THE FINANCIAL Regulator and the governor of the Central Bank will set out their concerns about any mortgage debt relief scheme at an Oireachtas committee discussion later this week.
Minister for Finance Michael Noonan served notice on the banks and building societies yesterday that some measures will be taken by the Government.
When he goes before TDs and Senators at the committee meeting tomorrow, he is to be asked to elaborate on the plans to deal with the developing crisis over mortgage arrears and other personal debt.
Ministers discussed the issue at Government Buildings in Dublin yesterday but agreed to defer concrete decisions until a group of civil servants and bank representatives delivers a report on this complex issue at the end of next month.
However, the Cabinet agreed that a “tailored” approach was needed and that there was no “one-size-fits-all, broad-brush solution”.
The 10-member body is chaired by Declan Keane, an accountant seconded from KPMG to the Department of Finance, and includes officials from several departments and the Central Bank as well as expertise from the banking sector.
Figures published by the Central Bank this week showed that more than 55,000 homeowners were more than three months behind in their payments at the end of June and this will almost certainly top 60,000 by the end of September.
On his way into the meeting, Mr Noonan placed the spotlight firmly on the banks and their role in resolving the difficulties.
Pointing out that the Government had “put a lot of capital into the banks” to deal with mortgage problems, he added: “The capital is in the banks to allow the banks write off some of that debt”.
The Minister’s comments were described by Noeleen Blackwell of the Free Legal Advice Centres (Flac) as “the first sign of any real urgency from this Government that it is willing to tackle the issue sooner rather than later”.
The Government’s approach is likely to come in for sharp Opposition criticism when Mr Noonan faces the Oireachtas Joint Committee on Finance, Public Expenditure and Reform tomorrow morning.
Central Bank governor Patrick Honohan and head of financial regulation Matthew Elderfield are expected to provide details about the problems with introducing formal debt restructuring when they appear before the committee on Friday.
Mr Elderfield has previously warned that any approach to restructuring needs to take account of the risk that it would create incentives for borrowers to cease meeting their obligations.
Taoiseach Enda Kenny told reporters yesterday the Government was “acutely aware” of the seriousness of the situation facing many households. “In all of these cases, people borrowed money, banks lent money and, because of circumstances, sometimes outside their control, there are now difficulties.
“The Government and members of the Cabinet are acutely aware of this because we meet them every day. We have commissioned a report on a broad range of issues here and we’ll make decisions when that comes to hand,” he said.
Minister for Transport Leo Varadkar backed previous comments by Tánaiste and Labour leader Eamon Gilmore ruling out blanket debt forgiveness. “There are lots of people struggling to pay their mortgages and just about managing and they shouldn’t have to pay for those who can’t or won’t.
“But at the same time if people are losing their houses or having their houses repossessed, I don’t think it’s fair that the negative equity, or the debts if you like, should follow them,” he said.
Flac director-general Ms Blackwell said: “We need a coherent strategy that takes into account the entire personal debt crisis, not just mortgage arrears.”
