Bank responsibilities - People must be safe in their homes

IN a fiscal crisis riddled by a litany of incredible failures, pressure is mounting on thousands of homeowners struggling to make ends meet following a claim that Ireland’s €35 billion bailout failed to take defaults on mortgage payments into account.

If Anglo Irish Bank chairman Alan Dukes is right then the Government will have to borrow even more money from the IMF and the European Central Bank — money that taxpayers already collapsing under an enormous burden of state debt, will have to pay back.

Coming on the eve of today’s Dáil vote on the loan, the blunt question posed by Mr Dukes is what happens when homeowners begin to default on mortgages? Given his role as overseer of the most rotten bank in Ireland’s league of rotten financial institutions, he is well placed to sift fact from fiction.

With each passing day, the number of mortgage holders in payment difficulties continues to grow. Estimates range between 30,000 and 100,000 homes in arrears, with many more in negative equity. Uncertainty and confusion continue to surround the true scale of this crisis.

According to one estimate, more than 70,000 people are now in arrears or have had their payments rescheduled by banks, building societies and other financial institutions which, egged on by mindless politicians, doled out money to greedy developers and ambitious homeowners as if there was no tomorrow.

Pressure is growing for measures to alleviate the burden faced by those in arrears. The vast majority of homeowners are genuinely seeking to meet repayments but many find it extremely difficult to keep up. Since more than 400,000 workers have lost their jobs, it is not difficult to understand why so many people are in mortgage arrears.

Under a Central Bank edict that comes into force next month, customers in arrears will no longer be bombarded with letters and demands for payment, subjected to penalties, or compelled to surrender tracker mortgages. For many people, this order cannot come soon enough.

The Central Bank will also apply more realistic stress tests to assess the true extent of bad debts on the books of the country’s banks. To date, every single estimate of the scale of these debts has been underplayed.

The AIB decision not to pay the controversial bonus to 2,200 bank executives is to be welcomed. Making future state support conditional on non-payment of the immoral bonus has concentrated the minds of managers and directors who have failed to live up to their responsibilities up to now.

As the country has learned to its cost, there are lies, damned lies and then there are the lies of bankers who contributed massively to bringing down the economy.

There is grave onus on those institutions to assure people they are safe in their homes.