I welcome the Minister to the House. While I realise that the Bill is amending previous legislation, I note that the Minister referred in his speech to good faith. We should reflect on the actions of the banks to date. We saw in the newspapers today reference to the banks being hauled over the coals by the Central Bank because they have not met the targets in terms of coming to arrangements with mortgage holders. However, when there is no sanction for banks, then those working in the bank are unlikely to worry too much about what the Central Bank says to them. We saw what the banks did in respect of what Patrick Honohan said to them last March. He asked them to consider split mortgages, set out as a possibility under the personal insolvency legislation and under the new code of conduct as well. Rather like the personal insolvency legislation, the new code of conduct was really a charter for the banks for what they can do. While we can talk about good faith, the banks do not act in good faith. The banks act to make a profit. They act in their own best interests and in no one else’s interests.
Let us consider what they did for Patrick Honohan, the Governor of the Central Bank, when he asked them to start addressing the 142,000 mortgages in arrears. He asked them to consider split mortgages, and they did so. To date, a total of 142 split mortgage arrangements have been made. However, if we split that among the five banks, it does not amount to much activity by the banks when it comes to making an arrangement in good faith with people in mortgage arrears. The banks have no more regard for the Central Bank now than they did five years ago.
The last time he was here I asked the Minister what discussions were held with the banks and whether he could make available to us details of the discussions and the position papers that the Government had for the Personal Insolvency Bill prior to the banks discussing it with them and what the legislation looked like after the banks came in. Perhaps the Minister would enlighten us about whether he could make those papers available to us?
Senator Mark Daly: If the Minister does not wish to take that opportunity, he is more than entitled not to respond to the question of what the banks sought when it came to the changes in the Personal Insolvency Bill, which has a bearing on this Bill. We have seen what the banks did when it came to the Central Bank. Never mind that a bank manager might tell a poor mortgage holder that the bank wants to repossess the family home, the Central Bank has informed them to give split mortgages but for the 142,000 people in arrears they have only handed out 142 split mortgages because they do not want to do it and there is no compulsion on them to do so. Can one imagine what they will be doing to people who are sitting before them in good faith?
If we had all the safeguards and proper personal insolvency legislation that had not been written by the banks or if we had a powerful Central Bank that could compel the banks to give split mortgages when people seek to resolve their arrears issues, then we might regard the Land and Conveyancing Law Reform Bill as part of a banking system in a normal working economy. However, we have seen that the banks do not act in good faith and only operate in their own interest. Blaming a bank for making a profit does not make sense because that is what they are established to do. They are not too concerned about the mortgage holders, which beggars belief when one considers that if they repossess these houses they will not grant loans to buy the same houses. It leaves the economic situation in paralysis.
I have said it numerous times and President Bill Clinton, when he was here in November two years ago, said that Ireland needed to solve its mortgage problem. A mere 142 split mortgages indicates that the banks are not solving our mortgage problem, despite the Government’s best efforts. The Government is trying as did the previous Government, but unfortunately the banks seem to be ignoring the Government and the Central Bank. Now the troika is going to haul the Government over the coals because the banks are not dealing with the mortgage arrears crisis despite numerous attempts by the Government to make them do so.
When the Government is engaging with the banks and asking them for their opinion, it will only have one result. Those who have worked on behalf of those people in arrears and those who have borrowed money from the bank have pointed out in briefings to many in political parties that the personal insolvency legislation and the Land and Conveyancing Law Reform Bill explain why we had a stay on the amount of repossessions. The previous Government had introduced an initial moratorium and the Land and Conveyancing Law Reform Bill, by accident more than anything else, has put a further stay on it.
Once the banks get their teeth into this they will go through the process of making many offers that are unsustainable. We know they make unsustainable offers because in almost one third of all mortgage arrears solutions offered, the people involved have again gone into arrears. That indicates the level of engagement by banks with people in difficulty.
This is an amazing week in that three major legislative measures are coming before the House on democracy, people retaining their homes, and abortion. It is probably the most important week for any legislator. We are passing this Bill, which is a charter to allow banks repossess homes once they engage in good faith with the owners, having seen the way they engaged in good faith with the Government. The Government is seeking to reduce the number of legislators by one third but we need more legislation when it comes to banks.