Taoiseach: Mortgage debt crisis is biggest issue

The high level of mortgage arrears remains the “single biggest issue facing our people”, the Taoiseach told the Dáil yesterday.

And he strongly indicated laws to help manage debt may be enacted sooner than expected.

Enda Kenny said he had “no problem” with the Dáil sitting through the summer to pass the Personal Insolvency Bill which allows debt problems to be solved outside the court system.

Fears the banks will have to be further capitalised with multibillion-euro sums of taxpayers’ money because of the level of distressed mortgages on their balance sheets, were raised in the Dáil during Leaders’ Questions.

Independent TD Shane Ross said the Central Bank governor, Patrick Honohan, had given a veiled warning last Monday when he said the banks had no immediate need for additional bailouts.

The rate of borrowers in arrears of 90 days or more rose to 10% — or 75,000 mortgages — according to Central Bank figures.

Matthew Elderfield, the deputy governor, warned “the scale of the problem has overwhelmed banks”.

The warnings must be heeded by the Government, Mr Ross told the Dáil: “The warnings from the watchdog have not been heard. The dog that did not bark in 2008 is barking very loud today.”

The banks, he said, are going down a route that could see the country need a second bailout before 2013. “We should be very worried about the bigger picture as well as the smaller picture,” he said.

Mr Kenny responded that the Government takes the comments by the Central Bank “very seriously”.

He said banks have been asked to furnish the Central Banks with their plans to deal with problem mortgages, as well as full details of the categories and sectors where there are problems.

The full extent of the problem will be known when stress tests are carried out next year.

The Taoiseach confirmed they will not happen in autumn as expected: “They will be conducted — I would assume in conjunction with other stress tests being done for other banks in European countries at the same time, and not have any one singled one for stress tests this autumn as against others being conducted in the spring time of next year,” he said.

The Personal Insolvency Bill is due to be published in June and debated on after the summer recess.

Fianna Fáil leader Micheál Martin said it “could be Christmas” before the bill becomes law and accused the Government of chronic inaction on the issue.

But Mr Kenny said he would prefer if it were put into law earlier: “I’d like to see it passed through the House before it rises for the summer time, it may not be possible to do that.

“I have no problem sitting right through the summer, I’ve no problem at all, believe you me, to get this legislation through.”