Banks are winning and we are losing

“The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.” — Lord Acton, 1834 — 1902

JOHN Edward Dalberg-Acton, 1st Baron Acton, KCVO DL hardly sounds like a Red-under-the-bed, and even if he was, he can hardly have imagined that 115 years after his death, his assessment would be as pertinent as it was when he made his prescient judgement. He might be disappointed too that the banks’ day of reckoning has yet to arrive — and if the evidence given to the Oireachtas finance committee on Thursday is anything to go by, it will not arrive anytime soon.

Thursday’s hearing was the turn of Ulster Bank to give its version of the tracker mortgages scandal that has hit something around 20,000 citizens. That some people have lost their homes because of dishonest, if not criminal, behaviour means that Acton’s observation remains goadingly sharp.

Ulster Bank told the committee that fewer than 15 customers lost homes, though the number of its customers impaled on the bank-set trap has risen from 2,000 to 3,500. CEO Gerry Mallon admitted that fewer than 40 customers have had their cases resolved. Ulster Bank is not alone in adopting what seems a defer-and-deflect policy. Of the five largest mortgage lenders, two have yet to start remediating overcharged customers, even though this scandal stretches back over a decade. This may be industry policy or a coincidence that fell from the sky. Speaking to the committee in December, Central Bank governor Philip Lane chose the coincidence option: “I see no evidence of that kind of cartel-like behaviour.”

Lord Acton might have been more difficult to convince.

It is natural, in a society that barely recognises white- collar crime, that the focus should be on borrowers hung out to dry, but we would be far better off if we viewed it through the possibilities offered by the Criminal Law (Theft and Fraud Offences) Act 2001. It states: “A person who dishonestly, with the intention of making a gain for himself or herself or another, or of causing loss to another by any deception, induces another to do or refrain from doing an act, is guilty of an offence.” 

This seems an apt description of how banks moved customers from tracker mortgages. The offence is punishable by a fine and/or up to five years in prison. It is deeply tragic that our national weakness — legislate but don’t enforce — applies. Not one bank or bank employee has been charged. That these revelations were made days after AIB reminded the committee that some banks won’t pay tax on profits for 20 years rubs salt into the gaping, festering wound.

The politicians questioning bankers may imagine they are holding banks to account but the reality could hardly be more different. As our banking inquiry showed, these hearings are little more than show trials acting as safety valves for a broken, rotten system. Our political system and its will to control the banks is in the dock, not the other way around. And so far the banks are winning hands down. How very right Lord Acton was — and how pitiably supine we are.

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