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THEY SAY THE sting is in the tail. In the Keane Report, the sting is in the preamble. “Importantly,” it says, “it will not be the case that the distressed mortgage holder will be entitled to a particular solution and all solutions carry consequences.”
Consequences. Moral hazard. Responsibility.
The Government is keen that the people of Ireland pay for their mistakes. By paying for them, the logic goes, foolish citizens will be minded not to make such mistakes again.
So, it appears, are the civil servants who put this report together. The second challenge listed in the report is ‘To avoid inappropriate mortgage holder behaviour.’ A search of the report does not find the following phrase: ‘To avoid inappropriate banker behaviour.’
The Taoiseach reminded us solemnly in the Dáil last week that ‘there are those who don’t want to pay’. Yes there are Taoiseach – but they are not the mortgage holders, they are the banks. Two weeks ago, I and other members of the Finance Committee met with the senior teams of Bank of Ireland and AIB. Two very interesting numbers emerged: Of the billions of euro which the Irish people had given these two banks to deal with the mortgage crisis, how much had been passed on to mortgage holders?
For AIB the number was €600,000. That’s about 0.0002 per cent of the money we’ve given them just to deal with distressed mortgages. Bank of Ireland had to be asked for their number five or six times, and finally conceded that for them the number was zero. Not one cent.
In other words, whilst the banks accepted that they may not get paid back fully on all mortgages, they would not surrender their legal hold on the money. They would not ‘forgive’ any mortgage holder the sin of believing the banks were acting responsibly when they loaned them the money. This means that even when you lose your house, you still owe the bank the full amount of the mortgage, plus interest, forever. In the only area that matters to banks, money, they are accepting absolutely no responsibility for their role in the mortgage crisis.
The working group’s field research? It “met with several of the banks”.
And they are delighted with the Keane report, which was welcomed warmly by The Irish Banking Federation. Why? Because this is a report for the banks. The report does not lay down as a principle that those responsible should share the cost of the clean up. Instead, the first ‘Guiding Principle’ in the report is this: ‘Those who can discharge their mortgage obligations must do so.’
Two clear tones emerge throughout the report: condescension towards borrowers, and a refusal to consider imposing requirements on the banks.
Why might that be? The working group consisted of 16 civil servants and two bankers. It met just eight times. Its field research? It “met with several of the banks”. But it appears to have had no contact with ordinary borrowers, or with people representing them. It didn’t meet the New Beginning group of lawyers and other experts who are representing borrowers and developing policy ideas.
The report is written by insiders for insiders. A sample sentence: “AHB buys the house from the mortgage holder at a discount to CMV; D/ECLG provides 25 per cent equity to AHB.” Had they talked to New Beginnings (or to any public representative), they would have heard stories of individual borrowers being treated with contempt by some lenders, who are using intimidating tactics to bully borrowers into supposed solutions.
The working group has swallowed the lazy “moral hazard” argument hook, line and sinker. There are repeated references to borrowers having no “entitlement” to a solution and having to suffer the “consequences”. But another, far more valuable report on this issue released recently, by the Monetary Advice and Budgeting Service (MABS), suggests that borrowers are well aware of the consequences of their actions, and take responsibility for them.
The report’s authors, Michelle Norris and Simon Brooke, interviewed MABS clients in order to create a portrait of the typical household in mortgage arrears. Many were up front about their own responsibility.
“I bought into it as much as anyone else did and I take responsibility for that too,” was how one MABS client, in Arklow, put it.
People talk of being “ashamed”, of being afraid to answer the phone
What the MABS report clearly shows is that the burden these people are under is enormous, and that it is a burden that is emotional and psychological as much as financial. People talk of being “ashamed”, of having “at least six bricks on my shoulder”, of “breaking down crying”, or being afraid to answer the phone, of fighting with their spouse and ignoring their children.
In terms of substance, the Keane Report contains several proposed solutions for mortgage holders. Most of these focus on ensuring that the bank gets paid back one way or the other. However, there are some good ideas. Stronger representation for mortgage holders is welcomed.
As is the emphasis on reform of bankruptcy law, to incorporate a new, non-judicial debt-resolution process. Both of these were recommended by the Law Reform Commission last year. Both have been repeatedly championed by me and others.
But even here the Keane Report fails to deliver. Rather than giving a recommendation on the length of time a person should remain in bankruptcy (the Law Commission recommends 3 years), the report notes that ‘the automatic bankruptcy discharge period…could be set as low as 3 years.’ And true to form, lest the citizens of Ireland are contemplating not giving up our aul’ sins, the report warns that ‘changes that incentivise behaviour to cease paying debts must be avoided.’
So what’s next? The report is to be debated in the Dáil this week. In the meantime, the Ministers for Finance and for Justice are working on an implementation strategy, which they are due to set out… “at the conclusion” of the Dáil debate. So what, precisely, is the point of the debate? This whole exercise has the feeling of just more smoke and mirrors.
Government spokespeople are already using the report as a reason to continue the Irish establishment’s love affair with the banking system. In February of this year, when we voted Fianna Fáil out of office, we voted for change. Maybe the French are right… Plus ça change…
Stephen Donnelly is Independent TD for Wicklow and East Carlow. See more at www.stephendonnelly.ie
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The way that this country is run stinks to high heaven. Howe many will ever actually get involved and change it. How many people will ever ring up their TD about this. Is it any frigging wonder “we are, where we are”.
How much did this useless piece of shite cost and who paid for it ?
@Elrat "who paid for this report" … I think you will find that you and I did .., as usual.
The banks are simply thieves. They create the supposed money out of thin air and then charge us for it in thensame way British lanlords took over land and then charged those wo lived there rent.
There is no actual debt. Google Fractional Reserve Banking. This is worse than the slave trade!
Check out http://www.blankofireland.com
The people of Ireland must not let themselves or their neighours be oppressed by this murderous bank scam.
100% Keith. Not sure about the blank of Ireland as its been slated of late but I think that if a forger in a shed gets life for counterfeiting, well then these money men creating money from nothing for banks should do time also.
I can’t understand for the life of me, Why are Irish Citizens just sitting around tutting & nodding. Is there anyone in this Country Big enough to represent the ordinary man/woman on the streets and towns of our Country. This really is a joke!!
Are you including yourself in that
Vote McGuinness and p*ss off the government
The welcome granted this report by government is proof that nothing has changed. The financial institutions with satellites of legal and professional elites still run the show, schedule feeding times, and decide if the pony and trap can be used on Sunday. There isn’t enough water in the Liffey to bathe all those in mortgage difficulty. Yet, Kenny, Noonan, Hayes, and the smoked salmon socialists blithely ignore all this distress in their rush to reassure the Big Lads in Brussels and beyond that every last cent will be wrung out of the taxpayer and small business to ‘honour’ debt commitments. And when Greece gets a discount on its debt, the same wizards surrounded by pliant economic geniuses will be banging the table, demanding, demanding indeed, that Ireland be allowed pay all its debts back. Sure, given the mealy consensus mentality in government, how could anyone expect a radical report on mortgage arrears?
Move up to Dublin Stephen so i can vote for you. Good article
I live in Dublin and I feel the same way!!
Reasons the Irish banks should be left fail:
-The economy will recover sooner. Look at Iceland.
-The Irish taxpayer should never carry the losses of any institution (public or private)
-Bondholders would loss their shirts
-Banking elite would loss their shirts
-Europe would be saved years of agonising and pouring money into equally dysfunctional institutions
-Banks will keep taping the state if allowed once.
i agree but what about the pension fund holders ? we need to disect the debt and let the venture capitslist chancers take the hit !
Mortgage strike might change their minds.
I have heard that suggested before.. Although it would truly need to be a widespread and concerted effort. Peaceful non compliance.
We would have to work on our sense of community first though, the more we unite, the shakier their foundation..
Why not offer the banks what they were giving for the bailouts they got as part if not all of the owed mortgages, and get the Government to push that trough, and if they wont or don’t, let the country have an all out work strike, that will let them see who’s paying who
I was reading comments on journal.ie yesterday slagging off demonstrators on Dame St. Until the public realize that there is no quantum in following the prescribed view nothing will change. Peaceful demonstrations can get an elderly honest private citizen who defended her rights against similar corporate bullying out of prison. Democracy will not work until we use it. Get outraged early. Get outraged often!
All the little Blueshirters out there are being told at their local meetings that FG are doing something about mortgage debt……….and believing it.
They are as blind as the FF supporters that went before them.
So let’s get this straight, banks lent money to people in a property bubble that they themselves got out of (read BOI selling all their branches),
These people have lost their jobs because of the same property bubble implosion (read FF’s soft landing Mantra)
The banks have been bailed out by the same distressed tax payers (read FF’s mantra re this is the cheapest bailout in the World)
The Banks have been given money to write off bad mortgage debt,
The Banks now want to get paid on the double, and charge interest and some of the highest legal costs in the world back on the same people who cannot ever hope to pay back these loans.
Not one single banker has faced charges yet. Not one., and nor will one ever spend a day in prison because of it.
Golden watches, Golden Circles, the only colour we should be talking about is the colour of blood running down the steps of our institutions run by these crooks, liars, thieves and traitors.
And Labour too. :-)
time to start rioting.
This reminds me of the report that FF/PD’s commisioned on the M50 Toll Booths … Does anyone else remember its findings ? in summary, the Toll booths were not turning the M50 into the largest car-park in Europe. Its funny, the Governments are always able to get reports out that suit their wants … In this case, the Government wants to support the banks, and screw the mortgage holders …… grrrrrrrrrrrrrrrrr
Do NOT VOTE FOR AN ESTABLISHMENT candidate in the presidential election or the next general election. These guys need to get a very clear and succinct message … “Feck off the lot of you”
Mortgage strike would be good but who is going to do it, who’s first everyone is afraid to do it cause of the consequences and the government know that.
Not everyone is afraid. In fact there’s nothing to fear from these crooked institutions. As an experiment, ask your bank to produce the original mortgage contract signed by both parties. Or simply ask them to validate the alleged debt. The responses are truly enlightening and speak volumes about who should actually be afraid. They have no power unless we grant it to them.
Banks are not going to be lending much anyway so credit history doesn’t matter? Maybe the journal can do a poll to see who will refuse to pay, 2 months would probably do it!
Put my name to list as 1 to Not Pay.time for action is now.
the Irish as a whole are a selfish, spineless and unfortunately a stupid lot who let politicians and the elite do what they want. as long as we are individually getting on ok we don’t care about anyone else. by electing a fianna fail person as president will just prove this. we never learn. hope I’m wrong.
I’ve been hoping I was wrong since about 2004.
You’re not wrong.
now there’s a suprise! just when you thought that somthing was actually going to be done about the corruption ,mismanagement and cronieisam in our banks, it turns out it was all our fault, not there’s. it was all down to “inapropriate mortgage holder behaviour” ! remind me just who was it that was virtually dragging people off the streets to give them 100% mortgages? who was it who bombarded people with letters ,phonecalls and leaflets telling us we needed new cars and bigger loans all sold of course with compleatly useless payment protection insurance (another banking bombshell that has yet to explode on us) who was it who paid bonuses of hundreds of thousands to executive staff,c.e.o’s and fly by night mortgage advisors? who was it that awarded themselves and their developer buddies multi million euro loans? i don’t remember doing any of that stuff my self so why should i take the blame and suffer the conseqences?.
Welcome to Debt Serf Central.
Ireland is the most indebted nation on the planet.
http://dealbook.nytimes.com/2011/10/14/a-call-for-a-write-down-on-irish-debt/
Amazing! 4 hours since this article was published and so far not one single comment yet from the ‘I’m alright Jack’ brigade. Could it possibly be that maybe the wider picture is being seen at long last? You know, the one that shows that maybe it WASN’T the fault of the ordinary homeowner afterall and that the banks and vested interests have a helluva lot to answer for. Maybe they’re finally opening their eyes to the fact that it is widespread corruption and cronyism that has caused this problem and not the hard pressed ordinary Joes and Janes who are being vilified as having gone mad and lost the run of themselves. Maybe the eyes are actually opening. We shall see.
If i wasnt in college id be at dames street protesting this is bullshit
The Keane report was the kick on the teeth we needed. Unfortunately it left us speechless with the shock of it for a few days. I am not affected by it as I’m renting but we will all be effected by it. My face went numb with the thought of gov renting back peoples’ homes back to them. The cheek of these people.
Why are they taking advice from economists. Most of them couldn’t agree on what to have for tea. No one knows what to so. Maybe we should decide to do what’s morally right and not economically right. They keep calling this uncharted waters ie they haven’t a clue. We have to think with our heart not our head. Your heart won’t lie. Do the right thing.
Pig Bankers,Penny Boy Toothless Politicians and Senior Civil Servants!!
The Blood Is On Your Hands!!!!
You can say that as much as you want, won’t change a thing. they don’t give a crap, they’re just sitting back, laughing, all the way to the… ehh…bank.
Ok in the perfect world, what was the bank bail for ? it was the giving of hard earned money from the people of Ireland back into the banks to help the banks get out of trouble that they themselves got into trough bad handling,
so what happened was the Government ( the people that technically work for the people of Ireland ) take ownership or part there of, of the banks, which says to me the people of Ireland own or part own the banks, (technically )…
SO!! If all the people of Ireland have to hand over all this money, by force I may add, its not like we were giving a choice, should that money not have went towards the debt in which it was meant to cover, the debt that some of the people in the country owed, if not all of the handed over money at lest part of it,
So !! should that not have knocked down the mortgage loss’s that were owed to what, again I say for there bad handling.
If that were the case I wouldn’t and I don’t think anyone would mind handing over a few Euro to get all this S**t sorted
And in a perfect world that should be the way it is, but on the other hand in a perfect world this would never have happened
Exactly Dominic. Where has the $10 billion gone that the banks were given for mortgage write offs?
We seriously need an answer to this question.
Gr8 write up
read all the comments great to see everyone feels the same and were not ripping the heads off each other blaming people for bigger houses,bigger cars etc..i think a mortage strike would give the banks a good fright .i live in the country and i can tell ya its up to dame street on saturday for me!!!!!! LETS ALL GET OUT ON THE STREETS AND STAND UP TO THESE PEOPLE !!!!!!!!!!!
About time people started to unite about our countries issues.
2 month refusal of mortgage payments is a great idea. Also burning down some banks is a better one.
We need to pressure our TDs. It will be a while til the next election – but there is something we can do now. We’re online – we have a little time. Find the contact details for your TD – probably on Oireachtas.ie – and tell them what you want them to do!
I’m going to phone & email mine and get them to pay attention to this article.
What have the banks done with the â
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