Banks fear lending after ‘Ponzi’ property bubble, says Shatter

Irish banks may be suffering a “fear factor” in lending after the collapse of the property bubble that resembled “a Ponzi scheme”, Justice Minister Alan Shatter said.

Lenders issued €623 million in home loans in the third quarter of last year, according to the Irish Banking Federation. They lent €11 billion in the same period five years earlier, at the peak.

“What our financial institutions were running in the 2003-2007 period was the nearest thing to a residential property pyramid scheme,” Mr Shatter said in an interview at his Dublin office.