The mortgage debt problem “is going to make the night of the bank guarantee look like a picnic” if it is not dealt with, Independent TD Shane Ross has claimed.
He made the allegation as the Dáil discussed sharp criticism yesterday of the banks by the Central Bank and the Department of Finance, which said the financial institutions were adopting a “wait and see” strategy.
Taoiseach Enda Kenny said the Personal Insolvency Bill, to come into force on March 1st next, would force the banks to engage with clients.
Mr Kenny said the banks had to make their proposals to the Central Bank by December. They should "get up and do it now" and engage with mortgage holders in distress, he said.
He rejected claims by both Fianna Fáil leader Micheál Martin and Sinn Féin leader Gerry Adams that the legislation would give the banks a veto on mortgage debt.
Mr Adams called for a number of actions, including not applying the property tax to homeowners in negative equity.
Mr Ross said the banks were being included as part of the solution “and they should no longer be seen as part of the solution”. He referred to remarks yesterday by the Central Bank’s head of banking Fiona Muldoon, who said the banks were behaving like teenagers in responding to requests to deal with mortgages.
Mr Ross believed Ms Muldoon “was saying bankers are in denial. The banks were looking for something to turn up” but they “extend and pretend”. They were engaged in “denial, delay and deceit”. They had lied to the Government, the Central Bank and the regulator, the Dublin South TD said. “They’re lying and you can’t treat these bankers as normal human beings," he went on.
Describing the banks as being like “unruly teenagers” Mr Martin told the Taoiseach that "you had proposed that the unruly teenagers had the final say on mortgage” debt relief through the insolvency legislation. Mr Martin said there were no indications the banks would deal any way properly with customers.
The Fianna Fáil leader referred to remarks by the general secretary of the Department of Finance John Moran that there would have to be much more dramatic write-off of debt. Mr Martin added: “It took a civil servant to say what Government has refused to say about debt forgiveness.”
But Mr Kenny said Mr Martin was “incorrect” and that the Minister for Justice had called for further write-offs of mortgage debate during the committee debate over the insolvency legislation.
Last week, the Taoiseach said, he told a Dublin Chamber of Commerce dinner there was not enough evidence of a demonstrably functioning banking system.
“What the public servants have been saying follows what the Government has been saying for quite some time,” he said of Mr Moran’s remarks and the criticism levelled by Ms Muldoon.
Mr Kenny said the Insolvency Bill would be in operation next year and if the banks did not settle with their clients, those clients would have a whole range of options.
The Government was “very clear” about how to deal with the “little people” and had no problem in cutting home help hours, but “when banks are in crisis the Government gives them €64 billion”, Mr Adams said.
