Cowen rules out interest rate fix

TAOISEACH Brian Cowen has ruled out the possibility of his Government browbeating the banks to keep mortgage interest rates low.

He was questioned about the decision by Permanent TSB to raise its interest rates and the expectation other institutions will follow suit.

Mr Cowen said the Government will continue to look at how to assist mortgage-holders in difficulty.

However, he said there was also a need to ensure the country had a sound and stable banking system.

Fine Gael leader Enda Kenny had pressed Mr Cowen to tell the public-interest directors in each of the guaranteed institutions to resist rate increases.

He said the banks needed to lower their cost bases and if they used the model of larger European institutions they could save €1bn.

And Mr Kenny said were the banks to get their cost-base down “there would not be the necessity to impose further mortgage increases”.

He said Finance Minister Brian Lenihan should call the banks in to demand they produce plans on cost structure reductions before interest rates are touched.

The Taoiseach said he did not know which retail outlets belonging to the banks Mr Kenny proposed closing – a reference to the suggestion that a lower cost base would require downsizing.

The exchange kicked off Leaders’ Questions in the Dáil after which attention turned to Communications Minister Eamon Ryan’s comments last weekend that a bailout scheme for distressed homeowners was on the cards.

Labour Party leader Eamon Gilmore said Mr Ryan referred to a scheme the Department of Finance knew nothing about.

Sinn Féin leader Caoimhghín O Caoláin said the plan was just “another old soggy lettuce from the Green Party”.

However, Mr Cowen said Mr Ryan’s comments were based on commitments in the Programme for Government. He said there is an interdepartmental group examining ways to help struggling families.

Mr Gilmore also rose the issue of CAO over-subscription, saying it could create an accelerated points’ race and longer dole queues.

Mr Cowen said the CAO subscription rate is likely to be 160% of actual places and Education Minister Batt O’Keeffe is examining options to deal with it.


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