PERMANENT TSB and other lending institutions should be prevented from raising their interest rates, former minister of state John McGuinness has said.
Responding to the 0.5 per cent interest rate increase by Permanent TSB and reports of other impending increases, the Fianna Fáil backbencher said: “People will not wear it.”
The Permanent TSB increase should be halted “at all costs” because it would “create a spiral in the other institutions”, he told the Wide Angle on Newstalk.
When it was put to him that Minister for Finance Brian Lenihan was not proposing to take action, the sacked junior minister said: “He has to be encouraged to do something now to stop them because there is no room here for complacency.
“The public won’t wear the fact that we are bailing out the banks and that the banks in turn are really screwing mortgage-holders and business-people . . .
“Commercial people can’t get money and now mortgage-holders are being penalised in relation to this latest increase.”
He rejected suggestions the banks had no option: “What they are really trying to do is bolster up the shareholders of the banks and get their affairs in order at a jolly quick pace because they want to get out of the responsibility in relation to the [Government] guarantee and back into the markets.”
There was support for Mr Lenihan’s approach from Labour’s Ruairí Quinn, who questioned whether the Minister had the power to intervene.
Representatives from Bank of Ireland and AIB along with other bodies will appear at Wednesday’s meeting of the Oireachtas Committee on Enterprise, Trade and Employment. Committee members will analyse lending practices and assess how banks are doing business with Irish industry.
Chairman of the committee Willie Penrose said: “It is now widely accepted that in order for the Irish economy to make a sustained and robust recovery there must be clear and definite lines of credit for Irish business.”