and organisations and the guidelines should be ready for publication very soon.

It may be expected that a significant number of persons are likely to avail of the new or reformed insolvency processes. For broad planning purposes, the tentative estimate for the number of applications in the first full year of operation of both the law and the Insolvency Service is approximately 15,000 for the debt settlement arrangement and personal insolvency arrangement; 3,000 to 4,000 for debt relief notices and 3,000 for bankruptcy petitions. The critical message which I reiterate to all those experiencing debt problems is to engage with lenders and other creditors to negotiate an appropriate settlement. That requires lenders to engage properly with customers. Now that the architecture of the new insolvency legislation is settled, financial institutions must improve engagement with debtors.

Mortgage lenders have the primary responsibility to deal with customers experiencing difficulties with their mortgage repayments. These institutions extended credit in the first instance, often without much in the way of expected oversight or due diligence. Urgent action is required by banks to address the problems their customers in genuine difficulty are experiencing. However, each case of mortgage arrears is different and will have to be looked at on its merits. If financial institutions refuse to engage constructively and realistically, the Government has made it very clear that it will take any necessary measure to refine its approach to ensure the new debt resolution processes work. This commitment has been made by the Minister on more than one occasion. While banks must have regard to commercial considerations, they must also behave with greater flexibility and insight and apply a broader range of common-sense options based on financial reality.

The new debt settlement and personal insolvency arrangements are designed to facilitate a workable, sustainable, voluntary resolution between a debtor and his or her creditors. A common-sense rather than a coercive approach is taken, as can be seen in the creditor voting process provided for in the Act. It is an approach designed to avoid, in so far as possible within constitutional constraints, the necessity for contentious court hearings and adjudications, together with the substantial delay and inevitable legal costs inherent in such process. The Government has very much engaged with the financial institutions in the lead-in to the enactment of the legislation. They understand exactly what our concerns are and what they should do in operating the legislation constructively and sensibly. Justifiable concerns have been raised by Senators and others about the balance of power between banks and debtors. There is talk of what has been commonly referred to as a "bank veto". In reality, it is in the best interests of both debtors and creditors to seek to conclude an acceptable and workable arrangement under the Act.

The Central Bank has had ongoing and detailed engagement with lenders on the issue of mortgage arrears and explored possible options for cases where more than a temporary forbearance response would be required. These are well known at this stage and include split mortgages, trade-down mortgages and sale-by-agreement options which would allow families to move to homes more suited to their current needs, including employment and appropriate accommodation needs. There will also be cases in which debt forgiveness is not only a practical solution but will also, in the medium to long term, benefit both debtors and creditors. The write-off of a portion of the capital debt outstanding on a family home is a further option. Where appropriate, the mortgage-to-rent scheme will also be available for consideration.

The Central Bank is satisfied that the tools are in place to accelerate the work-out of the mortgage crisis. Banks and borrowers must use these tools to reach fair and sustainable solutions to mortgage arrears on a case by case basis. Of course, progress by the banks in providing durable solutions has not been sufficient. Thus, the Central Bank has set targets for the conclusion of sustainable agreements and the durability of such solutions and will audit each bank's performance against the targets and, where necessary, apply sanctions. It has also commenced a review of the code of conduct on mortgage arrears to ensure it can facilitate better engagement between borrowers and lenders on a mortgage problem, while maintaining important protections for those borrowers who do engage with their lender. A consultation process on the review of the code ended on 12 April and the bank is reviewing the submissions received. I understand the aim of the bank is to publish the revised code of conduct in the first half of this year.

In addressing the mortgage arrears problem we cannot ignore the fact that the issue of repossession must be addressed in some cases. Ireland, for a number of reasons, has had a very low level of repossessions. The vast majority of repossessions occur on a voluntary basis. Nobody can be unaware of the issues that arise where repossession proceedings relate to family homes. It is an emotive and sensitive topic. The Minister for Justice and Equality has recently published the Land and Conveyancing Law Reform Bill 2013 which is designed to address issues arising from case law in various repossession proceedings which have created uncertainty relating to the exercise by lending institutions of their repossession rights. The consequences of the case law were unintended at the time of enactment of the Land and Conveyancing Law Reform Bill 2009 and the purpose of the Bill mentioned is to restore the intended position. The new legislation fulfils a commitment to remedy these issues in the context of the third quarter of 2012 review of the EU-IMF programme of financial support for Ireland. The Bill is designed to restore the law which has been in place over the centuries to enable lending institutions to rely on security in relation to a mortgage, as intended by the Oireachtas when enacting the 2009 Bill. The Bill mentioned also provides for the adjournment of actions for repossession in certain cases relating to the principal private residence of the borrower where it is the opinion of the court that the matter could be resolved by recourse to the Personal Insolvency Act 2012 and aims to examine whether a personal insolvency arrangement would be a more appropriate course of action. It is an important new caveat and protection. Where the court is of such an opinion, it may adjourn a hearing for no more than two months. The Minister is seeking to provide, by way of this provision, a transparent, final, time-limited safety net for a home owner where repossession is being pursued without the possibility of a personal insolvency arrangement having been fully explored by the parties.

It may be the case that, as a last resort, the best interests of the borrower may be served by repossession. This could arise, for example, if there were substantial arrears and no prospect that the borrower would be in a position to address these arrears or restore some stability to the mortgage arrangement. This is recognised in some cases where repossession arises on a voluntary basis and where there is some other voluntary arrangement to address an unsustainable mortgage. In circumstances in which individuals borrow money to acquire a home and that home is security for borrowing it has been the law for centuries that, ultimately, the financial institution that provides the loan can apply to the courts for possession of the property where the borrower fails to discharge mortgage repayments. In the absence of such a law, no financial institution would lend money for house purchases as the security would be meaningless. Modern insolvency legislation is a required feature of any properly functioning market economy. It will assist not only debtors and financial institutions but also business of all types and sizes, including tradespersons and local co-operatives. All debtors and creditors are concerned about this reform and all must be treated fairly. Many persons and companies may be both debtors and creditors.

While I understand and share some of the very negative feelings towards financial institutions and their contribution to our current economic difficulties, we must not lose sight of our objective, which is to introduce reformed, workable and balanced insolvency legislation. This approach which seeks balance and fairness has been criticised as suggesting creditors, particularly mortgage creditors, will exercise a veto. That criticism is reflected in the ill-thought-out motion before the House. The contention is based on an incorrect view of how normal commercial contractual issues may be resolved. If one borrows, one must repay where one can. If one receives a good or service, the provider is entitled to be paid.

If the debtor is genuinely unable to pay, negotiation with creditors may resolve the difficulty and the Act provides the new framework for sensible negotiation.

The approach in the proposed debt settlement arrangement and the personal insolvency arrangement is that the insolvent debtor will, with the assistance of a personal insolvency practitioner, put forward what the debtor considers to be a realistic offer to his or her creditors, one that will restore the debtor to solvency within a reasonable period while at the same time giving creditors a better financial outcome than the alternatives of debt enforcement or bankruptcy. The creditors will seek to consider carefully the debtor's offer, conscious that if they refuse, the debtor has another option, namely, the standard debt discharge procedure available under the reformed bankruptcy laws.

The motion from the Opposition Senators also makes reference to developing some form of non-judicial independent agency or process to arbitrate and impose solutions on creditors and debtors. This point was mentioned by a number of Members. However, the new debt resolution processes which this Government has introduced, and in particular the personal insolvency arrangement, are designed to operate on a voluntary basis with common sense and enlightened self-interest rather than coercion of any of the parties. There is no example of the type of body that appears to be demanded by the Senators in their motion existing in any jurisdiction. During the debate on the Personal Insolvency Bill last year, no Senator or Member of the Lower House could give an example of such a body.

Darragh O'Brien (Fianna Fail)
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We proposed a Bill. Should we be dragged by the nose?

Joe Costello (Dublin Central, Labour)
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There is good reason for that. Such a body would be struck down by the courts as a gross interference in the rights of parties to conduct their affairs. That is the answer to Senator Darragh O'Brien.

Darragh O'Brien (Fianna Fail)
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I do not have to agree with it but I thank the Minister of State.

Joe Costello (Dublin Central, Labour)
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The State cannot impose a settlement on parties to a private contract involving the provision of goods, services or capital. There are enough lawyers in the House who know it quite well.

The Personal Insolvency Act is one of the key elements of the Government's strategy to return this country to stability and economic growth. Its success depends on the goodwill and determination of debtors and creditors to agree workable arrangements that can be sustained over a number of years to a successful outcome. We cannot allow the emerging economic recovery to bypass families in mortgage arrears or leave a significant number of families in limbo because they have no certainty about their future financial situation. However, neither can we allow situations to arise where people who have the capacity to repay their debts renege on their commitments or, where there is a problem, do not meaningfully engage with the lender. The Government, unlike its predecessor, is delivering the reform process and the real solutions needed by our citizens so that they can engage constructively with financial institutions and creditors to bring about certainty, hope and relief in respect of their homes and mortgage affairs. I thank the Senators for giving me a longer hearing than I was entitled to.

Denis O'Donovan (Fianna Fail)
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It is not normally my style to make a political point but I recently canvassed in Meath East before the by-election. When I was knocking on doors, I was thankful I was not a candidate from the Labour Party. Trotting out the historical argument of blaming Fianna Fáil for everything, including the problems in Greece-----

John Gilroy (Labour)
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"Exonerate Fianna Fáil" will be our next slogan. It was not Fianna Fáil's fault; the party was not in government for 14 years.

Denis O'Donovan (Fianna Fail)
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The proof of the pudding was the result of my colleague, Senator Thomas Byrne, who did not quite double his vote but increased it from 19% to 34%. This was positive and indicates the lustre of going back. The point being made to me was that the parties in government should deal with the issues. They knew what was in store when coming into office and made loads of promises.

The banks really control the show. The Personal Insolvency Act is a dream. I hope it works but it will not resolve the major issues we are dealing with on a daily basis. We think of people in Dublin who purchased apartments and houses and who are now in negative equity but the situation applies across rural Ireland. I recently came across a young man whose planning permission was delayed for three years. He eventually started building and, by the time the recession bit and he lost his job, he had the structure of a house in place. There was no plumbing and no kitchen installed. It was uninhabitable but when he looked for a few euro from the social welfare office, they pointed out that he had a house. They put a notional value on his house, which was uninhabitable, and he was denied any assistance from the Department of Social Protection. There is a lack of joined-up thinking. The banks would not give him the money to complete his house and it is probably not the right way to go because he does not have a job. It is wrong for the Minister and the Government to dismiss out of hand the Mortgage Resolution Bill proposed by Fianna Fáil. There are interesting points in the Bill. Some 180,000 loans are in serious arrears, with 80% of them concerning family homes. There is a worry that, despite commitments given, family homes will be repossessed. It is a real fear.

I urge the Minister of State to speak to the senior Ministers in his party and to put a gun to the heads of the banks. It happened in our Government last time. The banks called the shots and told a ball of lies to the former Minister for Finance, Brian Lenihan, and others. Brian Lenihan, who is now deceased, sat in that chair and said the total bank problem was in the region of €5 billion to €7 billion. That was the information he had been given and he provided it to us in good faith. Some four years later, the banks have received substantial funding but have not dealt with the problem. Time will tell whether the proposals are of some benefit to the beleaguered borrowers and whether the banks are still calling the shots. The Personal Insolvency Act, even though the Minister of State may not agree, contains a veto for the banks. The banks are the final arbiters.

Fianna Fáil proposed splitting mortgages, a procedure under which part of the loan is parked for ten years. In some cases, that may be necessary. Another proposal is for interest-only payments for up to four years. I know a businessman who, unfortunately, had three properties. He was able to pay the mortgage on his family home and he had a commercial building and a buy-to-let property. The banks refused to accept an interest-only arrangement. For the past two years, nothing has been paid. If he was allowed, with a struggle he could have paid the interest portion on the other two properties. I remain to be convinced that the banks are really in this game to assist beleaguered borrowers. The banks have too much power and control and owe it to the taxpayers to treat fairly those in serious mortgage arrears, particularly in respect of family homes. People ask why debt forgiveness should happen but in some cases there is no alternative. The banks should look at this and take the bull by the horns. Banks have been recapitalised and the outcome on the ground does not reflect the money that has been put in. The banks are doing little or nothing for the ordinary Joe Soap and the beleaguered mortgage holders in desperate situations. The message for the Minister of State to take back is that I do not trust the banks. The previous Government and the current Government are being led a merry dance by the banks.

Darragh O'Brien (Fianna Fail)
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I thank the Minister of State for sitting in for in the Minister of State at the Department of Finance, Deputy Brian Hayes. I also thank him for not reading out certain elements of the script he was given. Whoever prepared the speech was able to say that the Minister of State had sat here and listened with growing disbelief to my introduction of the motion. The person could not possibly have heard it at the time.

I know the Minister of State was elsewhere.

John Gilroy (Labour)
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We take it for granted.

Darragh O'Brien (Fianna Fail)
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Perhaps they know me better than I thought and believe everything I say is nonsense.

Joe Costello (Dublin Central, Labour)
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There is no criticism of the Senator.

Darragh O'Brien (Fianna Fail)
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I am glad the Minister of State did not read the script. Either the official knows me very well or what was provided was a standard script.

We will always disagree on particular political points. We can also talk all we like about history, although it is important in the context of learning from the mistakes of the past. I have probably used 30% of Fianna Fáil's Private Members' time in the lifetime of this Seanad to try to address the issues of mortgage distress, arrears and debt. Fianna Fáil has brought forward realistic options and alternatives that should be looked at.

I hope that when we come to debate the personal insolvency legislation in a year's time, I will have been proved wrong. However, I do not believe it will work because of the bank veto, the lack of independent arbitration and the proposal that half the salaries of personal insolvency experts be met by banks. In this regard, the Minister for Justice and Equality, Deputy Alan Shatter, is only providing a new layer of the Judiciary to deal with this specific item. As I said to the Minister of State, Deputy Brian Hayes, the Government must define what is meant by "sustainable". I firmly believe it should not leave it to the banks to decide what will be a sustainable solution. I say this as someone who, prior to being elected to the Houses, worked in the financial services sector for 15 years. I hope the Minister of State will relay my request to the Minister and I am sure he will do so.

I accept the argument that every case is different. However, we need to deal with this issue within the parameter that 40% of a person's take home pay, after tax, is the maximum a bank can insist on taking. The bank could then move towards other solutions such as split mortgages, an extension of mortgage terms, etc., which should be looked at in more detail. It should not be left to the banks to determine, in respect of all of the issues we have discussed time and again, what the fix will be. I am sure that, like me, the Minister of State and other Senators have acted on behalf of constituents in their dealings with banks. It should not be forgotten that it is the bank official's job to know the ins and outs of the banking process. At a time when people's homes are up for grabs, they are being asked, despite not necessarily being well versed in financial matters, to fill in financial statements, back them up with all necessary information and then meet a senior official in a bank.

The motion was tabled in good faith and this has been a useful debate. I agree with much of what has been said by Senators across the House, although I do not agree with much of what was contained in the Minister of State's speech, which he edited well. The current statutory code of conduct should not be ripped up, as it provides the only protection in this area. Like I am sure most Senators present, I know what the response of the banks will be to the introduction of the land and conveyancing Bill to set aside the Dunne judgment. It will be a repossession charter for the banks. Like Senator John Gilroy, I have seen a lot of requests from banks for voluntary sales, particularly in the past two months. Some of them have been based specifically on value in cases in which the mortgage amount is low. Banks know what they are at and should not be trusted. The Government should set the bar and parameters for them. I hope some of the suggestions we have made in this debate will feed into that process. The Government should not trust the banks, as they will not do what it wants them to do.

I again thank all colleagues for their contributions to the debate.

Paddy Burke (Fine Gael)
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When is it proposed to sit again?

Maurice Cummins (Fine Gael)
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Ag 10.30 maidin amárach.