I welcome the delegation. Unfortunately, I must leave shortly to attend another meeting but my colleague, Deputy Ciarán Lynch who is Labour Party spokesperson on housing, will remain. The paper presented by the delegation makes a positive contribution to an extremely difficult and growing problem. This is the first opportunity we have had to examine its proposals in detail. The delegation will probably be aware that groups from different parts of the country have also sent proposals. Some time ago, for example, I received proposals from a group in Sligo.
Last Easter, a deputation from the joint committee paid a visit to the United States at short notice for a series of meetings on the emerging crisis. This was shortly after the collapse of Bear Stearns and in the share price of Anglo Irish Bank. The deputation travelled to Washington and New York for a number of meetings, including with various committees of the United States Congress and Senate, the Department of the Treasury and Federal Reserve. One of the striking things to emerge from these meetings was that the United States had adopted a twin-track approach to and awareness of the banking crisis, as it was then evolving. Not only was banking being addressed but serious consideration was being given to the individuals who had been part of the sub-prime home acquisition process.
To go back even further in the history of the United States, specifically to the 1980s when the savings and loans associations collapsed, one of the steps taken by President Ronald Reagan, a republican, was to nationalise overnight, through the Resolution Trust Corporation, the institutions that were in difficulty. Part of the package involved offering mechanisms to save, where possible, those individuals in the underlying properties that were the subject of some of the faulty loans.
I regret that the National Asset Management Agency Bill, while proposing to allocate a vast amount of resources — approximately €54 billion, including a €7 billion overvaluation of distressed loans — does not seek to address the secondary debt problems which will follow, namely, the mortgage and personal debt problems. For this reason, the paper is interesting and timely.
At the time of the emergency bank guarantee and subsequently, the Labour Party sought to have a three-year moratorium on house repossessions introduced. I understand a couple of our guests are members of the Bar. Labour Party members who are at the Bar have on a number of occasions privately expressed the view to me that if the NAMA legislation is passed in its current form, it is anticipated that many more cases will come before the courts, possibly after Christmas. Given the legal experience of several members of the delegation, do they share this concern that many more repossessions are waiting in the wings, as it were, until the National Asset Management Agency has been established?
The main commercial banks that are subject to the guarantee, Bank of Ireland and Allied Irish Banks, appear to have taken a reserved position in relation to repossessions, whereas the sub-prime mortgage providers have been very tough. In the cases I have come across, sub-prime lenders are charging people high legal fees once they enter the repossession structure. I have seen fees quoted of up to €28,000 being added on to the mortgage costs in a case where a person was in default on a sub-prime mortgage. I am not talking about the main Irish banks who are the subject of the guarantee. If the costs involved in repossession became the norm, they would be potentially enormous. What I like about the scheme is that where somebody can pay something the lender can be obliged to accept partial payment, even though it is not satisfactory, in recognition that the person is making an effort to meet the debt. Currently many lenders will take nothing unless one pays the full debt, particularly the sub-prime lenders. Many of the operators in the Irish market do not allow partial payment. One can pay nothing and once one is in default for more than two or three months one is then in a default mechanism at which point one is informed that a legal process will be initiated and the legal and transaction fees begin to be added on.
In the short term and in the context of the NAMA legislation, does Mr. Ó Dúlacháin see a way in which those immediate concerns can be addressed? I am aware of people who started off thinking they owed three and five months outstanding on their mortgage, which might have been €5,000 or €6,000 and very rapidly they were into arrears, including costs, of €20,000 to €30,000. From then on they were sinking. Recovery from that point becomes almost impossible. Does Mr. Ó Dúlacháin have any experience of that or any observation to make? Does he believe there are many more cases pending? Has he had an opportunity to discuss this paper with the Department of Finance and the Minister? If so, has any response been forthcoming from that source?