We rescued the banks, now we must rescue the public from negative equity

LAST Monday RTÉ 1 broadcast a documentary called Aftershock: Where to Now? in which four contributors were asked to offer suggestions as to what needs to be done to help this country out of the economic morass in which it finds itself.

I suggested a form of debt-equity swap for hard pressed homeowners, struggling under the weight of hefty mortgages at a time of declining incomes. This would involve banks taking part ownership of the homes of people in negative equity (where the loan is bigger than the value of the home) in return for writing off part of the outstanding debt, given people a lower debt, more realistically related to the present value of the home, to be repaid.

The response has been mixed, support for the concept from some being more than matched by objections and rejections, judging by emails and texts I’ve been getting, have been emphatic: the idea has significant problems, which I acknowledge and to which I will turn later, but it is rooted in the belief that without doing something a generation of people will be left to labour under an unfair millstone and that our economy’s chances of recovery will be greatly hampered.