Banking scandal means more of the same as Donohoe fails first big test

Once all the anger was vented, we were left with very little, writes Daniel McConnell.

Outrage... disgrace... scandal.

Just three of the adjectives used by Finance Minister Paschal Donohoe yesterday to describe the treatment by the banks of their own tracker mortgage customers.

Yet, once all the anger was vented, we were left with very little.

Would Paschal finally put manners on the bank? Would he end the supine relationship between his department and the commercial banks since the crash, despite them costing us €64bn?

That was the question being asked throughout Leinster House yesterday ahead of Donohoe’s press conference on the tracker mortgage scandal.

“The bankers who caused this will sleep well tonight, but those affected will continue to have sleepless nights because their nightmare continues,” Fianna Fáil’s Michael McGrath told the Dáil.

Worse still, they have taken legal action against the Central Bank when it tried to make them do the right thing.

And last night, the banks, got away with it once again.

Donohoe announced that despite this scandal being known about since 2010 and the Central Bank examination now two years old, he needs not one but two new reports before he feels he can act.

Donohoe is a politician of real substance and no one could doubt his bona fides when it comes to his emotions on this issue.

This was his first real challenge since becoming finance minister and it is one most people will say he failed.

For all of those expressions of anger from him and Government in recent days, we have precious little to look to by way of action.

No one sanctioned, no one removed from their post.

He said one of the powers was to decide to vote against the election of bank directors, but he cautioned that this would have a highly negative impact on the banks’ wellbeing.

Things did not bode well before the minister appeared when Ulster Bank’s statement landed which showed that just 100 of nearly 3,500 affected customers had been repaid and compensated.

It got worse.

It said just 1,000 customers would be paid by the Christmas deadline set out by Central Bank governor Philip Lane, with the others not before the end of June next year.

“Where we identify a customer who has lost their home as a result of the loss of a tracker rate, we communicate with them, arrange a meeting, and offer an upfront initial payment of €50,000,” said the bank.

It said existing impacted customers have been put back on their tracker rate.

Speaking at a press conference in his department, Donohoe described the treatment of customers affected by the banks as “a scandal”, labelling the banks’ behaviour as “disgraceful”.

He lambasted what he called the “legalistic” approach taken by the banks as “simply unacceptable”, while saying there had been a varying response from the banks in dealing with the scandal.

“I am disappointed by the behaviour of all of the banks. All of the banks have let themselves down,” he said.

“Naughty is not the word I would use to describe the hurt inflicted on people.”

When pressed as to which banks performed worst, he declined to do so for fear of contaminating the process.

When pressed about which banks he was talking about, he said he was particularly talking about the banks in which the State has a shareholding: AIB, Bank of Ireland, and Permanent TSB.

In defending the delay, Donohoe said more time is needed to resolve the matter. He will then look for a second report in March to see if sufficient progress is being made or will introduce a range of sanctions.

All in all, it is simply more of the same.