Banks 'must help middle income families'

THE BANKS must offer reasonable mechanisms to help middle income families who bought homes during the property boom Minister for Social Protection Joan Burton, has said.

She was referring in particular to yesterday’s Irish Times report on a letter written to Ministers by a Garda sergeant’s wife who is mother to a large family, in which she described their weekly struggle to make ends meet while paying a substantial mortgage on the four-bedroom family home they bought seven years ago.

Ms Burton said: “I am quite familiar with this case ... She is experiencing the worst of the Celtic Tiger, herself and her family. They’re just an ordinary family ... [who] bought a modest, semi-detached, three- or four-bedroom house ... at the top of the boom. As a consequence, they are heavily indebted in mortgage terms,” she told Pat Kenny on RTÉ.

“In the long term, the banks have been supported by everybody who is a taxpayer and a citizen of this country. We are paying for them every day .. They have to give a social return to the people of Ireland who have taken an enormous financial hit,” she added.

Referring to deeply critical remarks about the banks by secretary general of the Department of Finance John Moran and Central Bank regulator Fiona Muldoon, she said what they had to say was “a bit of a reality wake-up call to these guys – you’re not the masters of the universe any more, you’re living in Ireland, you have to help your fellow citizens”.

She had met a number of senior bank executives, she said, “and what the banks have to do is come down to the level of the ordinary customer and see how they can help them to be able to get through what is an enormous difficulty. Other countries have done this; there are models there. But it requires dedicated staff to do it. And at the end of the day, you also have to make decisions.”

David Hall, a director of the Irish Mortgage Holders Organisation – a new non-profit group of advocates and providers of debt resolution services to mortgage holders – said he was not surprised to read of the family’s difficulties.

“I have 11 guards as clients and six of their spouses are public servants. Certain banks gave out mortgages to public servants based on increments expected five years down the line, so they never really took applications on the basis of their original merits. Now all those expectations have been decimated and those people’s earnings are probably back to what they were before the application.”

At the St Vincent de Paul Society, Jim Walsh said the charity was “certainly seeing more of people who on the surface look to be comfortable, people who would in the past have been donors. The volunteers say you will see a car in the driveway and a house that looks fine, but inside there is devastation.”

Annmarie O’Connor, the business manager at Mabs, the Money Advice and Budgeting Service, which was consulted by the Garda sergeant and his wife, said that while people on social welfare and low pay remained the target group of the agency, staff were seeing people now “who are waged and self-employed, people on what are regarded as good incomes and are struggling – the main reasons being increased living costs, cuts in wages and cuts in working hours”.

Mr Hall said there was a “very big public debate” to be held in Ireland as to what should be regarded as “reasonable living expenses” for a family or individual under such a budgetary regime.

“No one stands up and says here is what a budgetary amount for a family should be, yet the institutions have built into the system what they believe are reasonable living expenses.”