Heads the bank wins, harp the customer loses

There’s an old saying that says ‘what is sauce for the goose is sauce for the gander’.

Can any one of us say with any measure of credibility that every debtor in Ireland is treated equally or even equitably? The answer is a resounding no.

Nothing is more of an exemplar of the truth of this than the treatment of the banks and bankers by the Government, the mandarins and even the troika compared with the treatment of those who have found themselves in hard times, more often than not, because of factors outside of their personal control.

Let’s recap for a minute on what happened.

The banking community went mad trying to emulate a highly profitable ‘rogue’ member of their own community. They lent money left right and centre. Massive bonuses were spread around like confetti at a wedding.

Rules that dictated what was reasonable to borrow or lend were thrown out the window. Ability to repay the loan and the interest does not appear to have been seriously considered. Our government and regulators were either incompetent, turned a blind eye, or both. The end result was taxpayers were asked to fork out over €62bn to bail out the banks.

However, that was not the only problem. In their rush for a ‘fast buck’, houses were sold and bought for many multiples of their true worth. Some of these were for buy-to-rent properties but very many of them for owner-occupier homes.

When the crash came, they quickly realised that their homes were worth only a fraction of what they paid and thus was created negative equity. Unfortunately, they still owed the bank the original amount and unlike in the US, they simply could not just hand the keys back and start over.

As was to be expected, tens of thousands of mortgagees are defaulting on a regular basis.

Amongst those are the folk who bought dwellings in the now-infamous Priory Hall development only to find the buildings met little, if any, of the regulatory and fire safety standards. These people have been forced to vacate their ‘properties’ whilst senior members of government are talking of the probability of knocking the buildings down and the banks are pursuing ‘owners’ for their mortgage payments. Regulators fail to do their jobs, government looks on and the banks dive in for their pound of flesh.

Worse still, to ensure that the banks would not be shortchanged by mortgage holders, aka taxpayers, their friends in government helped them out in several ways.

Firstly, government decided to amend the law to allow the banks to more easily repossess peoples’ homes.

Secondly, in the guise of helping defaulters to come to terms with his/her bank, it gave a veto to the bankers on accepting the insolvency agreement or not.

Thirdly, while insolvency was scheduled to last six years, banks will be allowed to revisit the status of the property for up to 14 years after the insolvency period is finished and will be allowed to recover any ‘profit’ made on a sale of the property.

It’s a simple case of ‘heads I win, harp you lose’.

And if the reports in yesterday’s paper are correct, one bank is even telling porkies about its performance in addressing the mortgage arrears’ issue.

Now we ask ourselves, is that how we treated the banks in their time of need?

Yes, I understand that we actually weren’t asked our views, but nevertheless we have to pay. Interestingly, based on the Anglo Tapes, we know that the bankers thought paying back bailout monies to the government one big joke. It seems moral hazard is only for the little people. Is there any real rhyme or reason why mortgage holders should not be treated as leniently as the banks have been?