That Dáil Éireann:
the burden of bank recapitalisation severely limits the capacity of the Government to positively lead this country out of recession and back to economic normality;
the burden of negative equity and mortgage arrears severely limits the capacity of the households of Ireland to live happy, secure and productive lives;
the banks, regulators and previous Governments were negligent in allowing the "property bubble" to arise and failed in their fiduciary duties to their customers, especially to mortgagees of principal private residences — the families of Ireland — to whom they had a special duty of care;
the bank guarantee and NAMA have crippled the normal workings of our financial and property markets and have not as yet contributed any positive outcomes;
arising from the unique circumstances that now occur, emergency measures must be used in order to solve the problems caused by earlier, and flawed, extraordinary measures;
real people are living in real houses and making real payments on these "negative equity" homes while their banks are exploiting the financial situation for their private benefit;
the wider economy is in desperate need of fresh credit and renewed banking competition; and
the dangers of allowing families to be trapped in a lifetime of debt and lost economic opportunity far outweighs the current selective interpretation of the "moral hazard" of assisting families in negative equity; and
to instruct the Minister for Finance, as the controlling shareholder in the covered banks, to adopt a policy of using whatever emergency measures are deemed necessary to reduce the unsustainable debt burden being placed on mortgagees of principal private residences in the State; and
to ensure that the means used minimise the burden on the taxpayer and ensure that households can contribute fully to our national recovery.
I wish to share time with Deputies Stephen Donnelly, Mattie McGrath, Maureen O'Sullivan, Finian McGrath, Mick Wallace and Clare Daly. I propose to take ten minutes and the others will each take five.
The Technical Group has brought forward this motion because the next big crisis we will face in the context of banking will relate to mortgage debt. In fact, it has already arrived. The motion is an attempt to place it centre stage and try to explore how we might achieve solutions.
As everyone is aware, in September 2008 the previous Government began the process of socialising bank debts which it transformed into sovereign debt, which led to the necessity for the EU-IMF bailout in November last year. Despite claims to the contrary, the Government has continued the policy of its predecessor. It has enhanced the guarantee and further tied the future of the bank bailout with the sovereign debt. It has missed the opportunity in its policies to be truly radical by bringing forward changes that will put the people first. The speculators, the bond markets and the banks which, as the Labour Party is so keen to point out at every opportunity, were completely reckless and placed us all in receivership should not come first.
As the total amount required for the recapitalisation of the banks passes €70 billion and the national debt heads for over 125% of GDP, hundreds of thousands of households are suffering under the burden of ever-increasing mortgage arrears and negative equity. We must as a matter of urgency develop policies which would assist in lifting households out from under this massive burden and enable them to participate in the domestic economy. If such participation was encouraged, consumption could be increased and additional revenue would accrue to the State as a result.
At the end of 2010 over 13,000 mortgages were in arrears for 90 days or more. Some 31,000 mortgages were in arrears for over 180 days. The total value of these mortgages is over €8.6 billion. There is a widely held view that when home owners are in arrears, very few will be successful in re-emerging. We do not know if the banks have made provision in their estimates for defaults on mortgages. As they have not told the truth during this crisis, we do not know what the real figures are.
We are rapidly reaching the point where wholesale repossessions will begin to occur. The banks have signed up to moratoriums on repossessions, but this is only serving to mask the true extent of the problem. As house prices continue to fall, the number of households in negative equity of over €50,000 will exceed 300,000, while over 60,000 households will be in mortgage arrears. In a recent discussion document on the financial crisis the IMF stated efforts by the banks to reduce the burden of household loans had not been adequate. There is clearly a need for the State to intervene.
We have a responsibility to the people, not merely the Irish and European banks which created and fuelled the crisis in which we find ourselves. It is not sufficient to state we must get the banks back working. This will not solve the problems of thousands of families that are drowning under the weight of massive mortgage debt. They were conned into obtaining such debt as a result of the policies pursued by the banks which the Government is intent on saving at the cost of our entire society and sovereignty. The Government is quick to remind anyone who will listen that it did not create the problem, that it was Fianna Fáil which was responsible for doing so. The current Administration is part of the problem. It has taken the baton from Fianna Fáil and is now running its race. The Government must be part of the solution.
The Minister continually points to an export-led recovery that will solve our woes. Information released earlier today shows that export figures are the second highest for 11 years. However, exports are still only approaching the levels they had reached prior to the financial crisis. If we depend on them at this stage, too many families will be destroyed while waiting for recovery to happen.
The banks have alluded to some policies which they may consider. On the publication of its disastrous annual results, AIB stated it would consider some form of debt forgiveness. This is not good enough. The programme for Government refers to some policy issues which may be pursued, including increasing mortgage relief for first-time buyers for a specified period, putting in place moratoria on repossessions and increasing the use of the mortgage interest supplement. This is merely tinkering at the edges.
The Government continually states it has a mandate. It is beyond time this should be used to assist those in real need of help. The Government should stop saving zombie banks and instead concentrate on saving viable households. It should assist real people because they, in turn, will restore the economy by using the money they will save on not paying unsustainable debt by making a contribution to ensure we survive the recession.
The Minister for Finance is, on behalf of the people, the major shareholder in the banks. As the major shareholder, he can present the latter with policies on mortgage debt that can have real meaning. He can also ensure these policies will be implemented. He can call an emergency general meeting and oblige the banks to accept policies that will ease the burden on households. There are proposals relating to debt forgiveness, increasing the terms of loans or engaging in debt for equity swaps. If we initiate a debate on a programme relating to this matter, there are other innovative responses which could provide a solution to the problem of mortgage debt. What we require is a solution which would put the people and their well-being to the fore. That is what the motion seeks to achieve.
One of the most striking aspects of the entire financial crisis has been how the people are not being considered. The Government has paid a great deal of lip service, but there are no policy developments we can highlight which indicate that people are being put first. When someone proposes helping mortgage holders, the first response is, "What about moral hazard?" What about it? It is somewhat rich to refer to moral hazard when discussing the banks. It was they which placed us in the situation in which we find ourselves by offering 100% mortgages, pursuing market share and super profits and providing ever increasing shareholder dividends. There is no moral hazard in assisting householders to participate in community life without the burden of unsustainable debt. Households in debt do not spend. Neither do they invest and the wider domestic economy suffers as a result. This is evident in each month's Exchequer returns, in the decline in VAT returns and the reduction in consumer spending. The loss of economic opportunity is the real moral hazard. The moral hazard is that we will do nothing and leave householders in the hands of the banks.
I commend the motion to the House.