Don't bank on the banks for sympathy, says ISABEL MORTON

LOOKING back over the past few weeks’ news headlines and images, it’s hard to know where we stand, or what’s going on.

One minute Europe is on the verge of falling into the economic abyss, and the next, they are printing money like there is no tomorrow and celebrating because “the markets” have rallied.

And they were all delighted, apparently, as we saw in the recent photograph of our Enda getting all cozy with Nicolas Sarkozy. Although some, like Gerry Adams, complained that our leader acted like an “eejit” allowing his hair to be ruffled by the French President, whilst others had no such qualms.

While Enda was playing away with Nicholas, we were left behind at home, peeved with our Government’s pathetic attempt at distracting us from actual events, with the launch of the draft “Personal Insolvency Bill” – which was supposed to be a “bailout for the people” but was nothing of the sort, as it relied entirely on securing the agreement of the banks on each individual case.

And surprise, surprise; Irish banks were not too keen on the proposed draft bill.

No doubt, the Government was well aware of the fact that the banks never had any intention of complying with their new bill, but threw it out into the public domain anyway, to occupy our little minds and perhaps, gain a few brownie points from any “ordinary working person” who might mistakenly believe that the Government was concerned for their welfare.

And, in the event that we were left under any illusions, in Jon Ihle's interview with John Reynolds in last weekend's Sunday Business Post, the new president of the Irish Banking Federation confirmed what we have always known; that our banks don't give a hoot if we suffer from malnutrition, depression and every other ailment known to man, as long as we keep on coughing up every cent we owe them.

In fact, Reynolds surprisingly blunt interview made it abundantly clear that Irish banks (now that they have been saved from the brink) will not entertain any notion of “quick-fix” solutions to borrowers problems. Instead, they just want to get on with what “banks do” and don’t want to have to concern themselves with non-banking things like engineering “social assistance” through the banking system.

So; no sympathy there then. Nor indeed, any sign of the banks accepting their share of blame for the property boom and the banking crash.

But, if nothing else, the draft Personal Insolvency Plan has brought to the fore a few issues which have not, so far, been openly discussed by our banks.

Ireland’s archaic bankruptcy laws – which currently stipulate a minimum 12-year period of insolvency – suit the banks perfectly, and bankers have no desire to see them reduced at all, let alone to the lenient 12 months currently offered by our near neighbours, the UK.

Why? Because banks gain nothing from any form of debt forgiveness, including bankruptcy. They will only bother to pull the rug out from under those who owe vast sums, because they know that they haven’t a hope of ever recouping their losses.

Instead, they use these examples as a warning to everyone else.

They will threaten bankruptcy of course, in order to keep their distressed borrowers fearful and ensure that they continue to service their loan repayments, but they don’t actually want it to happen.

However, attitudes have changed of late and many distressed borrowers no longer fear bankruptcy, but actually welcome it in preference to living a life of servitude to their banks.

But this “quick-fix” attitude will not be tolerated, as John Reynolds made abundantly clear. “There needs to be a recognition that being made bankrupt is a bad thing, that these sort of engineered, contrived, smart-arsed bankruptcy tricks that rich people do don’t offer the same happy vista for an ordinary decent person,” he said

These comments – made by the new president of the Irish Banking Federation – say it all; they threaten, they imply that “rich” people can go bankrupt in an entirely different way to the “ordinary decent person”, and they express anger, that these so-called “rich” people can pull the wool over the banker’s eyes with their “smart-arsed bankruptcy tricks”.

Maybe that’s why Enda and Nicholas were having the craic – perhaps, at last, they figured out a way of shifting the power from the banks back to the people; by threatening them with global bankruptcy?

Isabel Morton is a property consultant