Banks must be made to pay and to do as their told

In response to your headline ‘Banks to get rough on homeowners over debt’ (Irish Examiner, March 14), can I remind you that, in his column of September 14, 2013, Brian Lucey wrote: “It might be simpler for the incoming regulator to state that 35% (of after-tax income), with wriggle room of 5% either way, would represent an acceptable level of repayment for a principal private residence.

The difficulty is that, in doing so, we would probably cause a significant hole to appear in the banks’ balance sheet. A large number of mortgages would be classified as non-repayable, were we to do this. This would cause the banks to have to engage, in real terms, with mortgage holders. And that would result in write-offs, which would erode the capital of the banks. But they have already been granted capital to do this. In the last round of bank capitalisation, they were required to put aside nearly €10bn for losses on mortgages alone.

They have not written off this amount, and will not. The taxpayer, however, has a right to expect the funds injected to be used for the purpose stated.” Indeed, and why have the banks been able to get away with this? Because the Minister for Finance, Michael Noonan, has left it up to the Central Bank’s Professor Patrick Honohan, who has issued guidelines that the banks ignore. If Noonan and Honohan had gone up Mount Sinai, they would have come down with ten guidelines, not ten commandments. ! Time to put the screws on the banks.