A STATUTORY code to protect people who cannot meet their mortgage repayments will be part of the Government’s bank recapitalisation plans, Taoiseach Brian Cowen told the Dáil yesterday.
Earlier, he briefed the Cabinet on the details of the recapitalisation scheme. Ministers will meet again today or in the next few days to sign off on legislation to deal with the matter, according to a Government spokesman.
Minister for Finance Brian Lenihan was not at yesterday’s Cabinet meeting as he was attending a meeting of EU finance ministers in Brussels.
Mr Cowen was asked in the Dáil yesterday by Fine Gael leader Enda Kenny when it was intended to publish the National Pensions Fund (Amendment) Bill giving effect to the recapitalisation programme for the banks.
Mr Cowen said the heads of the Bill had been cleared by the Cabinet last week, and that work on it was proceeding as a matter of priority.
He told Labour Party leader Eamon Gilmore that discussions had taken place with the banks about the plight of people with mortgage difficulties to ensure that there would be no precipitate effort to repossess their homes.
“We are requiring that all lending institutions act in a humane and sensible manner on the basis that we wish to provide that reassurance to mortgage holders.”
Mr Cowen added while that in practice every effort was being made to avoid repossessions, it was important that a code be put on a statutory footing to provide protection and reassurance.
“The financial institutions must find the most humane way possible of dealing with the situation while distinguishing between those who can pay and those who will not pay. Those who cannot pay because of changed circumstances will be dealt with in a way that is reasonable and correct in the circumstances.”
Last night, in advance of a meeting with the Taoiseach for a briefing on the Government’s plans for dealing with the banks, Fine Gael called for other options to be reconsidered.
Mr Kenny questioned whether the Government’s approach to recapitalisation was the correct one from the point of view of the taxpayer, and said his party would be putting forward an alternative “good bank, bad bank” option.
Fine Gael deputy leader and finance spokesman Richard Bruton said it was time to look at alternatives to the Government’s proposal as there were huge concerns that the taxpayer was being asked to put money into banks without knowing the full extent of the hole in their balance sheet.
He added that it was in the taxpayers’ interest to kick-start new lending and not to protect the existing banks or those who knowingly took on the risk of funding their impaired lending policies.
“It is now time to look at a different model which would create ‘good banks’ with clean balance sheets into which the taxpayers’ recapitalisation would go.”
Mr Bruton said this would involve separating from within each bank a new bank which would hold all the State guaranteed deposits and a legacy bank that would no longer engage in lending but manage the remainder of the loan book and recoup maximum value over time.