FF and SF say plans leaves banks with too much power
Government insists uncooperative lenders will be penalised
Minister for Finance Michael Noonan T.D., and Matthew Elderfield Head of Financial Regulation at the Central Bank photographed at Government Buildings at the Mortgage Arrears Plan announcement yesterday. Photograph: Brenda Fitzsimons / The Irish Times
The main Opposition parties claimed the mortgage plan left too much power with the banks but the Government insisted that lenders which did not cooperate would face punitive action.
Fianna Fail finance spokesman Michael McGrath dismssed the initiative as a "banker's charter", saying it left lenders in control of the process and gave them additional powers to set aside the code of conduct on contacts with borrowers in distress.
"The message today is that the banks are coming to get you and the Government is supporting them in that process," Mr McGrath said.
"The banks have shown themselves incapable and unwilling to deal with this issue, and giving them more powers to come down hard on those in real, genuine distress, is not a solution," Mr Dohertysaid.
Similarly, People Before Profit TD Richard Boyd-Barrett said the new initiative gave the banks a licence to harass homeowners in difficulty with their loans.
"If they don't reach them, it has a very negative impact on the bank's provisioning and capital," the spokesman said.
Responding to reporters’ questions, Mr Noonan said the banks were now under new leadership. "There is no reason for the public to mistrust the new boards or the new management of the banks," he said.
"We have to have sanctions but I don't think the sanctions will have to be applied because the Central Bank is going to monitor this very very carefully and push it hard."
Asked whether he accepted the principle that there would have to be an increase in repossessions, Mr McGrath said in many cases it would be in peoples' interest to voluntarily surrender the property in order to negotiate a write-off of the debt overhang.
"I believe the result of what has been announced today and the reversal of the Dunne judgment will inevitably mean there will be a significant increase in family home repossessions," Mr McGrath said.
"Our view on this is very clear. Some mortgages are unsustainable. The focus should be on the buy-to-let sector initially. There is no differentiation drawn whatsoever today between the family home and an investment mortgage. The focus initially as the banks ramp up their capacity to deal with this problem belatedly should be on the buy to buy let sector, that's where they should be starting. There will be family homes that are not going to be retained in some circumstances."